PBS: The Secret History of the Credit Card

How did the credit card transform from a mere modern financial convenience into the all-powerful whip-master of the American economy?

In 2004, The PBS investigative program Frontline examined how in the last 30 years the credit card and credit card debt has dug in at the commanding heights of American consumerism. “The Secret History of the Credit Card,” which we recommend for viewing online, is a lively (by PBS standards) and despoiling take on the rise of the credit card in America.

“The Secret History of the Credit Card” reveals how a small unnoticed legal decision in 1978 allowed the credit card industry to operate in the few states with laws that permitted high interest rates. That decision had peculiar effects. It turned South Dakota, and then Delaware into financial capitals (If you’ve ever wonder why your credit card bills go to such unglamorous places). Eventually, the program argues, it turned the American people into debt slaves. 

Once liberated from interest rate ceilings, the credit card companies could take greater risks and market to a wider swath of Americans.  New ways to hook the Average Joe, through zero-percent offers and aggressive advertising, encouraged Americans to take on more and more debt, without fretting over the potential damage to the debtor. With profits came power, and the program jarringly documents the credit industry’s ability to bend regulation to keep their current advantage intact.

What emerges from “The Secret History of the Credit Card” is a picture of America in a debt dilemma. Credit and debt foster a strong economy and increasing luxury and convenience. Yet the resulting debt burden dumps a certain number of consumers into ruinous financial situations. From this arrangement, the companies make the money and regular people shoulder the burden.