History Of Women And Credit Cards: 1970s To Present

Although we may not think of credit cards as a gender equality issue today, it wasn’t until 1974 that women were allowed to apply for and own a credit card in their name. In this article, we’ll take a deep dive into the history of women and credit and how legislative advancements and shifting societal perceptions have led to significant advancements in women’s equality and in turn, greater access to financial independence for women.

Why Is the Ability To Have Credit Important for Women?

The ability to establish and build credit is important for anyone in the U.S., regardless of gender. By establishing a credit history and subsequently a credit score, you can show lenders that you are financially responsible and eligible for major life purchases like car loans, mortgages and premium credit cards.

When it comes to getting favorable rates on your loans, the better the credit score, the better your rates. Without an opportunity to build strong credit, all loans interest rates—including credit card APRs—are likely to be higher. Although it may seem counterintuitive, someone with a high salary and a low or nonexistent credit score is likely to be offered a higher interest rate on a loan than someone with great credit but a lower-paying job.

If women were unable to access credit in their own name, they would be unable to build their own credit profiles and their credit score would be dependent on the financial choices made by their male spouses. Women who marry other women would likely be unable to access credit at all.

When Were Credit Cards Invented?

The concept of credit extends back thousands of years to Mesopotamia, where evidence has been found of transactions between merchants who issued the earliest-known forms of an I.O.U for their goods.

Diner’s Club was the first widely-known charge card, created by Frank McNamara in 1950 after leaving his wallet at home while out dining. He and partner Ralph Schneider launched the first Diners Club card, which allowed cardholders to charge their meal to the card. The restaurant would send the bill to Diners Club and then Diners Club would send payment directly to the restaurant’s bank, taking a small commission for each transaction. Cardholders would be required to pay their bill in full each month to Diners Club.

American Express developed its first charge card in 1958, allowing customers to pay their bill monthly in exchange for an annual fee. Merchants who accepted the card would pay American Express a percentage of the amount being charged, an early version of what’s now commonly known today as interchange fees.

Later that same year, California-based Bank of America took it a step further, creating the BankAmericard with a pre-approved limit of $300 and mailing the card out across the state by 1966.

BankAmericard’s revolving credit card that allowed holders to carry a balance from month-to-month was a hit as the growing middle class in the U.S. found it appealing to have something that was both convenient and functioned as an instant personal loan. Later, in 1976, the BankAmericard changed its name to “Visa,” a word that sounded the same in nearly every language.

Read more: When Were Credit Cards Invented: The History of Credit Cards

When Could Women Get Credit Cards?

Although the Equal Pay Act was passed in 1963 requiring men and women to be paid equally when doing the same work, it wasn’t until the Equal Credit Opportunity Act (ECOA) was passed in 1974 that women were able to get their own credit cards in their own name. The ECOA was originally introduced in 1973 by Representative Bella Abzug (D-NY) and was signed into law by President Gerald Ford on October 28, 1974.

Women and Credit Cards in the 1970s

The 1970s were a turning point for women’s rights and included multiple legislative actions that helped to protect and advance women’s equality in the U.S.

1972: The Passage of Title IX section of the Education Amendments

The Title IX ruling prohibits discrimination on the basis of sex in any and all aspects of educational programs or activity that receive federal support. Although Title IX is sometimes referred to as a sports equity ruling, the passage of the Act not only paved the way for women to receive equal treatment in athletics but to also receive equal access when it came to discrimination in admissions, recruitment, discipline, gender harassment, scholarships, sexual harassment and sexual violence.

1972: The Supreme Court Case Eisenstadt v. Baird

This landmark Supreme Court ruling granted unmarried women legal access to birth control, a right previously only given to married couples. The Court held that there was no rational reason to treat married and unmarried people differently when it came to contraception. Additionally, both married and unmarried people would be granted the right to privacy, free of unwanted intrusions from the government as to whether or not they want children. Although this decision was not explicitly related to credit, it was another step forward for women to have autonomy over their lives, regardless of marital status.

1974: The Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA), more formally known as Title VII of the Consumer Credit Protection Act, was passed in October 1974 at a time when women were commonly discriminated against when applying for financial products like loans. With the passage of this Act, women were able to apply for credit cards in their own name, regardless of marital status.

1975: Time Magazine’s ‘Man of the Year’ Goes to ‘American Women’

The women’s rights movement became so widespread by mid-decade that Time magazine awarded its “Man of the Year” honor to American women, noting that “enough U.S. women have so deliberately taken possession of their lives that the event is spiritually equivalent to the discovery of a new continent.” The honor had been named for only four women previously since its inception in 1927. This was public recognition that women were gaining control over their own lives professionally and financially and made tremendous strides towards the ultimate goal of being treated equally in every way as men.

1976: Expansion to the ECOA

The ECOA was amended in 1978 to include the prohibition of discrimination on the basis of race, color, religion, national origin, age, receipt of public assistance programs like Social Security Disability Insurance (SSDI) or the Supplemental Nutrition Assistance Program (SNAP) or good faith exercise of any rights under the Consumer Credit Protection Act. The Act also requires creditors to furnish applicants who were denied credit with the reasons for the decision.

Women and Credit Cards in the 1980s

The 1980s were marked by a push-pull in the women’s movement. Although women were increasingly holding notable positions in both the workforce and governmental roles, the election of conservative Republican President Ronald Reagan may have stalled progress in many areas of women’s equality. Notably, he was opposed to the Equal Rights Amendment, a Constitutional amendment granting equal rights to women. In fact, the Republican party removed the ERA from its platform in 1980, the same year Reagan was elected president.

1981 Sandra Day O’Connor First Woman on the Supreme Court

Justice Sandra Day O’Connor was the first woman to serve on the Supreme Court, appointed by President Reagan. Prior to the position, she was a practicing lawyer and then held several elected positions in Arizona including a stint as the first woman in the U.S. to be majority leader in a state legislature. Her time as an official was marked by her sponsorship of multiple pieces of legislation that changed discriminatory laws against women.

1981: Supreme Court Case Kirchberg v. Feenstra

The Court overturned a Louisiana state law that had designated a husband is “head and master” and has unilateral control of any property owned jointly with his wife. The ruling found that this was unconstitutional and based on outdated ideas about the concepts of marriage.

1986: Supreme Court Case Meritor Savings Bank v. Vinson

In June of 1986, the Supreme Court unanimously ruled that sexual harassment is a type of job discrimination and is considered a violation of Title VII of the Civil Rights Act of 1964, which bans sex discrimination by employers.

Women and Credit Cards in the 1990s

By the early 1990s, women between the ages of 25 to 54 made up about 74 percent of the workforce, compared to approximately 93 percent of men in the workforce in that same age range. However, by 1995, women’s wages were only 77.4% of what men were making.

1993: The Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) made it illegal to terminate employment for women on medical leave for pregnancy as well as any employee who took time off to care for a relative or welcome a new child into their home.

The law meant that women or men who worked for an eligible employer were entitled to up to 12 weeks of unpaid leave for a covered reason under the FMLA. Prior to this act, someone could lose their job if they took time off to have a child.

Women and Credit Cards in the 2000s

2009 Lilly Ledbetter Fair Pay Restoration Act

On Jan. 29, 2009 President Obama signed the Lily Ledbetter Fair Pay Restoration Act. This legislation was a step forward for women’s financial equity. It overturned the Supreme Court decision of Ledbetter v. Goodyear Tire & Rubber Co., Inc. which set a limited time period for employees of just 180 days from the date of their first unfair paycheck to file a complaint of compensation discrimination. With the signing of this Act, it was reinforced that each unfair paycheck was an act of discrimination and therefore, a person could file within 180 days of their last unfair paycheck.

2012: Women’s Vs. Men’s Credit Card Interest Rates

A FINRA Investor Education Foundation Study found that women pay roughly a half a percentage point more in interest on their credit cards than men, regardless of their financial literacy level and other demographic characteristics like income and education.

2014 Janet Yellen Becomes Chair of the Federal Reserve

Janet Yellen’s appointment to be Chair of the Federal Reserve, the nation’s central banking system, was the first time in history a woman served in this position. She remained chair until 2018 and in 2018 was confirmed as Treasury Secretary, making her the first female to hold the position. As CFO of the U.S. government, she is responsible for creating and implementing U.S. domestic and foreign financial, economic and tax policies.

Present Day

Women’s control over their financial lives has come a long way since the passage of the Equal Pay Act in 1963 and subsequently the ECOA Act in 1974 that permitted women to own their own credit cards, regardless of gender or marital status.

A June 2022 study by Bank of America found that 94% of women believed they will be personally responsible for their finances at some point in their lives with 48% of female respondents saying they were confident about their finances.

But there is still much progress to be made. A July 2022 study by the Financial Health Network revealed that women reported worse outcomes on all measures of financial health including spending, saving, borrowing and planning. In the U.S. the gender wage gap in 2022 for all full-time, year-round workers, based on median earnings, is 16%.

How Much Do Women Spend on Credit Cards?

A July 2022 Financial Health Network study found that 54% of women reported having credit card debt vs. 57% of men, though this does not take into account credit card ownership. To date, there are no comprehensive studies in the last decade that can accurately account for the differences between how men and women might use credit cards. Part of the difficulty in accurately measuring any gender differences is that married couples tend to make financial decisions together.

Bottom Line

Until legislation was passed stating women were entitled to equal treatment when it came to pay and other financial products, it was an uphill battle for a woman to carve out her own financial independence. Once women were allowed to own their own credit cards, regardless of marital status, it paved the way for them to build their own independent financial lives.