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history of credit cards, borrowing, and lending

A short history of credit cards

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The evolution of borrowing and lending, from the 1800s to today.

We swipe our credit cards every day. But have you ever wondered how these cards came to be?

The concept of credit stretches back to ancient times. Back then, people used instruments like the tally stick to record debt. With this method, each party of a transaction would make notches in the stick to signify debt owed. Then the stick would be broken in half so each party could keep a record.

Fast-forward to the late 1800s, when charge coins came into fashion. Made of aluminum or steel, these coins were typically issued by department stores. During a purchase, the coin was used to imprint a customer’s information onto a sales slip.

These coins — and charge plates of the early 1900s — were precursors to the modern credit card. In short order, retailers began adopting the rectangular cards we know today.

How early charge cards were used

In the early 1920s, oil companies, airlines and department stores began giving out “courtesy cards.” Customers could use these cards only with the issuing companies.

In 1946, banker John Biggins created the first bank-issued card, calling it the Charg-It. The idea behind this card was simple: A customer used the card to buy something from a local merchant. The local merchant sent the transaction to Biggins’ bank, which paid the merchant and collected money from the customer. There was one small problem, however: The Charg-It could be used for local transactions only.

A solution arrived in 1950, when the Diners Club introduced the first universal card. Instead of being tied down to one establishment, Diners Club members could use the card for many purposes — especially travel and entertainment. Initially, members could use their cards at 27 restaurants in the New York City.

The Diners Club Card was a charge card — cardholders had to pay their bill in full each month. It came with a $5 annual fee, which is about $49 in today’s dollars. Diners Club also charged merchants 7% to 10% for every card transaction.

Not to be outdone, the American Express Company introduced its Green Card in 1958. Like the Diners Club Card, it was a travel-and-entertainment card that could be used widely. Though American Express was second to market with charge cards, it was first to introduce plastic cards. (Diners Club switched to plastic in 1961.)

The BankAmericard and revolving credit

But 1958 wasn’t just the year of the Green Card: It was also the year of the BankAmericard.

The BankAmericard was different because it was a general use card. Customers could use it anywhere as long as merchants accepted it. It was also the first card with revolving credit. With revolving credit, consumers didn’t need to pay their balances in full each month but could instead pay off their cards over time.

BankAmericard was initially released in California. It was such a success there that Bank of America started licensing it to banks nationwide in 1966. Soon, international banks started issuing the card — you could find it in Canada, Ireland, Japan and Great Britain.

Seeing the success of the BankAmericard, manufacturers Chemical Bank and Hanover Trust Co. created the Eastern States Bankcard Association. In collaboration with other regional bank groups, they started issuing cards through a network they called the Master Charge Plan.

At the turn of the decade, the BankAmericard’s issuing banks created National BankAmericard Incorporated. In 1976, BankAmericard was renamed Visa. Master Charge followed suit three years later, becoming Mastercard in 1979. And in 1985, Sears, Roebuck and Co. jumped into the credit card market with its Discover card.

Credit cards and the 2008 financial crisis

Revolving credit was an incredible innovation, but it provided consumers with more opportunities to accumulate debt.

This wasn’t a huge problem, as consumers were highly judicious about what they bought on credit. As recently as the 1980s, most Americans didn’t buy nonessential items on credit. But that’s changed over time. Now, according to a recent CreditCards.com survey, roughly 17% of credit card owners use their card on purchases of $5 or less, an uptick of 5% from the year prior and a sign of increasingly casual credit usage. It’s also normal to buy luxuries on credit, and today’s households that carry debt have an average of $16,000 in credit card balances.

In 2008, Americans held $951 billion in credit card debt. When the global financial crisis hit that year, many Americans found themselves charging more on credit cards for essentials like food and housing. With more debt, it became more difficult for consumers to make payments — and many of them defaulted.

Many card providers took advantage of these defaults with abusive business practices. They’d hike interest rates without notifying consumers, levy egregious overlimit fees and add confusing rules to card terms. Many consumers spiraled further into debt as a result.

Credit CARD Act of 2009

In response to shadowy card-provider practices, the US Congress introduced the Credit Card Accountability Responsibility and Disclosure (CARD) Act in 2009. The bill created many important protections for consumers that included:

  • Notifications for rate increases. Card providers must let you know 45 days in advance if they’re increasing your interest rates.
  • An end to retroactive rate increases. Prior to the Credit CARD Act, card issuers could retroactively raise interest rates after customers defaulted.
  • A legal ban on double-cycle billing. This now illegal practice allowed providers to charge interest on your current and previous month’s balance. It was widely considered unfair, because consumers were charged even when they’d already paid off purchases.

With its many consumer protections, the Credit CARD Act passed Congress with bipartisan support. It was signed into law by President Barack Obama on May 22, 2009.

The future of credit cards

EMV (“Chip”) Technology

Credit cards have come a long way, and they’ll inevitably evolve as financial payments change.

We’re used to the magnetic stripes on our cards, but this technology is highly susceptible to fraud. In recent years, Americans have been introduced to EMV or “chip” cards — technology that the rest of the world has been using for a long time.

EMV cards are difficult to clone and use more advanced encryption, offering a higher level of protection to consumers. Very soon, we’ll do away with swiping our credit cards altogether. Instead, we’ll “dip” our cards instead, inserting them into chip readers.

Beyond Plastic

This all might be moot, however, in light of big technological advancements in the payments industry. As time goes by, we may not need credit cards at all and instead use our digital wallets.

Many payment-industry experts believe that mobile devices and wearables are on their way to replacing credit cards. In a decade or two, we may use our smartphones for all of our payments. And by midcentury, we may be paying for items with microchips on (or in) our wrists.

A future without credit cards isn’t so far-fetched. We can already make mobile payments through services like Apple Pay and Android Pay. These platforms can be more secure than credit cards, because they don’t transmit card numbers when consumers make purchases. In time, they may become a universal standard — just like credit cards are today.

Compare credit cards

Name Product Filter values Rewards Purchase APR Annual Fee
2x points on travel and dining. 1x points on all other purchases
18.24% to 25.24% variable
$95
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months.
3% cash back on all purchases in your first year up to $20,000 spent, then unlimited 1.5% cash back on all purchases
17.24% to 25.99% variable
$0
Earn 3% cash back on all purchases in your first year up to $20,000 spent. After that earn unlimited 1.5% cash back on all purchases.
Earn unlimited 1.5% cash back on your purchases
15.24% to 26.24% variable
$0
Earn a $150 statement credit after you spend $1,000 or more in purchases with your new card within the first 3 months of card membership. Rates & Fees
5% back in rotating categories up to $1,500 combined each activated quarter, then 1% after that and on all other purchases
17.24% to 25.99% variable
$0
0% intro APR for 15 months from account opening on purchases and balance transfers.
N/A
14.24% variable
$0
Enjoy a 0% intro APR on balance transfers for the first 15 months, then a low ongoing APR of 14.24% variable.
3x points on dining and travel after earning your $300 travel credit. 1x points on all other purchases
19.24% to 26.24% variable
$450
Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months.
3% at US supermarkets on up to $6,000 per year, then 1%. 2% at US gas stations and select US department stores and 1% on all other purchases
15.24% to 26.24% variable
$0
Earn a $150 bonus statement credit after you spend $1,000 on purchases in the first 3 months. Rates & Fees
6% at US supermarkets on up to $6,000 per year, then 1%. 3% at US gas stations and select US department stores and 1% on all other purchases
15.24% to 26.24% variable
$95
Earn $200 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & Fees
5% on up to $2,000 each activated quarter on two categories combined (1% after), 2% on one everyday category and 1% on all other purchases
16.24% to 25.74% variable
$0
When you spend $500 on your card within the first 90 days, you’ll receive a $150 cash back bonus.
2x points on gas, groceries and airlines, whichever you spend the most on each month, 2x points on cell phone services and charities and 1x points on all other purchases
16.24% to 26.24% variable
$0 intro annual fee for the first year ($49 thereafter)
Earn 25,000 enrollment FlexPoints worth $375 in travel after spending $2,000 in the first 4 months.
2x miles at restaurants, on hotel stays and on purchases from United and 1x miles on all other purchases
18.24% to 25.24% variable
$0 intro annual fee for the first year ($95 thereafter)
Earn 40,000 miles after spending $2,000 in the first 3 months. Earn an additional 20,000 miles after spending $8,000 in the first 6 months.
5x points on flights booked directly or flights and hotels booked through American Express Travel. 1x points on all other purchases
None (Charge Card)
$550
Get 5x Membership Rewards® points on flights booked directly with airlines or with American Express Travel and 5x points on eligible hotels booked on amextravel.com. Rates & Fees
2x miles on Delta purchases and 1x miles on all other purchases
17.99% to 26.99% variable
$0 intro annual fee for the first year ($95 thereafter)
30,000 bonus miles after you use your new card to make $1,000 on purchases within the first 3 months and a $50 statement credit after you make a Delta purchase in the first 3 months. Rates & Fees
2x miles at US restaurants and on purchases made directly with Delta and 1x miles on all other purchases
17.99% to 26.99% variable
$0
Earn 10,000 bonus miles after spending $500 in purchases on your new card in your first 3 months of card membership. Rates & Fees
7x points on Hilton Honors purchases, 5x at US restaurants, US supermarkets and US gas stations, 3x on all other purchases
17.99% to 26.99% variable
$0
Earn 75,000 Hilton Honors™ Bonus Points after you spend $1,000 in purchases on the card within your first 3 months of card membership. Rates & Fees
12x points on Hilton Portfolio spending, 6x at US restaurants, US supermarkets and US gas stations, 3x on all other purchases
17.99% to 26.99% variable
$95
Earn 125,000 Hilton Honors™ Bonus Points after you spend $2,000 or more in purchases with your new card within the first 3 months of card membership. Rates & Fees
5% back at US office supply stores and on US wireless telephone services on up to $50,000 annually (then 1%). 3% on a chosen category on up to $50,000 annually, then 1% after and on everything else
14.49%, 19.49% or 21.49% variable
$0
Save on interest with a 0% intro APR on purchases for 15 months. After that your APR will be 14.49%, 19.49% or 21.49% variable.
2x points on everyday business purchases on up to $50,000 annually, then 1x points
15.49%, 18.49% or 21.49% variable
$0
Earn 2x Membership Rewards® points on everyday business purchases on up to $50,000 with no category restrictions.
4x points on two categories on up to $150,000 in combined purchases annually, then 1x points after that and on all other purchases
16.49%, 20.49% or 24.49% variable
$295
Earn 35,000 Membership Rewards® points after you spend $5,000 on eligible purchases with the Business Gold Card within the first 3 months of card membership.
1.5% discount when you pay early, with no cap on what you can earn back
None (Charge Card)
$0 intro annual fee for the first year ($250 thereafter)
Get a 1.5% discount when you pay early, with no cap on what you can earn back.
2x points on purchases through Amex Travel and 1x points on all other purchases
$0 intro annual fee for the first year ($95 thereafter)
Earn 5,000 Membership Rewards® points after your first purchase on the card within the first year of card membership.
6x points at Marriott Bonvoy hotels; 4x points at US restaurants, US gas stations, and on US wireless telephone and shipping services; 2x points on all other purchases
17.99% to 26.99% variable
$125
Earn 100,000 bonus points after you use your new card to make $5,000 in purchases within the first 3 months of card membership.
5x points on flights and prepaid hotels through Amex Travel, 1.5x points if you spend $5,000 on a single eligible purchase on up to 1 million additional points per year and 1x points on all other purchases
None (Charge Card)
$595
Earn 50,000 points after spending $10,000 and an extra 25,000 points after spending an additional $10,000 on purchases in the first 3 months from account opening.
Earn 2x miles on every purchase made directly with Delta and earn 1x miles on all other purchases
17.99%, 21.99% or 26.99% variable
$0 intro annual fee for the first year ($95 thereafter)
Earn 30,000 bonus miles after you make $1,000 in purchases on your new card within your first 3 months. Plus earn $50 after you make your first Delta purchase in the same timeframe.
2x miles on direct Delta purchases and 1x miles on all other purchases
17.99%, 21.99% or 26.99% variable
$195
Earn 5,000 Medallion Qualification Miles (MQMs) plus 35,000 bonus miles after spending $1,000 in the first 3 months. In addition, earn a $100 statement credit after you make a Delta purchase with your new Card within your first 3 months.
2x miles on direct Delta purchases and 1x miles on all other purchases
17.99%, 21.99% or 26.99% variable
$450
Earn 40,000 bonus miles and 10,000 Medallion Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in your first 3 months.
12x points at Hilton hotels, 6x points on select business and travel purchases and 3x points on all other purchases
17.99% to 26.99% variable
$95
Earn 125,000 Hilton Honors Bonus Points after you spend $3,000 in eligible purchases within the first 3 months of card membership.
1% cash back to your choice of nonprofits, K-12 schools, colleges and religious organizations
16.24% to 22.24% variable
$0
1% cash back to the nonprofits, K-12 schools, colleges and religious organizations of your choice.
1x points on all purchases with 2% point value when you redeem for airfare and 1.5% for cash back
17.24% variable
$495
Receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
1x points on all purchases with 2% point value when you redeem for airfare and 1% for cash back
17.24% variable
$195
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
1x points on all purchases with 2% point value when you redeem for airfare or cash back
17.24% variable
$995
Earn 2% point value when redeemed for airfare or cash back through the Luxury rewards program.
2x miles on all purchases
18.24%, 22.24% or 25.24% variable
$0 intro annual fee for the first year ($89 thereafter)
Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days.
Earn 3x points on travel — or 4x points if you’re a PenFed Honors Advantage member — and 1.5x points on all other purchases
12.99% to 17.99% variable
$0
Earn 25,000 bonus points when you spend $2,500 in the first 90 days from account opening.
2% cash back for all PenFed Honors Advantage members and 1.5% cash back on all purchases
11.99% to 17.99% variable
$0
2% cash back for all PenFed Honors Advantage members and 1.5% cash back on all purchases made with your card.
Earn 5x points on gas at the pump and 3x points on groceries. Earn 1x points on all other purchases.
11.99% to 17.99% variable
$0
Earn 5x points on gas at the pump and 3x points on groceries. Earn 1x points on all other purchases.
3% cash back on up to $10,000 in the first 12 months, then 1.5% on all purchases
15.24%, 19.24% or 25.24% variable
$0
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees.
N/A
14.24%, 20.24% or 25.24% variable
$0
An 15 months 0% intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
15.24% to 26.24% variable
$0
Build your credit with no fees: Apply if you're new to credit or have a fair to good score.
See terms
See terms
The First Access Card is a true Visa® credit card that does not require perfect credit for approval.
9.24% to 17.99% variable
$0
Low APR on all purchases including cash advances.
11.99% to 17.99% variable
$0
Earn a $100 bonus after spending $1,500 on purchases in the first 90 days from account opening.
1% cash back on all purchases or in categories based on Credit One Bank’s discretion
20.24% to 26.24% variable
$0 to $99
Get 1% cash back rewards on eligible purchases.
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV.
20.24% to 26.24% variable
$0 to $99
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV.
Get 1% cash back rewards on eligible purchases and double cash back rewards at the NASCAR.com Superstore
20.24% to 26.24% variable
$0 to $99
Get 1% cash back rewards on eligible purchases and double cash back rewards at the NASCAR.com Superstore.
See terms
$0 to $99
The Indigo® Platinum Mastercard® Credit Card is specifically designed for those with less than perfect credit.
9.99% fixed
$48
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.
19.64% variable
$35
A secured Visa® credit card that helps you build your credit quickly.
N/A
14.74% variable
$39
No minimum credit score and no credit history required.
N/A
10.74% variable
$49
Build or rebuild your credit with this secured card.

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