The credit card – how it all began

In this day, most Americans – from teenage on up – have credit cards. Where did it all begin? According to Wikipedia, the credit card was the successor of a variety of merchant credit plans. It was first used in the 1920s in the United States to sell fuel to the growing number of automobile owners. By 1938, several fuel companies were accepting each other’s cards. 

The concept of paying multiple merchants using a single card was invented in 1950 by Ralph Schneider, Frank X. McNamara and Casey R. Taylor and was named the Diners Club. When it first emerged, it became the first independent credit card company in the world. While many stores and businesses extended credit to their customers or allowed them to set up charge accounts, the idea behind Diners Club was that the same card could be used to pay a variety of merchants. At the beginning of 1950, the first Diners Club cards were given out to 200 consumers and honored by 14 New York City restaurants.  By the end of that first year, Diners Club had 20,000 customers and was accepted at more than 1,000 restaurants.

Today, there are countless variations on the basic concept of revolving credit for individuals, including organization-branded credit cards, corporate-user credit cards, store cards and more. An estimated 144 million Americans hold some type of credit card.

The United States garners the title – for good or bad – of being the number-one credit card nation. While many consumers practice responsible credit card usage, the average American family owes more than $9,000 in credit debt, and consumer credit-card debt has almost tripled over the last two decades—from $238 billion in 1989 to $800 billion in 2005, according to an analysis of Federal Reserve Board data by Demos, a national research and consumer advocacy group.

The credit card has enabled many Americans to realize their personal or business dreams. It has led others to their financial demise. Its beginning marked a pivotal time in our history, and the credit card will no doubt remain an important part of our society in the future.