This article remembers key events that have shaped Wall Street history.
Credit is a vital part of modern capitalism, and few elements of the consumer experience capture this relationship as perfectly as the credit card. It was not until 1958, however, that the modern credit card was born. On or near this day in September 1958, Bank of America (NYSE: BAC ) launched the first revolving-credit charge card in Fresno. The credit instruments offered previously were often restricted to companies or industries and typically required balances to be paid in full with each monthly bill.
Bank of America's card, the BankAmericard, was at first a paper card that had a $300 limit. It took several years for the idea to get off the ground, owing partly to banking restrictions that prevented banks from expanding across state lines. In 1965, other banks began licensing the BankAmericard program. It was from these humble beginnings that Visa (NYSE: V ) was born. BankAmericard would become an independent corporation in 1970, and it would change its name to Visa in 1976.
General Electric (NYSE: GE ) alone, among all major modern credit-issuing companies, was a member of the Dow Jones Industrial Average (INDEX: ^DJI ) in 1958. Today, four Dow components -- Bank of America, American Express, GE, and JPMorgan (NYSE: JPM ) -- all have substantial credit card operations. Six other Dow components -- Walmart, AT&T, Disney, Chevron, Exxon Mobil, and Home Depot -- offer branded rewards-focused credit cards managed by major issuers.
The Dow's four credit card issuers have a larger combined market cap today than the total market value of every company traded on the New York Stock Exchange in 1958. The total balance on credit cards in the United States was $672 billion in the second quarter of 2012, or about 5% of U.S. GDP today. In real terms, that much credit card debt would have been a quarter of the country's GDP in 1958.
There are 71 million more open credit card accounts today than there are people in the United States. However, there were a lot more before the recession. Nearly 500 million accounts were open in late 2008.
Credit card debt hasn't been as big of a weight around banks' necks as mortgage debt, but industry revenues may not recover from their pre-recession highs for years. Total credit card industry revenue fell 5.5% to $154.9 billion last year, according to analysts at R.K. Hammer. The Fool's premium research service offers an in-depth way to find out how major issuers Bank of America and General Electric are coping with consumers' credit-shyness. If you're interested in subscribing, click on either Bank of America or General Electric to gain access to detailed analysis and a full year of timely updates.