The history of women and credit cards
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In March, the United States recognizes Women’s History Month, a time to commemorate the contributions and achievements of women across different fields and eras in history.
In personal finance, pioneers, legislation and particular events have been pivotal in making strides toward leveling the financial playing field for women today. And although credit cards are a modern product, they can represent a lot of the changes that women have experienced over the past few decades, from financial access to credit use.
Here’s a look at the history of women and credit, some key moments in changing the status quo and where we are now.
- In 1974, the Equal Credit Opportunity Act (ECOA) prohibited discrimination against credit applicants based on gender, among other factors. For the first time, women could own a credit card in their own name.
- Today, U.S. women have more open credit card accounts (4.5) compared to U.S. men (3.6) (Experian)
- U.S. men have a higher credit card balance ($6,357) compared to U.S. women ($6,232), on average (Experian)
- The average credit score for U.S. women is 704 compared to 705 for U.S. men (Experian)
- Some research shows women tend to use debt to bridge income gaps or in times of need, while men are more likely to use debt to fund luxury purchases (American University)
1848: The Married Women’s Property Act
To get a credit card in your name, you need to have both the ability to sign a legal agreement and financial autonomy. But prior to 1848, a married woman had neither. She couldn’t form contracts, control her own income, transfer or sell property or instigate a lawsuit. The property she brought into a relationship became her husband’s, and her assets could be used to pay for his debts.
The Married Women’s Property Act, therefore, set an early stage for credit opportunity and equality. Once passed, a married woman was allowed to enter contracts, collect rent and receive her inheritance. She could control her sole and separate property and not be automatically responsible for her spouse’s financial obligations.
Suffragettes like Susan B. Anthony were instrumental in the passage of this bill. In her diary dated Nov. 11, 1853, Anthony wrote: “Woman must have a purse of her own, & how can this be, so long as the wife is denied the right to her individual and joint earnings. Reflections like these caused me to see and really feel that there was no true freedom for woman without the possession of all her property rights…”
1862: California Banking Law and the Homestead Act
Another key component of becoming a viable borrower is having a checking or savings account at a bank, so you can make payments toward your loan or line of credit.
In 1862 that became much easier, at least for women in California. That was the year that California passed a law establishing a woman’s right to bank under her own name, regardless of marital status, and recognized the full financial independence of women. This allowed women to make deposits and withdraw money on their own. What’s more, the San Francisco Savings Union made the first loan to a woman in the U.S. that same year.
The Homestead Act of 1862 also allowed women to homestead as heads of household. Such control over banking and property laid the foundation for lending.
1919: First Women’s Bank of Tennessee opened
Despite legal advances, many refused to provide women with bank accounts of their own. At the beginning of the 20th century, banks remained a masculine domain.
In response, the First Women’s Bank of Tennessee was created and opened on Oct. 6, 1919 in Clarksville, Tennessee. It catered exclusively to female customers, and on the first day, a total of $20,000 was deposited — equal to nearly $350,000 today. The bank was even staffed with female employees and directors (though the shareholders were men). Although women didn’t have legal protection against unfair lending practices at this point, changing the faces of banking was a step in the right direction.
1938: The Fair Labor Standards Act
Income is an important factor in any credit application. Proving you have sufficient income helps give the issuer confidence that you can manage the resulting bill. But even where women could borrow money at this time, they may not have qualified based on income.
Wage inequality was improved in 1938 with the passage of the Fair Labor Standards Act. Among other provisions, it prevented employers from paying workers different hourly wages because of their sex.
The battle for income protection wasn’t over, though. Later, the Equal Pay Act of 1963 amended the Fair Labor Standards Act to include all forms of compensation, such as salary, overtime, bonuses, life insurance, vacation and holiday pay and benefits. The Equal Pay Act was then expanded upon in 1964, 1967 and 1973 through additional laws protecting against discrimination related to “race, color, national origin, religion, sex (including pregnancy, childbirth, lactation, abortion, and related medical conditions and procedures; sex stereotyping; sexual orientation; gender identity; gender expression; and intersex conditions), age (over 40), marital status, political affiliation and disability.”
1958: The first credit card was introduced
Credit cards are a relatively new invention. The first general-use, universal payment card to hit the market was the BankAmericard, which launched in 1958. This revolutionary payment tool allowed consumers to charge items and services, then pay for what they bought in installments and revolve balances if they wished.
Thanks to credit cards, consumers no longer needed to carry large sums of cash or a checkbook, and they could delay payments until they were ready to satisfy the debt, thus leveraging their capital. Credit cards offered users valuable economic freedom.
Freedom for whom, though? Men, mostly. During this time, women did not possess full rights 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 he did and would be paying the bills.
“The inequality was just vile,” says Vrinda Gupta, fintech pioneer and Visa alum. “Right from the beginning the credit system was truly not designed with women in mind.”
1974: The Fair Credit Opportunity Act
It took 16 years before women were finally granted the legal right to open a credit card in their own name.
After widespread complaints from women about unfair gender-based lending practices, legislation was introduced and passed into law. In 1974, the Fair Credit Opportunity Act made it illegal for any financial institution to discriminate against applicants based on their religion, race, national origin — and gender. Lenders were no longer able to ask applicants about their marital status, except in states with “community property” laws on the books.
1975: First female-owned commercial bank opens
Just one year later, in 1975, First Women’s Bank opened in New York City. Betty Friedan, a well-known American women’s rights activist and author, was a founding member and served as a director for the bank, which offered services like educational seminars and financial counseling.
Later in 1989, the bank rebranded to the First New York Bank for Business due to a lack of financial success, with the chairman at the time, Martin A. Simon, stating, “The mission that the bank had to specialize in women because they didn’t have equal opportunity became anachronistic because everyone else was doing the same thing.” Ultimately, the bank closed in 1992.
1981: Kirchberg v Feenstra
In a Supreme Court case that ultimately changed women’s rights in the U.S. forever, Kirchberg v. Feenstra overturned a state law which allowed a husband to control jointly-owned property without a wife’s consent. In this case, Joan Feenstra’s husband, Harold Feenstra, mortgaged their home without her knowledge.
2012: The Credit CARD Act amendment for stay-at-home parents
A pivotal credit-related law was enacted in 2009: the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act). This law helped protect credit card users against abusive lending practices by reducing fees and ensuring that credit issuers would disclose the costs and penalties associated with charging. The law was powerful, but something was missing.
Despite making strides decades before, not all women had access to credit until an amendment to the Credit CARD Act allowed stay-at-home mothers to access credit on their own, says Diane Bourdo, president of the financial planning firm The Humphries Group, who also mentors female undergraduate and graduate students who are pursuing careers in finance. “It was not until then that [a woman’s] share of the household income could be used to prove she could pay off credit cards.”
According to the latest Pew Research data, 83 percent of primary child caregivers are female. Independent access to credit is a crucial step in anyone’s financial life, says Bourdo. Mothers who are caring for their children should not be excluded.
2020: First female CEO of a major bank
The latest step forward for women and credit cards occurred just this decade, and it came in the form of leadership.
Citigroup, one of the biggest credit card issuers in the world, made history when CEO Michael Corbat retired from his position in 2020. Jane Fraser, the company’s retail banking chief at the time, became the first female CEO of a major U.S. bank, officially stepping into the role in March 2021.
Today: More women take the credit lead
For bankers and consumers alike, representation matters. When women are present in leadership roles, they bring different perspectives and experiences.
Krista Phillips, executive vice president and head of branded cards and marketing at Wells Fargo, says changes began to occur when the major banks started to realize how many of the household financial decisions were made by female cardholders.
“From everyday purchases to major investment decisions that build wealth, more women today have become primary or joint financial decision-makers,” says Phillips. “It’s an important shift for banks and other financial institutions to recognize so we can collectively sharpen the focus on the financial needs of women.”
As for Gupta, she’s pushing boundaries with a credit-building product, Sequin, that tackles the pink tax — products marketed toward women that are more expensive than those for men, resulting in gender-based price discrimination — by gearing the rewards toward female-centric spending categories. “We are also closing the credit education gap by giving women a safe space to talk about it,” says Gupta.
Clearly the final chapter in the book of women and credit history has not yet been written, despite crucial advances toward equality. Now, it’s time to make sure everyone — including industry leaders, legislators and credit cardholders — are all on the same page.