Credit Nation: How Credit Cards Helped Shape A Nation

When people think of credit cards today, the mind instantly flies to the plastic most people carry in their wallets. Nearly every store across America that is of any notable worth offers some form of credit acceptance, whether it is accepting major cards offered by Visa and MasterCard, or supplying loyal customers with their own in-store line of credit through an exclusive card. In fact, the entire nation has been build around the use of credit, especially from the 1800s onward. Of course, back then plastic credit cards with magnetic strips were not standard, so how did the nation deal with credit then?

The Dawn of Consumer Credit

Modern credit cards, as we know them saw their birth in the 1950s when banks began issuing them to consumers. However, the idea of having an object that represents credit in a retail situation can trace its origins all the way back to the 1800s. Back then, credit cards were called charge plates, while some storeowners and retailers used charge coins.

Charge plates differ from the modern credit card in that they were made of aluminum and featured the customer’s name and address prominently on the front. These plates were no bigger than a dog tag and had a paper insert near the back that allowed store clerks to mark off purchases as they were made. Charge plates were usually kept in the store and when a customer wanted to make a purchase, he or she simply told the clerk so the correct plate would be retrieved. Major department stores such as Macy’s have used charge plates for many years.

Charge coins date back to 1865 when merchants along the Mississippi were preparing for westward expansion. Families who were moving west could use the coins to purchase goods that would see them through their journey on famous trails like the Oregon Trail. Charge coins came in many different shapes and sizes and were often made from wood or copper. Charge coins fell out of use when major department stores, which eventually lead to the rise of the modern credit card, as we know it, adopted charge plates.

The Modern Credit Card

While the charge plate was a good predecessor for credit cards, oil companies and large department stores began issuing their own credit cards to consumers as a way to ensure their loyalty. These cards could only be used at certain businesses owned and operated by the issuer, so this built customer loyalty to said businesses. This is highly different from today’s intentional use of credit cards, which is to provide convenience to the consumer in knowing that it will be accepted in thousands of different places around the globe.

According to MasterCard, the first known bank issued credit card was called “Charg-It” and it was created in 1946 by John Biggins. Customers who held the Charg-It card could make a purchase and the bill was then forwarded directly to Biggins’ bank that would then pay the merchant for the goods purchased, with the bank receiving reimbursement from the consumer in the form of a monthly statement. The only downside to this was purchases had to be made locally in order to accept Charg-It, and customers needed to have an account with Biggins’ bank.

While John Biggin’s Charg-It card is widely regarded as the first modern credit card, it was not until 1951 that the idea of offering customers an alternate way to pay for their purchases caught on. The Diners Club card is the first widely used credit card, mainly for entertainment and travel purposes. Men could make all of their purchases while on business trips and at the end of the month, a bill was sent that had to be paid in full. This is quite different from the terms of today’s modern credit, but the dawn of credit as we know it saw its roots take hold within the country nearly more than 60 years ago.

Credit Cards Today

Many different companies, from American Express, Visa, MasterCard, and Discover, offer credit cards today. Each of these has their own benefits, but they all allow you to pay your credit limit over time. This was a feature that was introduced by American Express in 1987 and is currently how the world uses credit. In order to make up for losing the direct charges people placed over the course of the month, many American Express cards feature an annual fee that must be paid in order for the card to be used.

In fact, the most prestigious credit card offered by American Express is the Centurion Card that is held by only a few select members who meet American Express’ strict requirements. This card carries an annual fee of $2,500 with a $5,000 one-time joining fee. It is also the only card in the world that is crafted from titanium, lending to its legendary status. With the annual fee come several bonus services such as free companion first class tickets with the purchase of a full fare ticket, companion shoppers, and a personal travel agent and concierge service.

While the Centurion credit card is an exclusive club of membership only for those who frequently use credit with a high disposable income, it is a testament to just how well founded credit use is across the world. Whereas credit was a means to ensure customer loyalty only 60 years ago, today it is used to provide convenience to millions of people across the nation. In fact, it can be nearly impossible to rent a car or purchase flight tickets without a credit card, since many travel agencies and airlines prefer the use of credit to checks and cash.

The Future of Credit Cards

While the plastic we have come to know and love continues to serve us well, recent developments in the credit industry are leading to improved ways to use credit. Online payment processors like PayPal have become the standard of Internet purchases, but technology is being developed that will allow modern smart phones to act as cards by charging the price of goods to a person’s card without having to swipe it. The future of credit is a bright one and who knows where technology will lead us 60 years into the future.

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