Credit Card History


Credit card abuse is a factor in the current credit crisis. Visa and MasterCard can be easy cash. Amidst all this chaos many ask when were credit cards first introduced?

The concept of credit has been around for centuries. It’s believed by historians that credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange, which was the forerunner of bank notes, was established in the 14th century. Paper money followed in the 1600’s.

The first advertising for credit was placed in 1730 by Christopher Thornton who offered his furniture for weekly payments.

From the 18th century to the early 20th century, tallymen sold clothing in return for weekly payments. They were called tallymen because they kept a tally of what people bought on a wooden stick. One side of the stick had notches representing debt and the other side recorded payments.

In the 1920s the “buy now and pay later” system was introduced in the U.S. It could only be used in the stores which issued it.

Also in the 1920s, according to Encyclopedia Britannica credit cards originated in the U.S. when individual firms (such as oil companies and hotel chains) issued them to customers for use within their firm.

First Bank Credit Cards

John Biggins of the Flatbush National Bank of Brooklyn invented the “Charge-It” program between bank customers and local merchants. Merchants deposited sales slips into the bank and the bank billed the customer who used the card.

Diners Club Credit Card

In 1950 the Diners’ Club issued their credit card in the U.S. This card was invented by Diners’ Club founder Frank McNamara and was intended to pay restaurant bills. The Diners’ Club card at first was a charge card rather than a credit card. The full balance was paid off at the end of the month.

In 1958 American Express issued their first credit card. Bank of America issued the BankAmericard (now Visa) bank credit card in late 1958.

Popularity of Credit Cards

Credit cards were first promoted to traveling salesmen to help them when they were on the road. In the early 1960s more companies offered credit cards advertising them as a time saving device rather than a form of credit. American Express and MasterCard quickly became huge successes.

By the mid 1970s the U.S. Congress began regulating the credit card industry by banning practices such as mass mailing of active cards to those who had not requested them. However not all regulations have been user friendly. In 1996 the U.S. Supreme Court in Smiley vs. Citibank lifted restrictions on the amount of late penalty fees that can be charged. Deregulation has allowed interest rates to soar to very high rates.

Interesting Facts

There were 984 million bank-issued Visa and MasterCard credit cards and debit card accounts in the U.S. in 2006. (Source: Visa USA, MasterCard International)

Visa and MasterCard sales in 1977 were $3.61 billion. In 1987: $26.37 billion. In 1997: $76 billion and in 2007 $240.52 billion.