Credit card differs from traditional forms of lending and has been found out to encourage higher levels of consumer debt and have also been found out to take advantage of behavioral vulnerabilities of consumers. In the case of traditional forms of lending, an applicant is thoroughly screened by the bank but in the case of credit cards even people facing bankruptcies or bad credit histories are able to get credit.
There is also a difference with regards to assessment of late fees and interest rates. All this is attributed to the National Bank Act of 1864 which exempts national banks from state consumer protection laws which can limit the interest rate being charged and also regulate the debt collection and credit reporting standards.
Also credit cards are reported to be the single major cause of indebtedness in U.S and this has not been attributed to other types of lending.
