Plastic cash or credit cards have gained popularity in the last few decades. But do you know that credit cards were not even invented in the early 20th century. This article will make you aware about how and when credit cards were invented.
As the name suggests, a credit card is a plastic payment card that authorizes its user to make a payment on credit. The cardholder can pay for various goods and services by the means of this card. The credit card company or the bank gives credit to the user so that he or she can borrow money in order to pay the merchant. The customer is charged annually with periodic, usually monthly, bills. The merchants associated with the card pay the credit card company a service charge, that is, around 4 to 7 percent of the total bills.
Change in payment methods when credit cards were invented
Dating back to the 1800s, people exchanged goods on credit by using charge plates and credit coins as currency. It was only decades later that plastic payment methods became popular. With this, credit cards were invented in the United States, when individual firms like department stores and oil companies issued their own cards for purchasing goods at their company outlets.
The first credit card for general purpose was invented in 1950. The Diners’ Club introduced a small cardboard card through which different merchants were paid at various establishments. It was followed by Carte Blanche. In 1958, American Express brought out its charge card, which was largely used for travel and entertainment purposes. American Express also invented the first plastic card, which later acquired the features of a credit card. Unlike credit cards, charge cards were valid in local and regional areas only and the bill of a charge card was paid entirely at the end of every month.
Later on, bank credit cards came into existence. These originated in 1958 and were started by the Bank of America in California, namely BankAmericard. It became the first successful modern credit card and was renamed as Visa in 1977. Eventually, small banks who issued credit cards affiliated with various national banks. This change enabled the customers to make purchases through credit cards on a national as well as international scale. With this development, other major bank credit cards also came on the scene such as MasterCard, Citibank, Barclaycard, etc.
This is how credit cards were invented and are still preferred by many people around the world. Recent developments have shown that alternative payment methods have also gained prominence like online services. However, credit cards are here to stay and will not disappear from the scene as of now.