Who invented the credit card?

Who is to credit or, some would say, blame for the invention of the credit card? Here is the story. Credit cards are commonly used in modern-day society. The idea of buying something in the present and paying for it later wasn’t a common practice before the early part of the 20th century. It started as a business-to-business practice and is now available to consumers who can meet the standards set by credit card issuers.

Credit in the Early 20th Century

The first credit was extended by businesses to their suppliers. The oil and hotel industries were the first types of companies to adopt this practice. They started to extend credit to their best customers. This allowed them to get supplies and services they needed and pay for them at a later date. The practice helped businesses to manage their cash flow and continue to work.

The next development on the road to the invention of the credit card was when department stores started offering charge accounts to its customers. This was a marketing ploy designed to bring in new business. It was also used to offer a convenient payment option to existing customers. The idea was quite popular with shoppers, and merchants soon started forming groups who would offer credit to each other’s customers.

The Invention of the Credit Card

The person credited with inventing a charge card that can be used at multiple locations is John Biggins. Mr. Biggins worked at the Flatbush National Bank in New York. He was responsible for introducing the “Charge It” program in 1946.

Under the program, business owners would deposit their sales receipts with the bank in the same way they would make a cash deposit. The bank would then send a bill to the company’s customers who had been extended credit. This idea would eventually form the basis for Diner’s Club.

Under the terms of a Diner’s Club card, members could eat at one of 27 participating restaurants in New York City. They would charge the cost of their meal and pay the bill later. The “Charge-It” program and the Diner’s Club were not considered true credit plans, since in both instances customers were required to pay the full amount owed when the bill was presented. The modern credit card that provides customers with revolving credit is based on these earlier models.

Modern Credit Cards

The first charge card available to the public was the American Express Card. Introduced to the market in 1958, it allowed members to make purchases; but, the balance needed to be paid in full each month. BankAmericard was introduced the same year. It was eventually renamed the Visa card and was the first credit card that to be accepted by many different kinds of merchants in many parts of the United States.

The modern credit card works in the same way as the “Charge-It” system that John Biggins invented back in the 1940s. A customer makes a purchase from a merchant. They either sign for it in person or provide a security number when ordering online or by phone. The credit card issuer pays the amount of the purchase to the merchant, less the fee the credit card company charges for the transaction.

The customer is presented with a statement from the credit card company at the end of the billing cycle. The customer then owes the money to them instead of the merchant they made the original purchase from. They are charged interest on their purchases, and the interest on the unpaid balance will continue to accrue until it is paid off.

Now credit cards are available with a number of different kinds of features. Consumers can choose from cards that charge no annual fees and ones that require a fee in return for getting a lower interest rate. Other types of cards available can be used to collect air miles or other kinds of rewards.

There are even credit cards that offer cash back on purchases, prepaid credit cards, and ones offered to meet the needs of students. Some cards offer a low introductory rate to encourage customers to transfer a higher balance to the new account. Gas credit cards help customers to save on their fuel costs.

Applying for a credit card online can even get you an answer within 60 seconds in some cases. Before you can decide what kind of card you would like to apply for, you need to find out more about the different cards that are available. Our handy credit card “Chaser” tool can help you find the right choice for you. Click on it and you can get started comparing and finding the best credit cards right away!

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!