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History of Credit Cards

Credit Cards have become an absolute necessity so much so that we take them for granted. A number of money experts have already slated the paper currency as a dying dinosaur. But have you ever wondered where did this plastic money of credit card come from? What is the history of credit cards? Whose genius was it anyways? Though the idea of "have now, pay later" existed since the 1700s but it was only in the early 20th century that the banks started taking credit protection in form of overdrafts. In 1914 Western Union gave its customers a metal card allowing them interest free deferral payments. This gave their clients a freedom to spend beyond their means. However, the idea of actual credit card did not strike 'father of Credit Cards', Frank McNamara until he forgot his wallet back home while going out for a dinner with friends.

This embarrassing moment was just too much for McNamara. Thus, he created the "Diner's club card". It was initially a businessmen's card for dinners and retails purchases while traveling but by the end of 1950 it had become a phenomenon. A national frenzy that began with just 200 customers who could use it in 27 restaurants, it swelled to such massive size that it spread over the whole USA with 20000 customers and more varied kinds of retailers subscribed to it as credit providers. The Diners card charged seven percent for each individual transaction with card subscribers paying a three-dollar annual fee.

Stores and service companies readily extended this facility. They could benefit from it since the customers spent more than they would if they had to pay the cash up frontally. The General Petroleum Corporation was one of the first companies to offer an actual credit card that allowed for fuel and automotive repair purchases to its employees. They could use their card and make payments towards these things with portions of their paychecks. The monopoly of Diner's club was short lived. McNamara withdrew his share of money from the company in 1952. Very soon American Express launched its similar yet more generalized credit card and Bank of America came out with BankAmericard (now called VISA) in 1958. Master card came up in 1966. These new market players overpowered the old titan. While McNamara created credit cards, John Biggins is acknowledged as the inventor of the bank credit card.

He worked at the Flatbush National Bank of Brooklyn in New York. In 1946, Mr. Biggins developed the "Charge-It" program in which local merchants who accepted the card would deposit sales slips into the bank and the bank billed the customer.


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