Give Her Credit: the credit card journey for women

Woman making an online purchase using her credit card

How often do you “swipe”? It’s most likely very often or even daily. And you probably do it without batting an eyelid.

But women and credit cards have a complex history, considering they weren’t always able to swipe as they pleased. Not so long ago, that was the way of the world. Before 1974, when the Equal Credit Opportunity Act was passed, women weren’t granted credit without having a husband to co-sign it. Awareness about this golden snippet of history is vital for being able to visualise and understand the under-appreciated journey women were forced to take in order to build credit, and healthy financial independence.

A glimpse into the history of credit cards

Credit systems – taking something with an expectation of paying for it at a later stage have been around for a long time, and credit cards themselves date back to the early 1900’s; those early cards, however, were associated with individual businesses (like a hotel or restaurant) and couldn’t be used universally.

In 1949, Diners Club launched the first general merchandise charge card. It was mainly used for travel and entertainment expenses for a more affluent customer. Diners quickly expanded their network across the nation and charged merchants a hefty 7% fee per transaction.

In the 1950s Bank of America launched the first general credit card. At the time, banking regulations limited the geographic reach of individual banks, so Bank of America found it difficult to compete with Diners nationwide access. To overcome this drawback, Bank of America licensed their card to other banks. Initially they were successful but soon became overwhelmed with the administrative task of processing all of the paper slips from member banks. In an effort to address the growing needs, Bank of America decided to spin off the organisation and it eventually became known as Visa.

But, again, this luxury wasn’t available to everyone: Women still required a husband to co-sign any credit transactions.

Not until 16 years after the launch of the first mainstream credit card – and broad conversations about equality gained momentum together with the civil rights movement and second-wave feminism—did the relationship between women and credit cards start to transition. And after the Equal Credit Opportunity Act was passed, a whole new world of financial wellness was opened to women.

Enter The Equal Credit Opportunity Act

When The Equal Credit Opportunity Act of 1974 was signed into law, it made discrimination on the basis of gender, race, age, marital status, and religion illegal for creditors. Women no longer needed a male co-signer to get themselves personal credit. Furthermore, women could not be charged higher interest rates or be required to make larger down payments than a man.

This new way of life was key for paving the way for financial independence, and independence of all kinds, presenting new opportunities that didn’t previously exist for many.

Why the ability to have credit is important for women

Aside from being able to pay for things quickly and easily, not needing to carry around cash, and of course the ability to purchase things online, credit cards are really important for one significant reason. They help you build credit. Using a credit card and making punctual payments allows you to establish a credit history and credit score, which is vital for your financial well-being.

“Credit cards provide you with financial options when you don’t readily have cash on hand. Building a healthy credit score creates a legacy that could afford you bolder investments like buying your first home.” – Andrew Church, CEO of Rodel Finance.

Young woman in her first home on laptop

When it comes to building a credit history in order to apply for car finance, a new rental agreement or mortgage and other bigger purchases, credit cards offer freedom. According to the National Domestic Violence Hotline, a common reason women stay in abusive relationships is due to a lack of financial resources. In cases like these, credit cards can serve as a short-term solution for freeing yourself from a bad situation.

When unfavourable and unexpected life events occur, credit cards can offer a lifeline. The ability to borrow money quickly for personal expenses, is of paramount importance for women to be independent and maintain dignity.

So next time you swipe your credit card, take a moment to remember the journey women faced to get to where we are today: we now have autonomy over our credit.

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