Credit cards are very common today and, in fact, are used to make almost any purchase. However, in times gone by, they were a facility most women were unable to avail. Prior to 1974, women needed a male cosigner or proof of income in order to get a credit card even if they worked. This was because lenders discriminated based on gender, race, religion, and other such factors in credit applications.
This changed in 1974, and this became illegal because of the passing of the Equal Credit Opportunity Act. Prior to this, women could not establish their identity financially nor establish their credit history. “Credit cards were one of the ways that women were able to establish their own financial identities and build their own credit histories,” said Amy Traub, associate director of policy and research at Demos, a think tank.
It did not solve all the problems women were having accessing credit and other financial services. A 2012 report from the Consumer Financial Protection Bureau found that women are still, on average, charged higher interest rates on credit cards than men by 0.5 percent. Women also have slightly lower credit scores, averaging 704 versus 705, according to Experian’s 2020 State of Credit report. This is partly due to the fact that women make less money, on average, than men $54,000 versus $65,000.
Women also use credit cards differently. According to a CompareCards survey, “Women are more likely to use credit cards for everyday expenses and emergencies, while men are more likely to use them for discretionary purchases and travel,” says Matt Schulz, chief industry analyst at CompareCards, a credit card comparison site.
Yet there are things women can do to help their credit and finances. Experts say women should make on-time payments, keeping the balances low, and not applying for too many new accounts. Such practices will help them to establish a good, strong, positive credit history that mirrors their financial responsibility. “Building a solid credit history is important for everyone, but especially for women. It can help them qualify for lower interest rates, save money and achieve their financial goals,” said Kimberly Palmer, personal finance expert at NerdWallet, a personal finance site.
Women have made great strides toward gaining access to credit cards and other financial services, but there is still room for improvement. Women can empower themselves about their money by knowing their rights and responsibilities. “Women have been historically excluded from accessing credit and other financial services. This has implications for their economic security, their ability to start businesses and their overall financial well-being,” said Katherine Gallagher Robbins, director of family policy at the National Women’s Law Center, a legal advocacy group.
Relevant articles:
– Forty Years Ago, Women Had a Hard Time Getting Credit Cards, Smithsonian Magazine, January 8, 2014
– The History Of Women And Credit Cards: 1970s To Present, Forbes, December 2, 2022
– How Women’s Credit and Finances Compare to Men’s, Experian, March 1, 2023
– Women and Credit: How to Build a Solid Credit History, NerdWallet, March 5, 2023