A Brief History of Credit Cards
Curious about how we got into this credit mess in the first place? To answer some of your questions, here's a brief history of credit cards
Though the history of credit stretches back into antiquity, the history of credit cards is surprisingly short. If you've ever wondered who we have to thank (blame?) for our current credit framework, look no further than this article. We'll be happy to let you in on the secret!
Looking backward
Whether you think credit cards are a great idea or the bane of civilization, there's no doubt that they've had a significant impact on human culture. But like the computer and the automobile, they haven't been with us all that long.
Credit cards are mentioned in European literature as early as the late 1890s, though most authorities trace serious credit card use to the United States in the 1920s. Back then, hotel chains, oil companies, and similar businesses issued cards to valued customers.
Gee, thanks
Even with corporate cards available, credit card usage didn't become common until the 1940s. In 1946, Brooklyn's Flatbush National Bank issued their "Charge-It" card that let bank customers charge their purchase at local stores that accepted the card.
But what really got the ball rolling was Diner's Club, a charge card meant to be used exclusively for paying for restaurant meals. A charge card is one you have to pay off each month. Diner's Club debuted in 1950, and as you may know, it's still around.
And greed took it from there
The first all-purpose credit card was, no surprise, American Express. Few people know that AmEx was originally an express shipping company until it was nationalized in 1918, and merged with all the other national express companies into one entity. The company built its entire financial empire up from there.
American Express had considered a charge card as early as 1946, but Diner's Club beat them to it. It took them a while to jump on the bandwagon, but by late 1958 they were offering a charge card for a $6 yearly fee (they charged a buck more than Diner's Club, so they'd be seen as a premium product).
The idea took off like a rocket.
And we're off!
Bank America introduced its BankAmericard (which later morphed into Visa), a true bank credit card with a revolving balance, that same year. It wasn't long before other banks were tossing their cards into the lucrative credit ring.
Since then, the credit situation has basically blown up out of control. The history of credit cards since then has been one of continuous product enhancement, clever accounting practices, the evolution of confusing rules and fees -- and a big mess that can trap the unwary in the tar pits of eternal debt, if you let it.
« Using a Balance Transfer Credit Card Application Successfully | Home | Here's a New Idea: a Limited Use Credit Card »
