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A Brief History of the Credit Card

Published April 17, 2014

Did you know over 10,000 credit card transactions take place every second? Though it seems like just about everyone owns at least one credit card today (it’s actually estimated that the average American owns around three credit cards), it wasn’t that long ago when paying with plastic was simply unheard of.

a brief history of the credit cardA Look Back

The first written account of money as a means of a physical exchange dates back thousands of years, but the whole idea of cold hard cash (and by cold hard cash I mean coins made out of precious metals like gold, silver and obsidian) has been dated back to around 2,000 B.C., where metal currency was found to be used in ancient Babylon, among other civilizations.

Before the emergence of coins, purchases were made by ways of trade and/or bartering. As our ancestors became less nomadic and instead began settling down, livestock quickly became the sole means of exchange. Not long after — with the rise of agriculture and farming — crops became the next preferred method of tender.

Although various forms of credit have been used throughout history, the whole idea of the ‘credit card’ is relatively new.

From Metal to Paper to Plastic

The very first credit card, so to speak, was invented in 1946 by a Brooklyn banker named John Biggins. Originally called the “Charge-It” card, it was the first credit card that was actually issued by a bank. There were various other prototype-like credit cards before, but this was the first one to actually incorporate a bank into the mix.

Biggins worked at Flatbush National Bank, and his credit system worked as a link between the bank and its customers. Although the idea was incredibly successful, there were two major caveats: 1) card owners had to be bank members, and 2) people could only make local purchases (since every purchase had to go through the bank itself first).

While Biggins was hard at work trying to perfect his “Charge-It” system, another type of card was coming into play. A few years after Biggins’ invention, the Diners Club card was created and immediately caught the eye of nearby bankers and investors.

Invented by Frank McNamara, who was also the Diners Club co-founder, it was created with the sole intent as an easy way to pay for restaurant bills.

As various sources suggest, the idea for the Diners Club Card was sparked when McNamara was having dinner with a few clients and coworkers. When the bill came, McNamara reached for his wallet, but to his dismay realized he had forgotten his cash at home. Terribly embarrassed, he had to phone his wife to come pay the tab.

The next day McNamara began thinking about a way to simultaneously make payments easier and help avoid similar embarrassing situations. Hence the Diners Club Card, which, believe it or not, could only be used at 27 participating restaurants. Only about 200 people were ever able to actually use them.

From Yesterday to Today

Apparently, the Diners Club card was a huge success, and not long after, American Express followed suit and created their own credit card. Not far behind was Bank of America, who issued their own card later that same year.

Both credit cards immediately gained popularity—leading to the American Express card becoming the most popular card in the country. Today, credit cards have become the most widely used monetary system in the world.

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