The most significant court case involving credit card debt in American history is undoubtedly Marquette National Bank of Minneapolis v. First of Omaha Service Corp. (1978). This landmark case set a precedent that paved the way for the modern credit card industry and reshaped the landscape of consumer credit in the United States.

The case dealt with the issue of usury laws, which were state laws that limited the interest rates that could be charged on loans. At the time, many states had strict usury laws that limited the interest rates on credit card debt to as low as 12% per year. This made it difficult for banks to profit from credit card lending, as they were unable to charge high enough interest rates to cover the costs of issuing and managing credit cards.

The defendant in the case, First of Omaha Service Corp., was a national bank based in Nebraska that issued credit cards to customers across the country. The plaintiff, Marquette National Bank of Minneapolis, argued that the Nebraska bank was violating Minnesota’s usury laws by charging high interest rates on credit card debt owed by Minnesota residents.

The case made its way to the Supreme Court, which ultimately ruled in favor of the Nebraska bank. The Court held that a national bank could charge interest at the rate allowed by its home state, regardless of where the borrower lived or the loan was made. This decision effectively eliminated the ability of individual states to regulate interest rates on credit card debt and paved the way for the modern credit card industry.

The significance of this ruling cannot be overstated. Prior to the Marquette decision, credit card lending was largely limited to regional banks and department stores, which issued credit cards with low credit limits and high fees. The ruling allowed national banks to issue credit cards with much higher credit limits and interest rates, which made credit cards more accessible to a wider range of consumers.

The ruling also led to the proliferation of “credit card banks,” which were able to locate in states with lenient usury laws and offer credit cards to consumers across the country. This helped fuel the explosive growth of the credit card industry in the 1980s and 1990s, and paved the way for the emergence of today’s global credit card companies.

In addition to its impact on the credit card industry, the Marquette decision also had broader implications for the regulation of consumer credit in the United States. The ruling set a precedent that federal law preempted state law when it came to the regulation of national banks, and this principle has since been applied to other areas of consumer lending, such as mortgages and auto loans.

In conclusion, the Marquette National Bank of Minneapolis v. First of Omaha Service Corp. case is arguably the most significant court case involving credit card debt in American history. The ruling paved the way for the modern credit card industry, eliminated state-level usury laws, and set a precedent for the federal preemption of state law in the regulation of national banks. The impact of this decision continues to be felt today, as credit cards remain a ubiquitous part of American consumer culture.