The history of women and credit cards

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It has been a long and difficult road to establish gender equality in personal finance. Although there are still a few areas under construction, great progress has certainly been made. In March, the United States recognizes Women’s History Month, a time to commemorate the individuals, laws, and events that have led to a smoother playing field.

Although credit cards are a modern product, they have not always been accessible to women. Here’s why, what caused key changes, and where we are now.

1848: Married Women’s Property Act

To get a credit card in your name, you must be able to sign a legal agreement and be financially independent. Before 1848, however, a married woman had neither. She could not enter into contracts, control her own income, transfer or sell property, or sue. The assets she brought into the relationship became her husband’s and her assets could be used to pay off his debts.

The Married Women’s Property Act thus paved the way for credit opportunities and equality. Once adopted, married women were allowed to enter into contracts, collect rents and receive an inheritance. She could control her unique and separate property and not be automatically responsible for her spouse’s financial obligations.

Suffragettes were instrumental in getting this bill passed, including Susan B. Anthony. In his diary, dated November 11, 1853, Anthony wrote: “Woman must have her own purse, and how can that be, so long as woman is denied the right to her individual and common incomes. Reflections like these made me see and truly feel that there was no real freedom for woman without the possession of all her property rights…This demand must be made by petitions to the legislature… »

1862: California Banking Act and Homestead Act

A key part of becoming a viable borrower is having a checking or savings account at a bank to make payments with. The right to open deposit accounts was not granted to women until 1862. This was the year California passed a law establishing a woman’s right to bank under her own name. , regardless of marital status. The Homestead Act then authorized women to become heads of households. Such control over banks and property laid the foundation for credit.

That same year, the San Francisco Savings Union granted the first loan to a woman in the United States. In fact, this financial institution published pamphlets on this subject, announcing the new law: “Married women and minors, making deposits in their own name, can withdraw them themselves.

1919: opening of the first Women’s Bank of Tennessee

Despite legal advances, many have refused to provide women with their own bank accounts. At the beginning of the 20th century, banking remained a male domain.

In response, the First Women’s Bank of Tennessee was created. It was aimed exclusively at a female clientele. To make the experience more hospitable for female customers, it was staffed with female clerks and managers (although the bank’s shareholders are male). Although women did not have legal protection against unfair lending practices at this stage, changing the face of the bank was a step in the right direction.

1938: The Fair Labor Standards Act

To qualify for the credit, you must have enough income to give the issuer confidence that you can handle the resulting bill. Women remain at a disadvantage, however, as they are regularly paid less than men for the same work. Even if they wanted to borrow money, they might not qualify.

Wage inequality began to end in 1938 with the passage of the Fair Labor Standards Act in 1838. Among other provisions, it prevented employers from paying workers different hourly wages because of their sex.

The battle for income protection was not over, however, and in 1963 the Equal Pay Act amended the Fair Labor Standards Act to include all forms of compensation, such as wages, overtime, bonuses, life insurance, vacation and vacation pay. benefits.

1958: The first credit card is launched

Credit cards are a relatively new invention. The first universal payment card to hit the market was the BankAmericard, which was launched in 1958. This revolutionary payment tool allowed consumers to charge for items and services and then pay for what they purchased in installments. installments and to rotate the balances if they wished.

Thanks to credit cards, a person would no longer need to carry large sums of cash or a checkbook, and they could delay payments until they were ready to repay the debt, thus taking advantage of their capital. Credit cards offered users valuable economic freedom.

But freedom for whom? Men, mostly. At that time, women did not fully possess the right to open these accounts on their own. If a woman wanted a credit card, a man would usually have to co-sign, even if she earned more than him and paid the bills.

“The inequality was just plain vile,” says fintech pioneer and Visa graduate Vrinda Gupta. “From the beginning, the credit system was really not designed for women.”

1974: The Fair Credit Opportunity Act

It took 16 years before women finally got the legal right to open a credit card in their own name. Even if women were successful in obtaining a credit product, the amount they could borrow on a credit card or loan was often less than what a man would get with the same credit and financial profile.

After numerous complaints from women about unfair gender-based lending practices, legislation was introduced and enacted. In 1974, the Fair Credit Opportunity Act prohibited any financial institution from discriminating against applicants based on religion, race, national origin, and gender. Lenders were no longer able to ask applicants for their marital status, unless it was in states with “community property” laws.

2012: modification of the law on credit cards for stay-at-home parents

Another fundamental law was enacted in 2009: the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act), which was passed to protect credit card users from abusive lending practices. It reduced fees and guaranteed that credit issuers would disclose costs and penalties associated with billing. The law was powerful, but something was missing.

“The biggest surprise to me is that not all women had access to credit until 2012,” says Diane Bourdo, president of financial planning firm The Humphries Group, which also mentors female undergraduate and graduate students. who are pursuing a career in finance. “Only then [a woman’s] part of the household income could be used to prove that she can pay off her credit cards.

According to the latest data from Pew Research, 83% of primary caregivers of children are women. “It took an amendment to the credit card law for stay-at-home moms to access credit on their own,” Bourdo says.

Independent access to credit is a crucial step in anyone’s financial life, says Bourdo. Mothers who take care of their children should not be excluded.

2020: First female CEO of a major bank

The latest big moment for women and credit cards could hardly be more recent. It came in the form of leadership.

Citigroup, one of the largest credit card issuers in the world, made history when CEO Michael Corbat stepped down. Jane Fraser, then the firm’s head of retail banking, became the first female CEO of a major U.S. bank in 2020.

Today: More women are taking the lead in credit

For bankers and consumers alike, representation matters. When women are present in leadership roles, they bring perspective. Krista Phillips, executive vice president and head of branded cards and marketing at Wells Fargo, says changes started happening when big banks began to realize how many household financial decisions were being made by female cardholders. map.

“From everyday purchases to major investment decisions that create wealth, more and more women today have become senior or joint financial decision makers,” says Phillips. “This is an important shift that banks and other financial institutions need to recognize so that we can collectively focus more on the financial needs of women.”

As for Gupta, she is pushing the envelope with a credit-enhancing product, Sequin, which tackles the pink tax – products marketed for women that are more expensive than those for men, leading to price discrimination based on sex – directing rewards towards women. centered expenditure categories.

“We are also bridging the credit education gap by providing a safe space for women to talk about it,” says Gupta. “Women are half as likely to receive financial education as men.”

Obviously, the last chapter of the book on women and the history of credit has not yet been written. Critical strides towards equality have been made, so it’s time to make sure everyone, including industry leaders, lawmakers and credit cardholders, are all on the same pitch. ‘wave.

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