I’m Doug Johnson with the VOA Special English Economics
Report.
The credit card was a revolutionary idea. Today, a small plastic card lets
people charge purchases in millions of places. The sellers get paid through an
electronic system of banks. The buyers get a monthly statement to pay off. They
can buy now and pay later.
The credit card industry is changing all the time.
On June 30th, Bank of America announced it would buy MBNA, the
nation's biggest independent provider of credit cards. Bank of America will have 20
percent of the credit card market in the United States. The deal was valued at
about 35 thousand million dollars.
Bank of America is the second-biggest bank in the country after Citigroup.
Bank of America will cut six thousand jobs to reduce costs.
MBNA had negotiated with another bank, Wachovia. In fact, on June
17th, a helicopter carrying top MBNA officials from secret talks in New
York crashed in the East River. All survived, but not hopes for a deal. Wachovia
lost interest.
The first widely used credit cards did not use the bank system
most commonly used today. Diners Club started in 1980. American Express issued
its first charge card in 1958.
That same year, Bank of America offered BankAmericards to sixty thousand
people in Fresno, California. BankAmericard grew into the huge system known
today as Visa.
Most American families have at least one credit card. The Federal
Reserve, the central bank, says Americans have more than 700 thousand million
dollars in credit card debt. They pay an average interest rate per year of about
twelve to fourteen percent.
Some card users pay all their charges each month, so they do not owe
interest. Others make only the small payment required. If they owe thousands of
dollars, the debt can take years to pay off.
And that is not the only danger. Information security and identity theft are
major issues these days. Recently there have been several incidents in which
many people had financial information either lost or stolen.
Someone stole records from the computers of CardSystems Solutions, a payment
processing company. That incident put forty million Visa, MasterCard and other
card numbers at risk of misuse.
This VOA Special English Economics Report was written by Mario Ritter. Our
reports are online at voaspecialenglish.com. I'm Doug Johnson.
