Why do so many credit card companies have an address in Wilmington, Delaware?

Several major credit card companies relocated to Wilmington, Delaware because of the advantageous tax laws offered there.

Wilmington, Delaware experienced the loss of many jobs after World War II, mainly due to it becoming less used as a boarding place. To solve this problem, state legislators looked for a way to bring new business to the state beginning in the late 1970s. Led primarily by Governor Pierre DuPont, in the early 1980s Delaware tried to lure big banks away from New York. York and other major financial companies, drastically revamping tax laws for the banking industries. Laws have also been changed to allow banks to charge whatever interest they want on credit cards.

Several banks, including 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 they could offer credit to customers with less credit. Although the big banks changed their credit card offices, the response was even greater than DuPont’s initial estimate. Many smaller banks have also set up shop in Wilmington to take advantage of the possibility of charging much higher interest rates while paying lower taxes on their profits.

Since the enactment of liberal interest rate and low tax laws, Wilmington has become one of the most attractive cities in the United States to open credit card companies. Other states and cities may have limits on the interest charged, and in fact, the US congress has even tried to create lower interest rates and cap rates and interest. That strategy didn’t work, and the congressional response was lukewarm at best, setting the interest rate cap at no more than 30%.

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In 1988, Delaware’s business protection laws became even stronger. During a time when hostile takeovers were becoming the norm, Delaware changed its laws to ensure that most Delaware companies were not subject to this process. The new laws meant that anyone trying to take control of a company would have to own 85% of its shares or, with most shares, would have to wait three years before starting the takeover process. Delaware-based companies were therefore better protected than in other states, strengthening the position of any bank or credit card company that created their charters within the state.

Today, there are several major credit card companies in Wilmington. This includes Bank of America, Chase, Barclays (which used to be Juniper) and ING Direct. Several smaller companies are also based in Delaware. What this means for the consumer, especially if you are searching for a lot of credit card deals, is that you will find a lot of Delaware deals. If you decide to apply for a credit card from a company in Delaware, it is important to read all the fine print carefully. You may pay higher interest rates, especially if your credit is not strong. With the luxury of good credit, you might want to look for the best credit card deals, especially those from states with laws less likely to favor the credit card industry.

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