Sometimes, a look back can provide a bit of perspective for a contemporary society. This week, we thought we’d take a look back at the history of credit cards and how they became the currency of choice for Americans. Here are a few little known facts about the plastic we proudly possess.
A Meal of Ideas
Long before the Visa, MasterCard and Discover logos became king for all things credit, it was department stores and some gas stations that issued charge cards that customers could use to purchase their wares on credit. Today, of course, American Express rules in the charge card sector, but it wasn’t until Frank McNamara, who was a president of a finance company in the late 1940s, stumbled across the idea of a credit card that could be used in multiple places. He was having dinner with friends and when it came time to pay the check, he realized he had no cash with him. A quick phone call to his wife and the problem was solved since she agreed to deliver his wallet, but the idea struck him then and the rest, as they say, is history.
Then A Lot of Meals
The first Diner’s Club card that was issued went out to a select 200 and could only be used at 27 restaurants throughout New York City.
Discover No Annual Fee
Remember when the Discover card was introduced by Sears in the mid-1980s? Everyone knew it didn’t stand a chance when the now-credit giant announced that it would be charging no annual fee, unlike its Visa, MasterCard and American Express counterparts. Needless to say, not only did it thrive, but it was the first model that served as the trail blazer for other no-annual fee cards.
Whatever Happened To
Granted, you need to be a bit older than twenty-one to remember this, but Visa wasn’t always that familiar name and logo we know so well. When it began in the late 1950s, it was called the BankAmeriCard. The banks that it partnered with were part of a huge network called National BankAmeriCard, Inc. The rapid growth of the company resulted in foundational changes necessary to keep it competitive in a fast-growing global financial sector. By the mid-1970s, it had abandoned all of its classic features and became known as Visa.
Speaking of shedding past images, MasterCard, up until early 1980, was known as MasterCharge. Interestingly, the logo was designed to deter fraud, though no one questioned how that worked.
Oh, That Explains It
Have you ever wondered why you’re not required to provide your phone number or home address when you’re using your credit card at the local grocery store? Turns out, before a merchant can accept major credit cards, he must agree to not ask for any information from car holders that would reveal sensitive information. And who said credit card companies are just looking out for their profits?
Also, and while this practice doesn’t happen nearly as often as it did before the internet, a merchant may require a credit card number when you pay with a check but if that check is returned unpaid by your bank, the merchant cannot then charge your credit card.
A Bit of FYI
Nothing frustrates consumers more than increasing interest rates. Did you know a quick phone call has resulted in lowering the rates for consumers? It’s true and it happens countless times each day. Of course, you want to have already established you’re a consumer the card company wants to keep, but often, it’s done in minutes and we all know the savings that come with lower APR.
Another little known fact has to do with your cash advances. Of course, anytime we use our credit cards as a bank, also known as cash withdrawals, our interest rates are going to be higher than the rates charged when we make purchases, but your payments are always applied in their totality to the balances with the lower APR. That allows the credit card company to continue earning on those balances with higher APR. Unlike a request for a lower APR you can’t ask that your payments be applied to the higher interest balances first. You could take our advice we always encourage consumers do: pay balances in full each month.
And there it is. A few little known facts about those powerful plastic cards we’re carrying in our wallets. Credit cards are designed to empower us, and as long as we maintain our own self-discipline, we can be sure that’s exactly what our credit cards will do; otherwise, we become burdened with what they represent.
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