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The History Of The Credit Card

Initially introduced to be used to borrow money the credit card has become a financial staple of the American family. Credit cards are easier and safer to carry than cash in many instances.

Credit had been used extensively to keep workers in line. Long before the credit card, companies would extend credit to its workers to buy necessities then take the dollars off the worker’s pay checks. This had the effect of keeping the workers broke and indebted to the bosses so that they had to keep working to support their families.

References to credit cards have been made as far back as 1890 in Europe. Early credit cards were basically merchant cards between consumer and a specific merchant. . However, the real use of credit cards is believed to have originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers.

Credit cards were not always been made of plastic. There have been credit tokens made from metal coins, metal plates, and celluloid, metal, fiber, paper, and now mostly plastic cards.


Up until the beginning of World War II, department stores, oil companies, communication companies and travel and delivery companies issued cards to their customers in exchange for a promise of deferred payment. As the public started using this type of credit more and more, banks became interested and decided it would be a good way to make money.


The Franklin National Bank of New York introduced the “Charge It” card in 1951 which could be used at local retail businesses. These card transactions were authenticated by the bank at the time a purchase was made. The merchants were reimbursed for their sale and the debts were collected from the card-owners at a later date.

Not long after that Diner’s Club released their own charge card which could be used for travel and entertainment. These cards were designed to attract traveling business people who did not want to carry a lot of cash. The amount had to be paid in full, however, Diner’s Club allowed its cardholders up to 60 days to make the payments for their purchases.

These first cards were designed to lend money and then be paid off in full each month. The first “revolving” credit card was offered by the Bank of America. This card was called the BankAmericard and was first marketed in the state of California. People were now able to borrow money and pay it back in small monthly payments.

By the mid-1960s the process of issuing and processing credit cards had become too much for the banks to handle by themselves, as a result, bank card and credit card associations began to emerge. The most prominent among these credit card organizations were the InterLink Association and the Western States Bank Card Association.

In 1970, Bank of America gave up control of the BankAmericard program. BankAmericard issuer banks took control of the program, creating National BankAmericard Inc. (NBI), which would be in charge of managing, promoting and developing the BankAmericard system. In 1977 BankAmericard became the Visa card.

The success of the two largest credit card networks – MasterCard and Visa – is critically dependent on the membership of thousands of financial institutions that jointly establish rules, standards, and interchange fees.


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