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The 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? 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.
Joseph Kenny is the webmaster of the credit card
comparison sites http://www.credit-cards-info.com/
and also http://www.creditcards121.com/
Article Author: Joseph Kenny
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