Bank of America sent 60,000 credit cards to one city in 1958 with no applications
In 1958, Bank of America mailed credit cards to 60,000 Fresno residents with zero screening or applications—a gamble that nearly bankrupted the bank but unexpectedly launched the nationwide credit card era.
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Early bank card systems collapsed when customers didn't know who to pay
Starting in 1944, Flatbush National Bank took over merchants' informal credit systems for regular customers—the bank handled credit checks and billing, a model almost identical to today's credit cards, only confined to a small Brooklyn area with 13 merchants and 3,600 accounts. Customers didn't know whether to pay the bank or the merchant, though; many merchants left as a result. The bank was then acquired and the project was killed. Not until 1950, when designer Biggins moved to Patterson Savings Institution in New Jersey, did the system succeed—he created three repayment periods of 30, 90, or 180 days, with merchants paying 6% to the bank for credit screening.
— Tracy V. WilsonThe Diners Club forgotten-wallet founding story was completely made up
The official Diners Club story: in 1950, founder Frank McNamara forgot his wallet while treating clients to dinner in Manhattan, his wife came to pay the bill, and this sparked the buy-now-pay-later credit card. But years later a former Diners Club executive admitted the story was entirely fabricated to make the founding sound better. The likelier version: McNamara worked at a credit company and noticed customers lending their own credit limits to neighbors to buy things, then collecting debts on themselves; this led him and his lawyer friend and Bloomingdale's heir to devise a centralized billing system for restaurants, which paid 7% in fees for customer traffic.
— Holly FreyBlanket-mailing unsolicited cards got merchants on board—and nearly sank the bank
On September 18, 1958, Bank of America's Fresno Drop sent credit cards to 60,000 Fresno residents at once, each carrying $300 or $500 in credit with no screening and no application process—any Bank of America account holder got one in the mail. It did convince many merchants who'd rejected credit cards to join, suddenly gaining thousands of customers with buying power. But the bank badly underestimated fraud, counterfeits, and defaults; it lost millions in the first two years. Only after it adjusted collections and reduced merchant fees did the program start profiting by the end of 1961.
The credit card's magnetic stripe was designed for CIA IDs, not banks
In 1960, IBM engineer Forrest Perry invented the magnetic stripe on the back of credit cards, but his original assignment was encoding data for CIA ID cards—nothing to do with banks. The real challenge wasn't writing data to the tape but fixing it to the card. According to IBM, Perry's wife suggested using a hot iron to fuse the plastic to the card, which solved it. The stripe later spread to bank cards; by 1969 it was standard on credit cards worldwide, so merchants no longer had to call the bank to ask ‘does this person have enough credit?’ Perry also helped pioneer UPC barcode technology.
— Tracy V. WilsonWomen couldn't apply for credit cards alone until 1974
Before 1974, most U.S. banks had a policy that women needed a husband, father, or male guardian to sign for a credit card; men needed permission to guarantee for women too—not law, just banking practice, rooted in the coverture tradition where married women's property belonged to their husbands by default. The 1974 Equal Credit Opportunity Act broke this, explicitly banning creditors from discriminating on sex and other grounds. A key force behind it was Ruth Bader Ginsburg's ACLU Women's Rights Project, founded in 1972, which pressed through legal suits.
— Holly FreyWhen South Dakota abolished rate caps, card companies moved in and profits soared
In 1979, South Dakota repealed its usury law, so credit card interest had no ceiling; banks moved entire credit card divisions there, and South Dakota quickly became the U.S. credit card hub, Delaware following suit. This made credit card operations one of the bank industry's highest-margin segments. The U.S. still has no federal credit card rate cap: Congress proposed a bipartisan 10% cap in early 2025, but it stalled in the Senate Banking, Housing, and Urban Affairs Committee and hadn't reached a full vote by November 2026 when this episode was recorded.
— Tracy V. WilsonAmerica took twenty years to catch up after France went all-in on chip cards
French banks began rolling out microprocessor chip cards in the 1960s—requiring a PIN to transact—and by the mid-1990s chip cards were standard on all French credit and debit cards. In 1994, Visa, MasterCard, and Europay jointly launched the EMV standard for global use (the name is their initials), spending two years standardizing chip specs; the first contactless terminals appeared in 2005. Yet chip cards only became mandatory in America on October 1, 2015—more than twenty years after France's nationwide rollout.
— Holly FreyAverage Americans now carry over $6,000 in credit card debt
According to a 2004 PBS Frontline report, the average American household then held 8 credit cards. Experian data shows total U.S. consumer credit card debt is now $1.23 trillion, with an average balance of $6,768 per person. The hosts note that number might sound high or low depending on who you are—they saved the full credit card debt story for a paid Behind the Scenes episode.
— Holly FreyIn their own words · checked verbatim
We called it a knuckle buster
Holly Frey1:04
That was all a fiction they made up because it made the beginning sound really good.
credit, which was once the sign that a person had trouble meeting his bills, has taken on a glamorous new meaning in recent years. Now a man with a credit card can rent a plane or boat or car, live it up in nightclubs, take a safari to Africa, and even get a Kelly girl for temporary office help.
60,000 Bank of America cards were mailed to Fresno residents, each with either a $300 or $500 credit line. There was no application process.
his case was like, well, we're loaning money to all these people. Of course, there's so much risk, we should make a lot of money back from it.
Tracy V. Wilson30:13
U.S. consumers carry a whopping $ 1. 23 trillion in credit card debt. The average credit card balance is $ 6, 768.
Figures
| Diners Club members by 1959 | 1 million | 15:20 |
| Total U.S. credit card debt (current) | $1.23 trillion | 35:23 |
| Average U.S. credit card balance per person (current) | $6,768 | 35:23 |
| Average U.S. household credit cards held in 2004 | 8 | 35:23 |
| Date chip cards became mandatory in America | October 1, 2015 | 34:20 |
| Diners Club merchant fee | 7% | 13:13 |
| Patterson plan bank fee | 6% | 9:11 |
Glossary
- EMV chip
- Global standard for chip-based payments jointly established by Europay, MasterCard, and Visa
- Charga-Plate
- Metal charge plate used by department stores before credit cards, imprinted with customer's name and address
- coverture
- Common law tradition where a married woman's property became legally her husband's
- usury law
- Law limiting the maximum interest rate a lender can charge
- Fresno Drop
- 1958 event when Bank of America mass-mailed credit cards to 60,000 Fresno residents with no screening
How to listen
Anyone working in payment products or consumer finance growth strategy, and anyone curious how the credit card industry grew recklessly.
The opening chitchat about an Andor episode and an 1888 sci-fi story imagining credit cards can be skipped.