In today’s world, people are more likely to pull out their VISA or MasterCard than to reach for hard cash, even for small purchases. And with reward and balance transfer credit cards being such a regular part of our day to day existence, it can be hard to remember that it really wasn’t all that long ago when credit cards didn’t exist.
The world’s first credit card was issued in 1951 by Franklin National Bank of New York. The cards were used, much as they are now, to allow trusted borrowers to make small loans without having to stop by their local branch office and fill out scads of paperwork.
Of course, Franklin National had no way of knowing that they had just begun the process of turning the financial world on its ear. They were merely providing a quality service to valued customers, creating more profit for themselves while adding convenience to their account holders’ lives.
It didn’t take long before other banks caught onto the idea, and within 10 years, the three big players in the credit card industry were born:
- American Express
Of course, only one of the three has kept their name unchanged. While American Express still uses its original moniker, BankAmericard and MasterCharge gave themselves face lifts in the ‘70s, renaming themselves VISA and MasterCard, respectively.
The ‘70s and ‘80s brought a host of innovations to the credit card industry, most notably:
- Reward programs. These programs allow you to earn points when making certain purchases, which in turn reward you by offering free or discounted services or cash back.
- Balance transfer credit cards. These credit cards allow you to transfer balances from other credit cards at low rates of return.
Moving into the ‘90s, debit cards became all the rage, offering many of the services credit card holders enjoyed without actually extending credit. Instead, the money was electronically withdrawn from the card holder’s savings or checking account. Today, the average American has 8 credit cards in their purse or wallet. The United Kingdom has more credit cards than people. We don’t know about you, but we figure that’s a lot of growth for an industry that didn’t even exist 60 years ago.