Ever wonder how that credit card in your pocket or purse, became such an integral part of your life? What would you do without it, and more importantly, what do you do with it? Sometimes, a reminder of what we did with them comes every month for many years. Credit cards had an inauspicious beginning, but managed to grow, and become a multi-billion dollar worldwide business.
The article, “The History of Credit Cards,” said that in the United States the introduction of credit cards occurred about 1920. The use of the original cards was only for the business that issued them, or if it was a chain maybe some of their other locations. Credit cards today are for convenience, but at the start they were to promote customer loyalty, and service.
In 1946, a banker in Brooklyn, New York, introduced a “Charge-It card. When a customer used the card the store sent the bank the bill, and the bank paid the store then collected from the customer. However, these cards were only for local use, and the cardholder had to have an account at that bank.
In 1949, Diners Club introduced credit cards for travel and entertainment. Although people bought on credit, it was really a “Charge-It” type card because at the end of the month the total bill was due. By 1951, Diners Club had over 20,000 cards in circulation, and credit cards were becoming an accepted part of the credit world.
American Express entered the credit business with its own card in 1958, and soon went global. Within five years, American Express issued a million cards, both in the United States, and overseas.
Then, in 1959, the credit card holder was given the option of a revolving account, in which they didn’t have to pay the whole balance. Customers readily accepted this option, because even though they paid interest charges on the unpaid balance, the payments were easier to budget.
Bank of America, later to become Visa, introduced the all-purpose card, as you probably have, in 1966. Today, the all-purpose card is accepted and used throughout the world.
Although online entities, such as Pay Pal, are challenging credit card companies, credit cards are firmly rooted in the world’s financial system, and probably here to stay for a long time. However, the competition, even amongst themselves, makes it necessary for credit card companies to always come up with new gimmicks to attract new customers. However, beware because some of these gimmicks may cost you money.
Emily Starbuck and Ben Woolsey: The History of Credit Cards