Credit cards have become an essential part of the modern world. You can use them to rent a car, book airline tickets, pay your taxes and buy various goods online and offline. Many Americans can't imagine their life without plastic money. However, paying with a credit card has not always been a common practice. Even though the first advertisement for credit was placed in 1730, credit cards appeared only in the 20th century. Our article will tell you fifteen interesting facts about credit cards that cover the history of their invention and development.
The first credit card was issued by Diners Club in 1950. It was invented by Diners Club founder Frank McNamara. In the beginning, credit cards could be used at 14 restaurants in New York.
The first credit cards were made of a paper stock with the accepting locations printed on the back.
The Diners Club credit cards were offered to 200 customers. Most of them were friends and acquaintances of Frank McNamara.
The first credit cards did not charge interest. In order to make a profit, the company imposed a 7% fee on the merchants who accepted the Diners Club credit cards and a $3 annual fee on the credit card users.
American Express was established as an express mail company in 1850. Those days the company was engaged in delivery of goods in New York. American Express entered the credit card business in 1958 when it issued its first charge card.
In 1984, American Express issued an exclusive Platinum Card. It came with an annual fee of $250 (about $485 in 2006 dollars).
Nowadays, the most prestige credit card from American Express is the Black Centurion Card with a $2,500 annual fee! It's available by 'invitation only'.
Originally, Visa was the trademark of credit cards issued by Bank of America. They were called BankAmericard and had an innovative "revolving credit" feature.
In 1970, Dee Ward Hock, the head of Bank of America committee, created National BankAmericard Inc., a consortium of banks that issued the BankAmericard. The association was renamed to Visa in 1976. Hock chose this name because it implied no national identification and was relatively easy to pronounce in any language.
The Visa logo colors were chosen because the blue represented the sky and the gold represented color of the hills in California where Bank of America was founded.
In 1967 four California banks joined together to battle the BankAmericard of Bank of America. Originally formed under the name Interbank Card Association, they acquired the MasterCharge brand and logo in 1969. MasterCharge was renamed MasterCard in 1979.
In 1984, MasterCard became the first credit card issuer that used a hologram on its plastics to prevent credit fraud.
In the early years, any bank had to join either the Visa or the MasterCard cartel to issue cards under their logos. A bank could not be a member of both.
Merchants had to set up two merchant accounts, one with a Visa bank and one with a MasterCard bank, to be able to process transactions from people using both plastics.
Discover was established in 1986. The company has always positioned itself as a driver of change in the financial services industry. First of all, they distinguished themselves from other lenders by providing credit cards with no annual fee.
Discover first introduced cash back rewards, known as "Cashback Bonus". It made the bank's financial products very popular. Nowadays most Americans associate cash back credit cards with Discover.
In 2007 Discover issued a new credit card with pay-on-time bonus equal to a full month's interest. It is earned if a customer makes on time payments within 6 months.
