Many people use credit cards on a daily basis. However, it is rare to find a credit card user who knows anything about the history of credit cards. Although it won’t necessarily help you to become a better borrower, understanding the history of credit cards can give you some insight into the role that they play in modern society today. And, as they say, knowledge is power.
Here is a brief history of credit cards as they have been used in America since their invention:
• Pre-credit cards. Before credit cards were even in use, there was a system of credit established by many store owners to assist their customers in getting their needs met. Communities were small and people knew each other so store owner could give thing to people “on credit” and trust that they’d be paid back when the buyer had the money.
• First credit cards. In the 1920’s, individual stores started making their own initial credit cards to make this process of “store credit” easier to track. This was particularly useful for stores – such as auto retailers – that had big purchases to keep in order. It was also used extensively by people selling gas to the buyers of these new cars.
• Diner’s Club. This card came about in the 1950’s. It was designed to aggregate purchases from different locations on a single card, the feature that we most commonly associate with credit cards today. American Express and Carte Blanche were two credit cards established shortly thereafter.
• Widespread development of different cards. Throughout the 1950’s and 1960’s, a series of credit card companies began to crop up. Bank of America created its first card which ultimately became the well-known VISA. MasterCard followed shortly thereafter. As more cards developed, more people began using them.
• Diversity of cards. At the end of the twentieth century, we saw a growth in the diversity of cards. Different companies each offered dozens of different cards to suit the unique styles of different consumers. Rewards programs popped up, different designs became available on cards, and personalization of cards became important.
• Credit cards in the twenty-first century. There are two major trends that we see with credit cards today. The first is adaptation to changing technology. Credit cards are being used in different ways with online billing, online shopping and changing technologies. The other trend is towards using credit cards responsibly. This is reflected in the number “green” credit cards that have cropped up recently to allow consumers to put their money where their hearts are.
Knowing the general history of credit cards can assist consumers in seeing what finance changes have taken place in the country over the years. This makes them more well-rounded people with a better understanding of what happens when they spend their money.
