Credit Card Lowdown: Origin of credit cards

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Origin of credit cards

The earliest known credit card use has been documented by Encyclopedia Britannica from the United States back in the 1920s. It was believed to be the hotel chains and oil companies who started the practice of issuing cards to customers in lieu of purchases made at their outlets. Post-World War II the practice increased at a significant rate.

Diners Club Inc is credited with the introduction of the first universal credit card which could be used at various different places of business in 1950. There was an annual fee which was billed on monthly or yearly basis. In 1958, American Express came up with their own card which was made famous with their slogan "Don’t leave home without it".

Gradually a bank credit card system followed where the account of the merchant was credited on the basis of sales slips. The charges were later billed to cardholders at the end of the billing period. The bank was paid by the card holders for the entire balance or in the form of monthly installments at a fixed rate of interest which was also referred to as carrying charges.

In 1959 BankAmericard started as the first national bank plan from the Bank of America in California on a statewide basis. Today it goes by the name of Visa. MasterCard which went by its initial name of Master Charge and other bank cards were quick to follow. Credit card info.com reports:

Let's start at the beginning. A credit card is a thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size, that contains identification information such as a signature or picture, and authorizes the person named on it to charge purchases or services to his account -- charges for which he will be billed periodically. Today, the information on the card is read by automated teller machines (ATMs), store readers and bank and Internet computers.

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October 21, 2005 in Tips & Advice | Permalink