Credit Card History

What Is Credit Card?

A credit card is a method or system of payment that is named after the small plastic card issued to service users of that system. At the specification of the ISO 7810 standard, you will find that most of these cards are the same shape and size.

It is a very powerful piece of plastic that can be regarded as a compressed form of cash. It can be defined as a credit system that allows the consumer to borrow money on the fly from a bank or a financial institution and use it to make payments to merchants - (stores, shops etc).,

Credit Cards v Debit Cards

Credit cards differ from debit cards in one distinct way. That is, the former does not remove money from service users' accounts following each transaction - as is the case with debit cards.

The primary function of the card is, that the system that issues it, lends money to the customer or service user. The value of the card to the Issuer - is in the customer's usage of the card.

Do not confuse this form of credit with charge cards either. They too are different. A charge card requires the entire balance to be repaid in full each month, where as a creditcard allows the user to revolve his or her balance. For this privilege the user is charged interest.

Creditcard History

There are differing opinions when it comes to the history and date of the first card. It is said however that a card was invented back in 1887 by Edward Bellamy.

From 1914, Western Union had apparently been issuing charge cards to their regular users, even though the concept of paying merchants via credit did not come into fashion until 1950.

This is supposed to have been pioneered by a Ralph Schneider and Frank McNamara, with a view to being able to consolidate multiple cards. For instance, a merger of The Diners Club and Dine and Sign, produced the first 'charge card'; which, though similar, required payment in full settlement of each statement. Shortly thereafter, both American Express and Carte Blanche followed suit.

The Evolution Of Creditcard

The Visa card as we know it today, evolved out of the Bank of America - BankAmericard in 1958; as did Mastercard in 1966, when a group of banks established Mastercharge.

Owing however, to the apparently fractured nature of the US banking system at that time, cards became an effective means of portable credit.

This in effect allowed people who travelled around extensively, to move their credit around with them and to places where they could not directly access their own banking facilities.

Barclaycard UK, incidentally launched the first card outside the US, in 1966.

As you can see, today's card has its pioneering roots in various forms of merchant credit schemes in the US, dating back to the 1920's. It is reported that the card's original use was for selling fuel to the increasing number of car owners but progressed onto companies accepting each other's cards from 1938 onwards.

There are now countless variations on the basic concept of revolving credit, which are issued by banks and honoureed by a huge network of financial establishments as well as organisational-branded credit cards, corporate-user, store cards etc.,

The design of many of these creditcards have in recent years become a major selling point. And since the real value of the card for the issuer, lies in how much it is used by the consumer, this has seen a significant rise of Co-Brand and Affinity cards - where the card design is related to the Affinity (a University for example), leading to higher card usage.

It comes as no surprise therefore, how creditcards have found their way into our lives. These flexible friends have gradually turned into becoming a necessity rather than a luxury, by the very nature of how these cards work.

The content on this site is purely for information purposes only and is not intended to replace your seeking professional financial advice.

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