History – The first credit cards

If you were born after 1980, you probably take credit cards for granted. You’ve been seeing them in use your whole life. But in the larger scheme of things, they really are a recent development.

Credit cards were first issued by oil companies and department stores in the early 1900s, to be used only at their own establishments. Instead of long-term credit offers, these cardboard or metal cards were a convenience for customers who then paid the full bill at the end of the month. Therefore, they were actually “credit cards” rather than “credit cards.”

1946 saw the first credit card issued by a bank, restricted only to customers of John Biggin’s bank in Brooklyn, and valid only at local business establishments. In 1951, the Franklin National Bank of New York issued a similar card for account holders only.

Diner’s Club was introduced in 1950, as a convenience for frequent travelers and entertainers. The first cards were issued to 200 select customers who could use them at 27 New York restaurants.

The following year, cardholders numbered 20,000 and the card was more widely accepted. Diner’s Club claims the title of the first widely used credit card. This was also technically a charge card rather than a credit card, as bills are due in full each month.

Meanwhile, Federal Express, which specialized in money orders and traveler’s checks, had been considering offering a similar card. When Diner’s Club was formed, American Express put its own plans into action and in 1958 launched its purple card for travel and entertainment. In 1959 they introduced the first plastic card. Again, technically it was a credit card.

The first revolving credit card, the kind we take for granted today, was issued by Bank of America, in the state of California alone in 1959. In 1965, the bank saw the potential for more profit and began granting card licenses to banks across the country. This became known as the BankAmericard Program.

Business was booming, so in 1967 four California banks formed the Western States Bancard Association and introduced competition into the BankAmericard Program: the MasterCharge. By 1969, most independent bank credit cards had joined the BankAmericard or MasterCharge programs.

Because these growing companies wanted to expand into the international market, the name “America” ​​was a problem. So in 1977, BankAmericard became Visa. In 1979 MasterCharge also changed its name and became MasterCard.

The credit card industry now has 5 major players:
– International visa
– MasterCard
– American Express
– To find out
– Diner’s Club

Visa, the card that started the race for revolving credit, remains the leader, with more than 1 billion cards in use and more than half of all credit card transactions worldwide.