Jonquilyn Hill

Banks.

So how did credit card interest rates end up being so high in the first place?

That's a question for Sean Venata.

I teach financial history at the University of Glasgow, and I'm the author of a book called Plastic Capitalism, which is a history of the credit card industry in the United States.

Where does that story start?

So it really starts in department stores.

So you can think about big city department stores, something like Macy's in downtown New York, and it really starts at the turn of the 20th century.

So these are huge kind of palaces of consumption.

They're in part marketing themselves on the availability of credit.

Why pay cash?

You initially get something called like a credit token.

They eventually are cards that have your name, your account number, your address embossed on them.

And this connects with a kind of mechanical billing system that then creates your bill that goes to your house.

Department stores after World War II begin to expand outside of the central cities.

They begin to compete with small local merchants.

The modern department store with a great variety of merchandise from all over the world.

And so what begins to happen in the 1950s and then the 1960s is banks get into the credit card market.

And they do so because they're making loans, they're dealing with businesses, and in this case, small retailers, who feel the competition from the department stores that can offer credit.

And what the banks do is they go around to the small stores and say, listen, we can pull you all together into a centralized credit plan, and then you'll be able to offer credit that competes with department stores.

The Bank of America card will soon be coming to Southern Ohio as another service of the Citizens National Bank of Ironton.