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The credit card companies got themselves into problems when they just blanket sent out cards to anyone that had a mailbox.

Credit card companies started mass-mailing unsolicited credit cards in 1958, pioneered by Bank of America with its BankAmericard (now Visa) in Fresno, California, a tactic known as the “Fresno Drop,” which rapidly grew the card’s user base and established the modern revolving credit model. This marked a major shift from earlier, limited-use store cards to a general-purpose card, leading to the widespread practice of unsolicited mailings through the 1960s. It was specifically designed as the first “true” credit card that introduced the concept of revolving credit, allowing consumers to carry a balance from month to month rather than requiring full payment at the end of each billing cycle. And the companies that used it were given the equipment and opportunity to gain customers for free. So it was an open invitation to fraud.

This in time led to a mass forfeiting of the cards based upon lack of payments, and high use of the cards before they were shut off leaving an outstanding balance to the card companies. So the companies started raising interest rates to compensate for their losses. Now because of the widespread use of the cards the card companies can get over their heads really quick.

And today, the highest credit card interest rates (APRs) are typically found on cards for people with poor credit, reaching near 36%, with cards like First PREMIER and Total Visa often featuring rates at or above 35.9%. While there’s no federal cap, these high rates are for subprime borrowers, as national banks can often bypass state usury laws, leading to rates well over 30% on some store or subprime cards, exceeding the average. But as the number of cards is blindly being sent out, the average APR has to go up to defend their investment. So everyone pays the price for those that fraudulently act for themselves.

wy69