Ever wonder how long our society has been reliant on credit cards? While the concept of credit has been around for thousands of years, credit cards are far more recent of a phenomenon.
The first type of credit card appeared in the early 1910s as a department store card, limited to purchases made at a specific store or location. The general use credit card took another 40 years to develop.
In 1950, Diner’s Club introduced the first credit card used at multiple stores. Of course, this card could only be used at restaurants, but it was the first time that a company outside of the storeowner created a credit program for the general customer. This new business model was born in New York with 14 restaurants. Actually not a true credit card, but instead a charge card, as it did not charge interest. Diner’s Club made its money through an annual fee to cardholders and a surcharge to the merchant of each purchase’s price. The credit card balance was due in full at the end of each month.
It was another eight years before American Express jumped in. Their first card was also a true charge card, not a credit card, as the balance was due each month in full, and no interest was charged.
The banks jumped in shortly after American Express. Visa, known as BankAmericard, was next in 1959. They were the first to use banks to enable cardholders to build charges at multiple stores. These cards were more true credit cards as they allowed the customer to choose to pay off the balance or hold it over at a monthly interest rate.
Soon after Visa, Master Charge followed. Master Charge later became MasterCard and this explosion of credit card competition has grown to the monster it is today.
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