Ask Mike: The first credit card
Hey Guys,
The holidays are fast approaching and millions of people will put their purchases on plastic. As of 2010, there were more than 600 million credit cards held by U.S. consumers, according to CreditCards.com. How did the trend get started? Who created the credit cards?
Believe it or not, Diners Club was the first real credit card. The story of its invention is the stuff of entrepreneurial lore. A businessman named Frank McNamara was eating dinner at a New York City restaurant called Major’s Cabin Grill. While eating, McNamara realized he’d forgotten his wallet.
McNamara called his wife, who came to the restaurant and helped pay the bill. Understandably embarrassed, McNamara vowed never to be in that position again. He and a partner created the Diners Club, which launched a year later, allowing members to sign a bill and pay later.
Of course, the first cards looked a lot different than they do now. Early Diners Club cards were cardboard and didn’t include a magnetic strip on the back.
Originally, Diners Club cards were accepted at 14 New York City restaurants and were held by just a select few. These days, cards of all sorts are accepted everywhere, from hotels to movie theaters to (much to McNamara’s delight) restaurants around the world.
Thanks for reading,
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I thought I remembered that Diners’ Club was the first.
Recently, in the course of discussing with a friend his post-apocalyptic novel in which people are trying to rebuild civilization, I suggested that perhaps credit cards were something the survivors didn’t want to revive. I love mine, but I think credit cards and easy credit in general have created far too many problems.
My mother had a charge card from a local department store. It was so old it was an aluminum stamping and they called them charge plates. You put them in a machine with a carbon receipt and then slide the bar over.
Sounds more like a cheque than a credit card.
happy thanksgiving, and thanks Yahoo Answers!
i remember those metal charge plate things at sears and penny’s with my parents many years ago (60′s?).
and i worked at a retail golf course just 3 years ago … we kept a credit card manual “slider” and duplicate carbon receipts, just in case the computers went down. same function.
i don’t know, but i imagine cards went to plastic so the magnetic stripe could be added and not be interfered with by the metal.
Yes, the bar sliding carbon charge plate is not yet gone. I have worked in a few places that kept one in the back office in case the power went out. I am only 33, but i recall them well. After the swipe carbon copies your info, you then sign the carbon copy. This machine is why cards have raised lettering and numbers, to allow for the carbon transfer! What a weird memory, thanks for conjuring that up.
Oh, I take that back. I see now, charge plates are even older versions. Haha
good
It was the first in that it could be used at unconnected businesses of the restaurant type. But gas cards technically were similar in that gas stations were often individually owned and preceded DC by 30 years. Store cards could only be used at one store or chain and just gave one a card to present rather than claiming to be so and so when paying (leaving anyone in earshot to make the same claim later…). So Diners Club (which was a merger of existing competitors, not a shiny new venture) sort of broke new ground, at least for the average not-so-average guy. The Air Travel Card preceded it by at least 20 years and did the same across different airlines but was definitely for the above-average guy. But DC was in no way a general credit or charge card in that one could use such a card in unrelated businesses of different types, like one can with modern credit cards. That was Bank Americard.
Yes I remember Diners Club and Carte Blanche issued to rich people and business executives, a very small number. The only credit card the public had were department store charge-a-plates, metal with raised letters run through a machine leaving the imprint through carbon paper. And only married women could get any credit. Women couldnt get credit cards.
I remember Diners Club from 1949 when I worked in downtown Chicago at a large bank. Part of my job was typing the agenda for the monthly board meeting. They were planning to get corporate Diners Club cards for the bank board of directors, to be discussed at the meeting. I asked my co-workers what that was, and they didn’t know. How did I remember that from all those years ago?
American Express?
people we must realize the “credit” card technically was around pre civil war. Shop owners would allow buyers to pay monthly or weekly based on name alone. I’m sure we didn’t invent the idea of borrowing so no doubt someone will shortly provide a history lesson of early B.C. monetary systems
When I was a young lad, the local stores of our town would carry a charge account for anyone worthy of credit. Payments had to be made weekly, in cash, at the store. No payment, maybe no charge privilege next time you needed it. I ran such a charge account at a local clothing store, where I purchased, shirts, pants, socks, etc. The year I was married, 1962, our local bank, 1st National of Three Rivers, started a credit card service called, surprise, the 1st National Charge Card. It was accepted at most all of the businesses in town. We used it the first time to buy a suit for a funeral we had to attend. That was the first exposure to credit cards in our town, 1962.
I use cash only.
Frankly, reading black text is way more pleasant, than light grey on white.
Credit Cards are a hassle and I couldn’t afford one. But hey good luck to all them people who have one and take good care of their credit.
The raised letters had the huge security advantage that you need to have the actual card in hands, not just know the number of some guys card.
Now they can steal and go shopping just by passing you! (eg bing).
Why people don’t care about stolen numbers?
There are card readers for you PC, which function the same way raised letters once did – you need the physical card on hand.
I like the debit card, that’s the one I use – only. (rapped in aluminum foil)
I never pay fees for credit cards again.
People have an irrational fear of credit cards and there’s too many horror stories on the TV and floating around the internet of credit cards ruining people’s lives. A credit card doesn’t ruin your life, out of control spending ruins your life. A credit card is not supposed to be used in that you go out and charge the maximum amount on it and only pay the minimum monthly payments. The credit limit is there for a reason but it’s never a good idea to max it out. Instead, charge only what you need if you can’t otherwise afford it (Grocery shopping, gasoline, Christmas presents, vacation, travel, etc.), once you’ve charged 1/4 to 1/2 of your credit limit, pay it down by paying 3x to 5x the minimum payment due. This will prove to the credit card companies and lenders that you are not an out of control spender and can manage your money wisely. This will lead to getting your credit limit raised and banks will potentially lend you more money for better luxuries (Buying a house, boat, motorcycle, startng a business, etc.). Credit cards can be wonderful pieces of plastic if you don’t abuse them.
@Matt – Not exactly, cheques are handed out by banks and when you sign and pay using a cheque, the cashier hands it to a bank where the bank gives him the amount written, which is later deducted from your bank account after they run pass the routing number, and hopefully, if you have any money on your account.
The credit card is…well, I get your point, it’s similar but the first diners was the point not to pull out a paper but just to show the card and sign a bill where the Diners company pays the cashier the next month. You get the bill from the Diners to your house where you pay at the specific date. It’s something like formal “borrowing”.
I read these all the time… and they continue to astound my dormmate as well as my other collegial friends.
I think it sound more like a tab at frist, signing the bill to have it paid at a later date and time.
Having the card I suppose was in a sense a reflection of the person’s ability to pay? And the idea of a credit car seems to be a bit different than just signing one’s name on a sheet of paper.
A person with a card is using it to pay and then is paying the credit card company back for the purchase, so it’s a barrowing of money… not really an “I’ll pay you later for your service now and my signature is a promisary note”.
The diner’s club didn’t exactly create a charge card untill it’s merger the same information that you gathered from wikipedia says that and somehow I guess you (Mike) or an editor has failed to put that information in your article.
Here is the rest of the paragraph:
The Diners Club, which was created partially through a merger with Dine and Sign, produced the first “general purpose” charge card, and required the entire bill to be paid with each statement.
however the article goes on to say, that these are charge cards and not credit cards…
That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmericard demonstrated the feasibility of the concept).
… American Express created the first credit card, that established a credit network, meaning someone else, ie: the credit card company; is paying the bill and you have to pay the credit company it’s money back at a higer fee (principle + intrest rate).
The article can be found here :
http://en.wikipedia.org/wiki/Credit_card
The elasticity of demand which accompanies a credit-economy is what has supercharged our economy and stand of living in this century.
In Iran, in 1920s, people used to carry a wooden stick to the local bakery, and the baker would curve a line on the stick for each bread loaf purchased, then you could pay your stick off at the end of the month and start with a new one.
My father still has the original Diners Club card and the Carte Blanc cards, When were moving I saw it the box. Wow! has times have changed,
My grandmother used to work for a credit card company that used some type of early version computer that used a punched card system.
You can see that system in a Doris Day / Rock Hudson movie – I think it was That Touch of Mink not sure.
A card called Unicard for store purchases after Diners club for costly restaurants and hotels. then American express and Citi card
It should be made clear that “Charge Cards” like the original Diner’s Club, Carte Blanche and Am Exp were distinctly different from “Credit Cards”, and that both of those were distinctly different from Credit Accounts offered formally or informally by merchants to known and valued customers.
Charge cards are a fee based service with total balances due upon receiving a bill (usually with 20~30 days to pay).
Credit Cards implicitly allow the buyer pay less than the total amount due and make most of their income from interest and penalty fees.
The credit lines extended to many people in the 18th century through the beginning of the 20th were often through “Company Stores” and were not really credit instruments but rather a means to keep employees as virtual slaves, unable to quit because of their ever increasing debt to the company ownership for rent and over priced necessities such as food fuel and clothing.
Modern CC Companies attempt a similar business model by imposing many fees, high interest rates, etc.
I do have to say, Discover Card has some fantastic perks for new accounts. Right now they are giving you $100 if you charge $500 within three months. That’s just crazy. Even if you only charge $1, you will still get $50 cash back.
The catch is you need a referral from an existing customer, but this direct link to their site should get you both bonuses: http://tinyurl.com/cjth4dv
Thanks for your Time!
This is very interesting news. It’s good that someone wrote this article. Good work!