13 Years Of American Credit Cards, In 1 Graph

Last week, Wisconsin Gov. Scott Walker revealed that he was paying off a credit card that was charging him 27 percent interest - really high! That got me thinking: What kind of deal are the rest of us getting on our credit cards? And how has that changed over time?

To find out, I analyzed a Federal Reserve Survey that delves into the details of people's finances. Here's what I found.

The flattening of interest rates. A few years back, there wasn't that much variation on the rates that credit card companies offered consumers. If you had good credit, you probably paid 8 percent interest. If your credit wasn't so good, you paid 16 percent. But eventually, card issuers became more sophisticated in their use of data, according to Ben Woolsey, president of CreditCardForum.com. Today, instead of lumping lots of people into a few buckets, card companies offer lots of different rates. Consumers also realized that rates could vary more and began to shop around.

More high-interest cards for people with bad credit. In the early 2000s, companies like Capital One realized that they might be able to make a profit offering credit cards to people with sub-prime credit - as long as they charged high interest rates. Other companies followed suit.

The rise of the 0 percent introductory rate. While we take it for granted today, the common 0 percent introductory rate didn't exist until pretty recently. In the late '90s, a few banks experimented with offering 0 percent. It took some time to catch on, but once it did, a bunch of banks piled on. In the years since, they offered 0 percent for longer and longer introductory periods: 12 months, 18 months, even 24 months.

It seems a little crazy that a company would let people essentially have free credit for such a long time, but the companies understood a key fact about credit card customers: Most people don't pay off their balances.

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