Nov 26, 2018
Credit cards are ubiquitous today, but not long ago these magical pieces of plastic were literally something right out of science fiction.
Here’s a brief look at where credit cards came from -- and where they might be going.
A term that goes back 130 years
The earliest reference to credit cards was in futuristic science fiction.
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The term “credit card” was coined by author Edward Bellamy in his quasi-socialist utopian novel Looking Backward: 2000-1887.
In this visionary book from 1888, the "credit card" distributed to each U.S. citizen is loaded with that person's share of the country's wealth. The people then use their cards to purchase whatever they need.
Sounds awfully familiar, right?
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Before cards, there were credit coins
Department stores used to issue customers special coins that they could use to charge purchases.
Beginning in the late 19th century and into the 1930s, individual department stores and hotels distributed coins of various shapes and sizes to charge the accounts of regular customers.
The credit coins were stamped with the customer's account number, which would imprint on sales slips next to the amount charged.
This system cut down on errors in handwritten records and sped up the transaction process. Issues with fraud occasionally arose — not much has changed there!
The earliest credit cards
Charga-Plates, kept in a holder like this one, were the earliest version of today's credit cards.
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The first predecessor of the credit card became available in 1928. Dubbed the "Charga-Plate," it was issued by large-scale merchants to regular customers.
Some stores chose to keep the cards in-house and retrieve them for use whenever the customer returned to make a purchase. The card's account number was imprinted on a "charge slip" to record the sale.
The airline industry joined the charge card club in 1934 when American Airlines released the Air Travel Card — the first product to hint at the benefits of contemporary credit cards rewards programs.
Passengers could receive up to a 15% discount at as many as 17 participating airlines.
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When were credit cards invented?
Diners Club was the first of the modern credit cards.
The 1950s brought the first attempt at a general-purpose credit card: the Diners Club card. It was shortly followed by the Carte Blanche, and in 1958 by American Express, which would go on to create a worldwide credit card network.
The first credit card ever
Also in 1958, Bank of America introduced BankAmericard, the first revolving-credit financial system issued by a third-party bank to be accepted by retailers. After the card was licensed to other banks, it became Visa in 1976.
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Also in the 1970s, U.S. credit card systems became computerized.
Before computerization, each purchase required the merchant to call the bank, which then called the credit card company, which then confirmed the cardholder's information and account balance. Seriously?
What’s next?
Your smartphone is quickly making that plastic in your wallet obsolete.
Today's credit card technology is much more convenient, but it's quickly being overtaken by other, even more efficient digital payment systems, including online banking and apps.
In other words, your smartphone is quickly replacing all that plastic in your wallet.
Credit cards have come a long way since the early 1900s — but the growth of new, universal technologies is threatening to send them the way of the VCR and the dial tone.
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Esther was formerly a freelance contributor to Moneywise.
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