What are the reasons behind the credit card popularity?

Credit cards allow you a safe and convenient way to borrow against your line of credit often freeing people from the burden and risk of carry cash on their person (I hate pennies). They allow you to borrow money and spend it in practically any major vendor here and overseas, and allow you to make payments securely over the internet. They also build you line of credit if used responsibly.

Ultimately I think the popularity comes from people's perception that they can spend money without worrying about the consequence until later. American banks now rely to a large degree depend on revenues from credit cards, and aggressively push credit cards in a way that reinforce people's misperception that they can spend without consequence. They often offer you 0% interest for a limited period, making you think that you can borrow as much as you want without interest, but after the limited period their regulations punish any late payment by jacking up interest. (high interest = high profit)

Banks 30 years ago weren't that interested in offering credit cards and they weren't very popular, because Usury laws in almost all states set a max percent on how much interest they can charge limiting the profit that can be made. This changed in the 1978 U.S. Supreme Court decision, Marquette vs. First Omaha Service Corp, it was decided that a state can export its interest cap to another state. So the banks setup shop in high cap states and started offering credit cards knowing that they now can make almost 40% interest compared to the 6% that most states are capped at.

Now Americans are the most heavily in debt people in the world, with an average of 8500 per household at the average interest of 15%! Pretty nice setup for the banks I'd say, so please people spend responsibly.


(thank you goes out to FaqFarmGeo Vbala Electrical Engineer Allyjean, I merged all of your points with what I wanted to add)