The payment card is perhaps the most important financial in-novation of the twentieth century. Like many other innovations, it developed gradually, resulting from a series of cumulative advances. Accident also played a significant role, as explained in detail in Part III. The benefits of the payment card are obvious. In essence, it provides easy money. As a payment device, it is faster and cheaper to use than paper-based payment systems. As a lending tool, it can be used to borrow indefinite amounts for a broad range of purchases without providing security or even stepping into a bank. Those features are the focus of Chapter 3.

The credit card, however, is not an unqualified success. Broader social costs arise from increases in credit card use. Specifically, the credit card is associated with increases in spending, borrowing, and financial distress. It is not clear why that is the case, although academics have suggested it may be due to any number of factors: cognitive impairments, compulsive behavior, excessive or unfair advertising, or fraudulent contracting practices. Chapters 4 and 5 discuss that problem. Specifically, I examine the quantitative relations between credit card use and consumer borrowing and also between credit card borrowing and financial distress. I sidestep temporarily the question of why those relations exist. Setting the stage for the comparative discussion in Part III, the analysis also shows that the effects of credit card use are not unique to the United States.