The History of Credit & Debt – History of Credit Cards

The history of the credit card is anticlimactic after everything you have read about the history of credit and debt so far. The credit token was developed in the late 1800’s because stores wanted a faster way to complete transactions rather than have to lookup individual information or record the name and address of the buyer every time. To complete a transaction the clerk only had to record the identification number from the back of the token on the sales slip.

Until the arrival of the revolving bank card, all other card bills were required to be paid in full upon receipt.

Quiz: What year do you think this letter was written? Beacon Oil Company sent a letter to its new credit card holders and stated the customer would receive monthly statements for their convenience charges and should hand the credit card to the attendant who would place it in a small machine which would imprint the name and address on the charge slip. The letter asks the recipient to sign the card on the back as protection against fraudulent use. What was your guess? Look at the bottom of the page for the correct answer.

Credit cards have been around for longer than people imagine.

Earliest Uses

In 1890 Pauline Curtis wrote a short story in which she mentioned the credit card. “Jim found opportunities to keep himself provided with his lawless indulgences till the end of the year and the next credit-card. Much that he wanted was not to be had from the regular government sources, but it was easily paid for by an indirect use of his card.”

A second early reference is from Elton Smith, again in 1890. “But for the most part, he devoted his time to his house and grounds, expending the surplus of his credit card in beautifying the latter, and then, through pure selfishness, put a high fence around all to shut others out from the enjoyment of their beauties.”

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While store or book credit allowed irregular repayment and installment loans required regular repayment, the credit cards of the early 1950s combined both types of credit. In 1951, Franklin National Bank released the first revolving charge card. The revolving line of credit was an attraction for early customers. Using the revolving card a customer could borrow money, repay it, borrow again, repay some, borrow again, and all without having to be approved for each new line of credit as long as the borrower remained under their credit limit.

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Hundreds of other banks followed the example set by Franklin National Bank and Flatbush National Bank by issuing credit cards for use at local merchants. But credit card customers wanted to use their cards outside of their local area. The organizations that are now called Visa and MasterCard sprang up to create interchange, a nation-wide system designed to settle credit card transactions between banks, merchants and customers. Today, with help from Visa and MasterCard, financial institutions are marketing credit cards to people all over the world.

Bank Credit Cards

The accepted inventor of the bank credit card was John Biggins at the Flatbush National Bank of Brooklyn in New York. The year, 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.

Types of Cards

There are four major types of credit cards:

Credit tokens or coins – Front | Back
Metal charge plates – Store Plate | Common Charge Plate
Paper cards – Sample
Plastic cards – Sample

The credit token or card is and was simply an instrument to complete a credit purchase. Remember, credit had existed in America from the time of the Pilgrims and was heavily used as early as the 1700s.

A. 1930

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