Given the close connection between the growth in Mastercard debt and the rise in bankruptcy filings, it’s helpful to check how markets for visa cards have developed in.

This pattern started to change with the advent of visa cards in’66, since cards provided unsecured credit lines that customers could use at any point for any reason. The earliest visa cards were issued by banks where clients had their checking or high-interest accounts. Because most states had usury laws that limited maximum IRs, banks offered mastercards only to the most creditworthy purchasers and card use thus grew only slowly. But after the Marquette decision in’78, credit card companies could charge raised rates and they expanded in states where low rate of interest boundaries had formerly made lending unprofitable.

Over time, the development of credit offices and computerized credit scoring models modified card markets, because banks could get info from credit offices about individual consumers’ credit records and could therefore offer visa cards to customers who had no previous relationship with the bank. Banks first offered visa cards to customers who applied by mail, and then started sending out pre-approved card offers to inventories of consumers whose credit records were screened ahead. These inventions reduced the price of credit both by getting rid of the face-to- face application process and by permitting banks to grow nationally, which raised competition in local Visa card markets.

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