How Credit Cards Started

An average person today can carry as many as eight credit cards. Credit card use is so rampant that everything and anything can be purchased and availed using it. But did you know how these plastic moneys came to be? Here’s a brief history:

The popular credit card of today started in the 1920’s in the United States but only at department stores that would issue these cards to their avid customers. By 1924, credit cards for gasoline appeared and were acceptable nationwide. During this time, automobile use became popular and so did travelling therefore it became necessary to have a card that’s acceptable in any gasoline station anywhere in the country. However, by the start of the Great Depression and World War II, gasoline and tire supplies decreased to the point that they were rationed in every locality. Because of this, gas card uses were hampered and consumer purchase fell.

The 1950s, however, harbingered the rise of credit cards and it has been unstoppable since. Credit cards were instigated by Francis McNamara of New York City and the first credit card was the Diners Club. McNamara owned a small lending company and he was inspired to put up his own credit card business from one of his creditors. This particular creditor owned a bunch of department store cards which were lent to his colleagues and friends and charged them with their every use. He loaned from McNamara’s company the money he used to pay off the department store bills. His profits came from the interest rates of his charges to his friends.

The idea of having a credit card came while McNamara was dining at a restaurant with his attorney. They were brainstorming for ideas which will redeem him of his lending losses and the Diners Club was born. As the name suggests, the Diners Club is a type of credit card that was acceptable at over 28 restaurants and establishments around New York City. The cards then were made of cardboard with the name and account number of the customer listed on the front and the establishments listed at the back of it.

This idea became so popular that banks followed suit and created their own programs of credit cards. In 1958, Bank of America began issuing 60,000 pieces of BankAmericards to residents of Fresno California, not minding whether they have credit card application or not and bad credit or not. BankAmericard is now the famous Visa. This event was the start of aggressive marketing tactics of not just credit cards but other banking programs today. Additionally, credit cards fraud also became so rampant that it led to the approval of the Fair Billing Act of 1974.