Credit Card History Part 3

If you are like most Europeans, you carry at least one credit card in your wallet. Having a credit card and using it wisely provides you with convenience. A credit card will also provide you with the convenience of waiting nearly one full month before paying for your purchases. Most consumers carry a balance on their credit cards, and finance charges can reach as high as 33% if you don’t pay your bills on time. This can cause a major problem.

There are those who just can’t resist pulling out the plastic to pay for things they can’t afford. This has resulted in charges of about $1.2 trillion on an all-purpose credit cards in the year 1999 alone. With the cost of goods and services rising every day, many Americans are finding themselves wallowing in debt with no real solution in sight.

Credit Card Beginnings

You may wonder where and how this all began, so we will start at the very beginning. Your credit card is a thin piece of plastic that is approximately 3 ⅛ inches by 2 ⅛ inches in size. This little piece of plastic contains information about your identification such as your signature or your picture. It allows the person who owns the card to charge services or goods to his or her account. The information carried on a credit card today can by read by ATMs, store computer reader, as well as bank and internet computers.

The use of credit cards began in the United States during the 1920s. Hotel chains and oil companies started to issue cards to consumers to enable them to make purchases at their stores. The practice rose significantly after World War II.

The Universal Credit Card

The first card that could be used at a variety of different merchants and stores was initiated by Diners Club Inc. in 1950. This early system charged cardholders a yearly service charge, and consumers were billed either once a month or once a year. The next universal card came from the American Express company in 1958 with their famous slogan that is still in use today, “Don’t leave home without it!”

Bank Credit Cards

It wasn’t until later that the bank credit card system was implemented. With this system, the bank credits the account of the business as soon as they receive the sales receipt. The cardholder pays the bank the entire amount or pays in monthly installments where interest is charged.

The first bank to implement a country-wide bank plan was BankAmericard. Bank of America started this system in 1959 on a statewide basis. Beginning in the year 1966, the system was licensed in other states and renamed Visa in 1976.

It wasn’t long before other major banks jumped on the bandwagon, including Master Charge which soon became MasterCard. For local banks to compete in larger markets, banks that offered credit cards on a more limited basis formed partnerships with the larger national or international banks. This was in order to offer consumers expanded services where meals and lodging could be charged to their credit cards no matter where the consumer chose to use it.

Since then, credit cards have become a major business. Profits for credit card companies are astronomical and will continue to rise if consumers don’t get a handle on their spending habits.