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Why Do So Many Credit Card Companies Have a Wilmington, Delaware Address?

Several major credit card companies moved to Wilmington, Delaware, for the advantageous tax laws offered there.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 30 August 2014
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Wilmington, Delaware experienced the loss of many jobs after World War II, mostly due to it becoming less utilized as a shipping location. To address this matter, the state legislators sought a way to bring new business into the state, starting in the late 1970s. Led primarily by the Governor Pierre DuPont, in the early 1980s, Delaware attempted to lure large banks away from New York and other large financial companies by dramatically redrafting tax laws for banking industries. Laws also changed to allow banks to charge any interest they wished on credit cards.

Several banks, among them Bank of America and Chase, were inspired by Wilmington’s flexible laws to relocate at least their credit card companies to Wilmington. The ability to charge more interest meant that they could offer credit to less credit-worthy customers. Though big banks moved their credit card companies, the response was even greater than DuPont at first estimated. Many smaller banks also set up shop in Wilmington, to take advantage of being able to charge much higher interest rates, while paying lower taxes on their profits.

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Since the enactment of liberal interest rate laws and low taxes, Wilmington has become one of the most attractive cities in the US to set up credit card companies. Other states and cities may have caps on interest charged, and in fact the US congress has even attempted to create lower interest rates, and cap fees and interest. This strategy has not worked, and Congress’ response was lukewarm at best, placing the interest cap at no more than 30%.

In 1988, laws in Delaware protecting credit card companies were made even stronger. During a period where hostile takeovers were becoming standard, Delaware changed its laws to make sure that most Delaware companies would not be subject to this process. The new laws meant any one attempting to take over a company would have to own 85% of its stock, or with a majority of stock holding would have to wait three years before initiating takeover proceedings. Companies stationed in Delaware were thus better protected than in other states, strengthening the position of any bank or credit card companies that created their charters within the state.

Today, there are several major credit card companies stationed in Wilmington. These include Bank of America, Chase, Barclays (which used to be Juniper), and ING Direct. A number of smaller credit card companies also have their home base in Delaware. What this means for the consumer, especially if you’re sifting through a lot of credit card offers, is that you’ll find numerous ones coming from Delaware. If you do decide to apply for a credit card that is from a company in Delaware, it’s important to read all fine print carefully. You may pay higher interest rates, especially if your credit is not solid. With the luxury of good credit, you may want to shop around for the best credit card offers, especially those from states with laws less likely to favor the credit card industry.

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anon122851
Post 6

Any bank or credit card company based in the state of delaware and doing business in any state in the united states should be subject to each state's laws they are doing business in. This reminds me of the hole in the wall gang, butch cassidy and the sundance kid in the 1800's. Also cap interest rates.

anon64279
Post 5

Remember this when the Republicans want to let you buy health insurance across state lines. They will all move to the state with the least regulations and screw us all.

anon62608
Post 4

I also had a Chase card for 12+ years, good credit score (700+), never late on a payment, and Chase jacked up my interest rate to 29.99 percent just because they could. It is about time to start a class action suit against the state of Delaware to prohibit them from allowing those banks to destroy our savings just to pay off their ridiculous rates.

anon51504
Post 3

I had a Chase card for 12+ years, good credit score (700+), never late on a payment, and Chase jacked up my interest rate to 29.99 percent just because they could.

anon49192
Post 2

Beware of Bank of America. Please read the fine print. Yes, they will change the terms of your agreement for no reason at all. I have never been late or missed a payment and my account was closed when I contacted them to ask for help in maintaining my account, as I had separated from my husband, was a single parent, and needed to afford rent. They told me they could not help me initially. Several days later they closed out my account, and several week later they changed my 9.9 fixed APR to a variable one. My credit is not bad and never has been. It is just greed!

anon34371
Post 1

Years ago, when I opted out of pre-approved credit card offers, after some time they all pretty much stopped - *except* those from Delaware. What's up with that?

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