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The History of Credit Cards

    The concept of credit is probably much older than most people realize. Credit has its beginnings in the late 1800s when charge plates and credit coins were used between merchants and consumers. Of course, credit cards did not exist yet in the 1800s. In time the concept of credit slowly began to evolve and become more all-encompassing as it expanded in its versatility. Credit cards themselves began to make headway for the very first time in the early 1900s, not too long after credit started being used.

    The Origin of the Credit Card

    Although there are some references to credit cards as early as the 1890s in Europe, the credit card industry as we know it today began early in the 1920 in the U.S. Gas & Oil companies and a few hotels of the time were the first to offer credit to their customers in the form of a card.

    Department stores, hotels, and oil companies were the first to issue their own proprietary cards. These cards had some fundamental differences from the credit cards which we employ in our daily use now.

    The first cards were designed with the intention of giving higher quality customer service as well as forming customer loyalty. Convenience wasn’t the primary thought in mind as it later became.

    The first bank issued credit card was invented by John Biggins in 1946 in Brooklyn, New York. The Flatbush National Bank started a program called ‘charge it’ that allowed bank customers to shop local merchants and pay the bank later.

    John Biggins is reputed as being the official father of the credit card through a bank. He is noted as having invented the very first one, called “Charg-It” in the year 1946. This credit card worked essentially in the same way which ours do today. Instead of being charged directly when someone would utilize the card the bank would pay for the expense.

    The earliest national credit card made its debut in 1950 and the first nationwide bank credit cards appeared in 1958.

    As the pace of life continued to increase in the sixties and seventies, the credit card companies began to market their cards as ‘time savers’ as opposed to a line of credit. The market campaign was a huge success and the credit card boom in America and around the world took off.

    The merchant or business owner would then deposit the sales slip at the bank; after which the customer was billed for the amount. John was a banker who lived in Brooklyn, New York, and one of the stipulations of the card was that all transactions had to be made locally. Everyone also had to have an account with his bank in order to use the card.

    Credit Cards and Their Makings

    The Diner’s Club Card, used primarily for eating out, is the next major leap the credit card made three years after John Biggin’s Charg-It card. This new card was initially only a piece of card board and came about when Frank McNamara famously went out to eat for lunch but upon receiving the bill realized he had forgotten his wallet.

    Somehow things turned out for the better and he was able to pay, but the mishap sparked the ingenious idea which gave birth to the Diner’s Club Card. The card was invented to provide for that extra convenience which cash has never provided, but it wasn’t technically a credit card because the balance had to be paid off entirely each month. The Diner’s Club Card is known as a charge card and became extremely popular for its time.

    In 1958 American Express invented the very first plastic card. All former cards had been made out of cardboard, celluloid, or paper. American Express’s revolutionary little purple plastic card soon allowed them to claim a million card holders.

    Twenty years after its beginning, the Diner Club Card was also replaced with plastic. Today the credit card is the most convenient form of payment as well as the most used.


    Christopher - BSc, MBA

    With over two decades of combined Big 5 Banking and Agency experience, Christopher launched Underbanked® to cut through the noise and complexity of financial information. Christopher has an MBA degree from McMaster University and BSc. from Western University in Canada.

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