Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991
Business History Review 90, no. 1: 57-80, Spring 2016
DOI: https://doi.org/10.1017/S0007680515001038
Posted: 8 May 2020
Date Written: October 26, 2016
Abstract
Within the postwar financial regulatory system, state-level regulations — particularly interest rate limits — constrained the profitability of bank credit card plans. But differences in law among the states allowed motivated institutions to circumvent local laws using these mobile financial instruments. Eventually, banks themselves became mobile, placing irresistible pressure on states to eliminate local restrictions on consumer finance. The critical moment came when Citibank relocated its credit card business to Sioux Falls, South Dakota, in 1981. By examining this move in its longer context, this essay provides a new perspective on the rise of consumer finance in the late twentieth century, one that emphasizes strategic manipulation of local law by firms pursuing a national customer base.
Keywords: Credit Cards, Consumer Finance, Federalism, Citibank
JEL Classification: N42, N92
Suggested Citation: Suggested Citation