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 Credit
Cards History
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The first recorded use
of credit cards in the United States occurred in the
early 1900s, when individual department stores,
communication companies, hotels and other travel
companies, oil companies, and various other
businesses began issuing small metal cards to their
preferred customers. These cards, sometimes called
"metal money", offered customers an interest-free,
deferred payment option. Unlike today's cards,
customers could only use their "metal money" with
the company or business that issued the card.
The popularity and use of this type of charge card
increased until World War II when all use of credit
and charge cards was prohibited. After the war
ended, however, charge cards bounced back in use and
popularity, becoming even more accessible to the
general public.
When consumer trends indicated that customers with
charge cards were spending more than other
consumers, banks became very interested in the
potential profit behind the credit card industry.
The Franklin National Bank in New York issued the
"Charge It" card in 1951, allowing customers to make
charges with local retailers. Impressed by the
success of the "Charge It" card, other local banks
introduced similar services to their local
customers.
Universal credit cards emerge
In 1950, Diner's Club introduced the first universal
credit card. Designed especially to meet the travel
and entertaining needs of business men, the Diner's
Club card could be used at a variety of restaurants,
retailers, and other businesses. American Express
released their own major universal card in 1958.
Bank of America introduced the first
"revolving-credit" card, called BankAmericard in
California in the late 1950's. The
"revolving-credit" plan gave customers the option to
pay their credit card debt all at once, or pay a
monthly minimum with interest over a longer period
of time, marking an important milestone in the
development of the credit card industry .
In the mid-60s Bank of America began licensing other
banks across the nation to issue BankAmericards,
allowing smaller banks to offer expanded services to
their local customers. Master Charge followed suit,
and by 1969 almost all independent bank charge cards
were licensed through either BankAmericard or Master
Charge. To facilitate international expansion,
BankAmericard changed their name to Visa in 1976.
Master Charge followed by changing their name to
MasterCard.
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