The history of credit cards is a story told in phases. When credit cards started, in the early 1900s, the cards were issued by individual stores or gas stations. The cards were designed and issued to create brand loyalty and encourage customers to return based on the convenience of having established credit at the merchant.
Credit Card as Charge Card
The next phase began with the Diners Club card in 1949. The Diners Club card was able to be used at multiple establishments but was actually a charge card. Unlike a credit card that allows a person to carry a balance, a charge card is a card that requires that the balance be paid at the end of every month.
Credit Cards for Entertainment
Diners Club’s innovation was that it inserted itself between the consumer and the retailer. This allowed a consumer to carry one card that could be used at multiple retailers. However, it remained primarily used for travel and entertainment.
The predecessor to Visa carried this innovation forward in the next phase. Created by Bank of America in 1966, the BankAmericard created the first general-purpose credit card that allowed the customer to maintain a revolving balance and use the card at multiple retailers. MasterCard created a similar network.
More Credit Card Networks
Over time, other companies like Discover and American Express have joined the ranks of financial networks that allow consumers to buy today and pay tomorrow. While this financial freedom has been a boom to the economy because it allowed consumers to enjoy consumer items today and pay for them tomorrow and to the consumer because it allowed immediate improvements to American families standard of living, the impact of the proliferation of credit is not fully known.