Considering women themselves were once property, we’ve come a long way: most women can now walk into a bank and open an account, sign up for a credit card, or take out a loan. As recently as the 1970s, credit cards were issued only with a husband’s signature; it took the Equal Credit Opportunity Act of 1974 to force companies to make cards available to women. Women quickly embraced credit, and less than thirty years later they carry roughly the same amount of consumer debt as men and even have more cards in their wallets than men do—by a 5-to-4 margin.
But as the market opened up to female borrowers, lenders began lobbying to relax usury laws and developing predatory practices. Women who obtained credit found themselves bearing a disproportionate share of lender abuses. As a group, women are financially less stable than men are; that made them a prime target for companies looking to profit from late fees and interest on unpaid balances.
Of course, female borrowers aren’t the only ones feeling credit card company abuses; interest rates have soared, fees have stacked up and terms and conditions have become obscured at the back of lengthy contracts across the board. The industry is in desperate need of reform and regulation, and the Obama administration has already begun to rein in lenders. But some critics of increased regulation contend that deregulation allowed companies to lend to borrowers who would have faced discrimination early in the industry’s life, including women, low-income people and people of color. As those regulations are put in place, will women see some of their financial power eroded?
The most recent push toward industry regulation is the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act), which Obama signed into law in May 2009. The bill includes protections against interest rate increases without reason or notification and bans hikes in the first year of an account, gives consumers more time to pay their bills, forces companies to apply excess payments to the highest interest balance first and puts statements into understandable language, among other things. And more restrictions are on the way. The Dodd-Frank financial reform bill of 2010 created the Consumer Financial Protection Bureau, whose mission is to restrict predatory practices and make products safer and more transparent. While it won’t be fully functional until it has a permanent chief, once it’s up and running it will start issuing new rules and ramping up enforcement of existing ones.
These regulations are in response to bank practices that have left Americans trapped in products they don’t understand and can’t pay their way out of. As usury laws were relaxed in court decision after court decision during the late 1970s and early 1980s, the credit card industry figured out how to keep consumers indebted. They hid terms and fees at the back of agreements, which have bloated up to thirty pages from a page and a half in the early 1980s. They offered low teaser interest rates that ballooned to double or triple later on. As Elizabeth Warren puts it, “The financial industry has perfected the art of offering mortgages, credit cards, and check-overdrafts laden with hidden terms that obscure price and risk.”