We’ve become so accustomed to whipping out a Visa or MasterCard and paying for everything from groceries to travel to online purchases that it’s hard to imagine a world without credit cards. Although credit cards have been around in some form for almost 100 years, they began resembling the cards that we use today only in the last half century.
Here’s a look at how credit cards have evolved:
1914 – Western Union issues its best customers a paper card that they can use to make charges to their account. It was the first consumer charge card.
1920s – Stores and oil companies introduce charge cards that consumers can use to make purchases at their stores only.
1939 – To increase its business, Standard Oil mails out 250,000 unsolicited charge cards. This was the first time this marketing strategy was used.
1946 – Brooklyn banker John Biggins offers customers of his bank (Flatbush National Bank) a “Charg-It” card. Card holders could make purchases using the card at several local stores, which would forward their bills to Biggins for settlement. The bank then would collect the money from its customer. Both merchants and cardholders paid a fee to use this service.
1949 – Appearance of the Diners Club Card. The card was the idea of Frank McNamara, who forgot his wallet when dining out at a New York City restaurant. He developed this card as a way for NYC elite businessmen to pay their bills at restaurants. The card signed up 10,000 members, 28 restaurants and two hotels in its first year.
1958 – In Fresno, California, Bank of America introduced BankAmericard – a paper card that was accepted only at local stores. This was the predecessor of today’s Visa card. According to Paying with Plastic by David Evans, the bank sent 60,000 cards out to all of its creditworthy customers in the area. (There was no applying for a credit card for those bank customers.) Credit limits were $1,500 or $2,600. Some of the best customers were given a revolving credit account so they were not required to pay off their bill each month.
By the end of 1959, Bank of American had expanded the card to include 25,000 merchants in California; two million households in the state had a BankAmericard.
1958 - In response to the growing popularity of the Diner’s Club Card, American Express, which had previously concentrated on money orders and traveler’s checks, launched its own credit card.
1959 – Chase Manhattan Bank in NYC introduces the Chase Manhattan Charge Plan. Cardholders had just 10 days to pay off their charges before interest would be charged.
1959 – American Express sends out the first plastic credit cards.
1966 – Bank of American establishes BankAmerica Service Corporation to franchise its card to other banks
1966 – Several large banks join together to form the InterBank Card Association (ICA), a national credit card system that is the forerunner of today’s MasterCard. The InterBank Card as also known as MasterCharge.
1968 – ICA forms associations with banks in Mexico, Europe and Japan, creating a global network. Over the next 10 years the network continues to grow internationally.
1970 – The Federal Trade Commission bans the mailing out of unsolicited credit cards.
1972 - Congress passes the first Fair Credit Billing Act regulating billing practices and disputes between credit cards and their customers.
1973 –BankAmericard launches the first electronic authorization system for credit cards. A year later it begins electronic clearing and settlement.
1974 – BankAmericard establishes an international program.
1976 – BankAmericard becomes Visa.
1977 – Congress passes the Equal Credit Opportunity Act, prohibiting banks from using gender, race, national original and marital status in evaluating credit card applications. Married women were allowed to establish credit in their own names.
1978 – Supreme Court ruling overturns interest rate limits for banks chartered in one state and doing business in another. This led to rapid expansion of credit card usage.
1979 – MasterCharge becomes MasterCard.
1986 – Discover Card introduced by the Sears Corporation.
1989 – Citibank partners with American Airlines for the first rewards credit card.
2004 – A federal court antitrust ruling allows banks to become part of more than one credit card network.
2009 – Congress passes the Credit CARD Act, limiting interest rates and fees that banks can assess on credit card transactions and making card rates and fees more transparent to consumers.
2012 – An AARP survey finds that almost three-quarters of all adult Americans have at least one credit card.
2015 – Be prepared for the introduction of credit cards that use special encrypted chips to reduce fraudulent duplication of cards. These cards may use signatures for transactions (much like the cards today) or they may require the use of PINs to make transactions even more secure.