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History of the credit card is short compared to the history of the wallet, when compared to most things on the historical time-line. It wasn't until the 1950's that the birth of the credit card occurred, and things have steadily progressed since that time. Bank of America introduced the BankAmericard, the first general purpose credit card, to the world. If you're familiar with the VISA symbol, it's interesting to note that the operational entity of Bank of America that issued the first BankAmericard, became VISA in the mid-1970's, and from then it has grown to be a powerhouse for issuing credit cards and the operational know-how for millions of financial institutions, and those who accept those cards as payment. That was about the time the credit card wallet started to be developed as a fashion accessory too.
Through the intervening years, much debate has continued around the impact the invention of the credit card has had on issuers, users and merchants alike. Many critics blame the loose restrictions on granting credit to people who aren't familiar with the fee structures or rates, who end up in debt they can't recover from, paying endless amounts of interest to the lender. Or the merchants who are now stuck in a monopoly, locked into usage fees that erode their profit margins.
Credit cards has created a way of making debt into something that is normal in our every day lives. Before credit cards, you had to be explicitly approved to obtain a "credit limit", and then it was usable only at the establishment where you were approved. With credit cards, your "debt" walks with you in your credit card wallet, and provides instant access to anything you wanted, as long as you had enough "debt money" (credit) available. In the end, many end up with a class of debt called "consumer" which includes most credit cards. The average household has over $16,000 in credit card debt (see graphic), which is revolving. Meaning, the interest continues to grow and the "minimum" payment becomes more of a ticket to keep the wolves at bay, than a means to remove the debt. Therein lies the criticism around credit cards. When handled properly, they're a lifesaver and wonderful safety net, but when not understood or controlled, they can cause financial chaos.
Due to ease of use and how small they are, credit cards are convenient. A credit card wallet can hold a dozen or more cards. Today, 7 of 10 Americans have at least 1 credit card, with 10 million new consumers entering the credit card market every year. That shouldn't be surprising as we see anyone who wants to purchase anything on debt (including a home via a mortgage) must have a credit report. And the fastest way to get a positive credit report started is to own and use a credit card. Thus, even before kids under 18, they are obtaining store credit cards, or if they've had a job they can easily get a VISA or Mastercard sponsored credit card from their local or national bank. Either way, it sets them up for ease of use and credit establishment, but if not managed properly, can also set them up quickly for financial failure.
The use of credit cards, however, are not only relegated to the young, all ages have grown to own, carry and use credit cards as can been seen by the graph below.
You might be surprised if I told you that many credit card wallets contain only a few credit cards. In a recent survey, more people, 25 million to be exact, have stayed loyal to a single credit card they own for 10 years or longer. When asked why, the majority said something interesting. They stayed because they were afraid of upsetting their credit rating status if they cancelled a card (see graphic), or held too many different cards. Since most people don't understand how the credit rating and reporting industry works, this makes sense. Unfortunately, the large credit reporting companies are all privately run and they hold very closely how they determine a credit rating. Thus, outside of the speculations given by financial reporters, it's anybody's guess. It's like trying to figure out how Google ranks pages in search. Lots of guessing and testing.
Since we're talking about credit card wallets, we're talking about minimalist wallets. That means, it's thin enough to carry in your front pocket without much fuss. If you find yourself wanting to take too many things with you, then you might want to do a wallet audit to determine how to trim down your stack. Additionally, you should also look at the 5 must and 5 never things to carry in your wallet if you're not sure.
And ultimately we may not need more than 1 card after all. New technology is developing a programmable credit card which can hold all the cards you want, making one active for purchase depending on your needs. Ten cards embedded into one, now that's minimal.
