Extra Credit

During a college tenure in which I chiefly took up space and displayed my ignorance, we dorm hall denizens often received credit card application forms from banks and card companies in our lobby mailboxes. They were widely ignored and mostly littered hallways and the areas around residence halls. 

At the time, I thought it colossally stupid, a waste of paper and effort. We were students. Few of us had much coin and we paid cash for what we bought. Credit cards were for adults, not for callow offspring who were even-money to embarrass them. Only later did I come to think it savvy and perhaps brilliant, if a mite cynical. 

Young OBX Dave was a hard-working and sharp-dressed fella.

At one point, as a joke, I filled out a form and applied. You were asked your annual income. I worked in the summers and made a few thousand dollars, which lasted me through the school year. I filled in the amount, which to me was part of the gag, and sent it off. 

A few weeks later, a thick envelope arrived, containing a letter saying I had been approved, several pages of terms and conditions, a credit card with my name on it and a monthly spending limit of a few hundred bucks. I was stunned. What the hell was I gonna do with a credit card? I didn’t suddenly have more money. I didn’t even have a checking account at the time. 

I don’t think I carried the card in my wallet at first, as if it might somehow materialize in my hand and force me to buy things. I may have left it at home with my parents. I recall no significant early purchases and almost never used it. One enlightening evening, however, a buddy and I were at some off-campus watering hole. We had run out of cash, which usually resigned us to head home. I’m not sure why it occurred to me – perhaps I saw a sticker in the window – but I asked the server, “Do you take Visa?” He said, “We do.” We looked at each other as if a magic portal had opened before us. 

We didn’t sling until last call or buy drinks for the house – only another round or two, as I remember. But the realization that a piece of plastic could extend the jollity when your pockets were otherwise empty was mind blowing. 

All of this probably sounds quaint, like an episode from a bygone era that depended on kerosene lamps in the evening or when the home entertainment center was a radio. Using credit cards now for everything from clothes to furniture to bar tabs is as natural as breathing. Back in the 1970s, though, it was far less common, particularly by the yutes. 

I bring this up not to go all Boomer gasbag, but to point out that society changes, sometimes gradually, sometimes rapidly. I came across a story that said U.S. consumer credit card debt reached a record $1.13 trillion in the fourth quarter of 2023, according to the Federal Reserve. That amounts to almost $4,380 for every adult and $3,424 for every man, woman and child in the country. 

In 1970, however, only 51 percent of U.S. families had a credit card. By the late ‘70s, that number was still only just above 60 percent. Granted, the concept of credit has existed almost as long as humans. Widespread credit, though, is fairly recent. The concept of revolving credit – carrying debt from one month to the next, with interest and fees – didn’t exist in consumer finance until the late 1950s. American Express handed out the first bank cards in 1958, the year I was born, and the same year that California-based Bank of America began to issue personal credit cards, according to Forbes. Bank Americard, the precursor to Visa, didn’t operate outside California until 1966, the same year a consortium of regional banks aligned to start what became Visa’s primary competitor, MasterCard. 

Which gets to the smart marketing component. Credit card providers and banks, all companies in truth, are in the business of cultivating customers. Sure, they reach out to adults because they’re the ones with steady jobs and incomes. But not looking to the future is almost negligent. Never too early to start building consumer habits. 

College campuses are a target-rich environment, as the strategists say, populated by youngsters on their own for the first time who likely possess only a passing acquaintance with personal finance, particularly 50 years ago. Offer them a taste of credit, make them feel grown up. Keep spending limits and conditions tight. If they pay in full and on time, fine; if they don’t, even better. If only a small percentage of millions of kids sign up, it’s worth the effort. 

The effort appears to have paid off. Credit card usage has become pretty much part of the national DNA. According to Forbes, 191 million Americans have at least one credit card, and half of the population has at least two cards (by comparison, the entire U.S. population in 1970 was 203 million). Eighty-two percent of U.S. adults had a credit card in 2022. 

The amount of debt is a concern – the financial site Bankrate said that 49 percent of cardholders were carrying over debt month-to-month in late 2023, and the Consumer Financial Protection Bureau said that almost 10 percent of card users are in what’s called “persistent debt,” where they’re charged more in interest and fees annually than they pay toward the principal. The concerns and that level of saturation haven't stopped the card companies and credit advocates from continuing to push. 

I regularly receive emails from one of the three major credit rating outfits telling me that they have new credit card recommendations and asking if I’d like to increase my monthly spending limit. Nah, I’m good where I am. Needs and wants are modest. I’ve used credit cards for 45 years without inflicting great damage to myself or others. Jury’s still out on me using sharp objects and heavy machinery.