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Credit Card History
 Jul 26, 2004


Around the world credit has become a very important part of society. Your financial life revolves around your financial history. Read this article to learn about early credit card history, universal credit card history, and how the credit card industry has changed.


Credit cards have become rather pervasive in our society. The average adult has four credit cards. And one in seven Americans has 10 credit cards. While credit card use has become a major part of personal finances, it was not always that way. Here is a look at some of the history behind credit cards.

Early credit card history

Credit has been around almost since trade. It has been possible for the trustworthy to get goods with the promise of payment since the time when barter was the primary method of payment. Credit card use, however, first began in the early 1900s.

In the early 1900s, a few companies decided to make it easier for certain, preferred customers to pay for goods and services. The most common businesses to make use of credit cards were:

  • Oil and gas companies.
  • Department stores.
  • Travel businesses.

The cards were usually made of metal. However, they could only be used at the businesses that issued them. Interest was not charged, and normally the balance had to be paid at the end of every month.

During World War II, though, charge cards were banned. But after the war, they returned. Companies realized that more people could be lured into becoming loyal customers when they had a card from a specific individual company, so credit cards become more available to the public in general.

Universal credit card use

After a while, it became apparent to certain organizations (especially banks) that they could make more money by offering universal credit cards. The first universal credit card is commonly thought to be the Diner's Club card, which was introduced in 1950. The Diner's Club card could be used at a number of participating establishments throughout the company, most often at hotels, restaurants and other travel related businesses.

In 1951, Franklin National Bank in New York City offered the Charge It card to customers. This card was accepted at local retailers and others throughout the city. Other banks soon introduced their own cards. However, these cards had to paid off in full at the end of the month.

Revolving credit card development was probably the single most important development in credit cards as we know them today. In the late 1950s, Bank of America offered a credit card that didn't require payment in full at the end of the month. Instead, customers could pay a smaller minimum payment and carry the balance. An interest rate would be charged, since the credit had turned into a loan.

Linking credit cards issuers

It soon became evident that a network was needed in order to streamline the credit card process. Bankcard associations began accepting and issuing cards. By the mid-1960s, expanded services could be offered, and it was possible to begin using credit cards in other countries. Licensing popped up, through which banks could get cards through BankAmericard (which became Visa) or Master Charge (which became MasterCard).

The advance of credit cards was further helped by technology. In the 1970s, it became possible to authorize transactions electronically allowing for credit card use any time of the day or night. Magnetic strips were placed on the cards to facilitate this process. Today, though, a vast communications network, and the Internet, allows for almost instantaneous approval and shopping online. Now, account information is being embedded in radio frequency devices, allowing for cards to merely be held close to some terminals to be read.

Easy credit and a culture of plastic

One of the reasons that credit cards are so common today is because they are so easy to get. In the earliest days of credit card history, it was difficult to get a card. You had to prove that you were fiscally responsible. Additionally, interest rates on credit cards were quite high, making them less desirable in some cases.

Starting in the 1980s, though, money has become cheaper. Indeed, interest rates began falling, and credit issuers stopped vetting applicants so closely. Instead of needing good credit to get a credit card, credit cards became the way that credit was established.

Now, even an 18 year old with no credit history can get a credit card, and nearly every adult has at least one credit card. This is one of the reasons they are so popular. Credit has been easy to obtain, and it has been relatively cheap until recent times.

Today, credit is still prevalent, but it is again becoming more difficult to obtain as the credit market crisis makes card issuers wary.



* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button, you can review the credit card terms and conditions on issuers website.