Credit cards have a long and rich history, from their metal predecessors to the regular internet search for “Bank of America credit card preapproval.” From their first issuance to the present, credit cards have evolved to reflect changes in technology and consumer behavior.

This article will explore key events that made credit cards the standard financial tool. We’ll look into the history of the credit card, spanning their beginnings, major developments, and more.  

What is a credit card?

While most people use a credit card, how much do we actually know about it? Knowing what credit cards are is essential to understanding their history, so let’s get on the same page. 

Credit card definition

Let’s start with the definition of a credit card. A credit card is a physical card tied to a type of loan. It is an example of a revolving loan, which allows you to borrow money up to a specific limit.

A bank, the primary distributor of credit cards, decides this limit based on your credit history and other factors. When you use your card, you can repay what you spent and use it again.

The credit card stands out because it offers open-ended credit. Meaning users can borrow up to a certain amount and decide to pay off the full balance each month or carry it over to the next month, paying interest on the remaining balance. 

History of the credit card: the timeline   

To better visualize the history of credit cards, here is a timeline that captures major milestones and shows how they have evolved into the essential financial tools we use today.  

When were credit cards invented?  

Some argue that credit cards as we know them popped up in the 20th century; others say versions of lines of credit date as far back as the Bronze Age.   

For ease (and time), we’ll focus on the history of modern credit cards as we know them. Credit history, lines of credit, and more go hand-in-hand with the evolution of the credit card, which revolutionized our financial transactions and commerce.  

Without further ado, here’s a look at the history of the credit card.

1930  

The Charga-plate bookkeeping system was introduced in the 1930s and used until the 1950s. This system comprised of dog-tag-style metal plates issued by department stores to carry customer account information, is considered the prototype of the modern credit card. 

For example, Macy’s or Bloomingdale’s shoppers could charge purchases to their accounts using these plates, simplifying transactions and fostering brand loyalty.

1946  

The Charg-It system, created by John C. Biggins of Flatbush National Bank of Brooklyn, NY, developed a card system allowing people within a two-square-block radius to charge purchases from multiple vendors to the bank.

This innovation benefited local communities, connecting small businesses and consumers under one system, effectively demonstrating the concept of a centralized credit network.

1950  

It all began with Diners Club, the first card that allowed members to pay for meals at selected restaurants without cash. Members could dine at upscale New York establishments, charge the bill to their Diners Club card, and settle it later. You could say it laid the foundation for the “buy now, pay later” model.

1958  

American Express launched its credit card, going beyond dining to encompass a wider selection of services. The main one is travel, where people could use their American Express cards to book hotels and flights.

1966  

Bank of America (BoA) unveiled the BankAmericard program (later rebranded as Visa), pioneering revolving credit, a cornerstone of contemporary credit card systems. With revolving credit, cardholders could pay off part of their balance and carry the rest forward, which was revolutionary for middle-class Americans who wanted financial flexibility.

1975  

The integration of magnetic stripe technology on credit cards transformed transaction processing, significantly enhancing the speed and security of payments. For example, customers could swipe their cards at stores like Sears, drastically reducing checkout times and improving transaction accuracy.

1980s  

The expansion of electronic payment systems facilitated global credit card usage for various financial transactions. Credit cards like MasterCard and Visa became widely accepted worldwide, allowing travelers to pay for services overseas without needing foreign currency. 

1990s  

The internet era gave more room to experiment with cashless payment methods, mainly through online shopping. Amazon, launched in 1995, became one of the first e-commerce giants to use credit cards for online transactions, revolutionizing how people shopped for books and other goods.

2000s  

Chip technology, known as EMV (which stands for Europay, Mastercard, and Visa), greatly improved the security of credit cards. Unlike magnetic stripe cards with static data that can be easily copied, EMV cards have embedded microchips. These microchips create a unique code for each transaction, which helps prevent counterfeit fraud.

If a chip-enabled card is stolen, a thief cannot easily replicate its security, making it hard to produce fake cards. The UK and France started using EMV standards in the early 2000s, and the U.S. followed in 2015. This change was part of a global effort to reduce the increasing fraud linked to magnetic stripe cards.

2010s  

EMV paved the way for modern contactless payments and digital wallets, as the infrastructure allowed for secure tap-and-go transactions. Shoppers today can tap their EMV-enabled cards or phones at payment terminals without sacrificing security.

Contactless payment technology introduced quicker and more convenient transactions through a simple card tap. For example, commuters in cities like London could tap their contactless cards to pay for subway rides, eliminating the need to purchase separate transit cards or wait in line. 

2020s  

Then comes the fusion of credit cards with mobile payment systems and digital wallets, such as Apple Pay and Google Wallet (other innovations from the 2010s), the latest step in credit card convenience and security.

Now, people leave their physical cards at home and make secure purchases with their smartphones or smartwatches at grocery stores, restaurants, or even vending machines. 

A sidestep to debit cards

Let’s briefly explore debit cards, which are closely related to credit cards.

What are debit cards? 

While debit and credit cards share the same basic mechanics—a simple plastic card and a chip—they serve different purposes. Debit cards are also payment cards, but they allow people to pay directly from their bank accounts.

Unlike credit cards, which draw from a credit line that must be paid back later, debit cards use funds already in your account, providing a more immediate form of payment. In short, a debit card uses your money rather than putting you at risk of debt. 

When were debit cards invented?  

What we now know as debit cards were invented in the late 1960s. These aimed to simplify banking transactions and reduce the need for physical currency. 

When did debit cards come out?  

Debit cards first appeared in the consumer market in the mid-1970s. They introduced a new form of payment that directly accesses funds from the user’s bank account, offering a convenient alternative to checks and cash.

Wrapping up   

The credit card has become an incredible tool, but with every benefit (and monumental impact) comes its dangers. Now that we’ve reviewed the history of the credit card, you should have a better understanding of its significance. However, since a credit card is an example of a revolving loan, we need to recognize its biggest downfall: debt.

The credit card has empowered consumers by offering them the flexibility and convenience to manage their spending and borrowing effectively. But mishandling this can come with immense consequences.  

If you or someone you know is struggling with credit card debt, there are resources available. Take the first step toward financial relief by exploring your options today. Check out our blog for more insights and educational content on managing debt.

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