Credit cards have been around for such a long time and have become such an important part of our lives that it’s hard to imagine a living without them. But have you ever wondered when that little plastic card made its way into the first pocket? The answer will surprise you. Credit cards are almost 100 years old.
How it all started
The first credit cards were issued in the United States, during the 1920s. Companies gave them to their customers for purchases made at company outlets. But the first universal credit card appeared only 30 years later. These cards, introduced by the Diners’ Club, Inc. in 1950, could be used at a variety of establishments.
The travel and entertainment card was the next one to pop up. It was launched by the American Express Company in 1958. Those people who held this new type of card had to pay an annual fee to the credit card company, which billed them periodically, usually monthly.
As credit cards started to become more and more popular, they also started to evolve. A new innovation was the bank credit card system. Under this system, the bank credited the account of a merchant as sales slips were received. Afterwards, it charged the cardholder at the end of the period. The cardholder either paid the entire sum or just monthly installments, with added interest.
BankAmericand was the first national plan. Bank of America launched it in 1958, in California. It spread to other states after 1966, and was renamed VISA 10 years later, in 1976.
The rise of credit cards
As more and more banks started using credit card plans and as this trend spread nationwide, the nature of personal credit started to change. It was no longer limited by location. Credit cards now allowed their users to make purchases at national and even international levels. Eventually, they spread to every corner of the world.
Credit card use started to increase dramatically in the late 20th century. However, credit card debt also rose, as many customers overspent their earnings.
The global financial crisis of 2008-09 led to a rise in defaults as consumers were increasingly forced to rely on credit. As a result, the U.S. House of Representatives had to approve the Credit Card Holders’ Bill of Rights, in April 2009. It would provide additional consumer protections and restrict or eliminate credit card industry practices deemed unfair or abusive.
Not for everyone
You could call credit cards a necessary evil. It’s always a good idea to live without debt, but you can’t ignore credit cards forever. Not now, when you need a good credit score if you want to have a healthy financial life.
Although the United States of America is the the world’s most indebted country, credit cards shouldn’t scare you. They’re just tools and tools are only as good as those who use them. If you’re a responsible, smart user, you can live a debt free life and also enjoy all the benefits that come with credit cards. And that list of benefits is pretty long. Not just that much needed credit history, but also discounts, free airplane tickets and much more.