Personal & business credit Cards

In a fairly short time both personal and business credit cards have become a part of our everyday lives. Almost all businesses accept credit cards. There are now a wide variety available like no annual fee and no interest credit cards.

The first known use of the term “credit card” was in a novel in 1887 and  described a card used to make purchases. The first real cards were introduced in the U. S. in the 1920s. Western Union in 1921 started issuing  cards to regular customers to charge services.

 

Other businesses started giving cards to their customers to buy gas for  automobiles that had begun filling the streets. These “gas cards” were actually “charge cards” rather than credit cards since they required the balance paid in full each month.  Credit cards, on the other hand, provide the customer with a line of credit (on a revolving account )with interest charged on unpaid balances. It would be quite a few years before true credit card as we know them appeared on the scene in American business.

 

The earliest charge cards were printed on paper but forgery became a problem. To make them harder to forge, a ”charge plate” was developed and used until the late 1950s when plastic became generally available. These plates were about 2 1/2″ by 1 1/4″ (close to  the size of military dog tags). It was embossed with a customer’s name and address. When making a purchase, the charge plate was placed in an imprinting machine with a charge slip on which the amount of the purchase was written. The machine imprinted the information and the customer signed the slip to complete the purchase. The completed slip went to the stores bookkeeping department where the transaction was handwritten into a ledger book. At the end of the month (or other billing cycle) an invoice (bill) was sent to the customer. Before computers this system was very labor intensive.

Beginning in 1934, American Airlines and the air Transport Association developed a system to simplify charge cards by assigning customers unique identification numbers called account numbers which is an important part of today‘s credit card industry.. This led to “air travel Cards” which let customers by the 1940s to purchase airline tickets from 17 different airlines. The modern  ”buy now and pay later” philosophy was well on its way to becoming a part of the American lifestyle .

The idea of paying completely different types of businesses with the same card became a reality in 1950. The creation of a “Diner’s Club” card was the first general purpose charge card. american express followed in 1958 with a worldwide network of merchants accepting their card. However, at the time these were all still charge cards where the entire balance had to be paid monthly. There were no “minimum” payments. Partial payments were not acceptable and could lead to the card being revoked. The requirements for obtaining these cards however was quite strict and therefore defaults were an exception.

In 1958 Bank of America began what would eventually prove to be the first successful general credit card. Their ”Bank Americard” had several problems at first but it was a true revolving credit financial instrument. As its use spread around the world, Bank of America changed it to its now familiar name “visa Card”. In 1969 Citibank merged its new “everything Card” with a small credit card company called “Master Card” and the other of today‘s giant credit card companies was born.