Where Do Credit Cards Come From?

Where Do Credit Cards Come From?
The Encyclopedia Britannica defines credit as "a
transaction between two parties in which one (the creditor
or lender) supplies money, goods, services, or securities
in return for a promised future payment by the other." The
concept of credit was already used in the earliest period
of history in Assyria, Babylon and Egypt.

The use of credit card was first used in the US in 1920 by
some automobile owners who used cards to buy fuel. However,
these cards were accepted only to the establishment who
issued it. By 1938, a number of companies started to accept
each other's card.

There is an amusing story behind the origin of the first
official credit card. According to the story, in 1949 Frank
X. McNamara, head of Hamilton Credit Corporation. was
having dinner with Alfred Bloomingdale and his attorney
Ralph Schneider at the famous Major's Cabin Grill, a
restaurant beside the Empire State Building. They were
going to discuss a credit problem with one of his clients
who was unable to pay him back. At the end of the meal, Mr.
McNamara realized that he has forgotten his wallet so he
called his wife to bring him some money. From this
incident, an idea came to life. So in 1950, Diners Club was
founded and the first "multi-purpose" credit card was born.

A credit card gives its holder the privilege to make
purchases without cash and pay for it on a later date. When
a person opens a bank account, he may apply for a credit
card in order to receive a specified credit limit
equivalent to cash. The bank assigns a certain interest
rate per month, and this will be charged on the account
whenever the credit limit is exceeded or whenever there is
an unpaid balance past due.

For many people, owning a credit card has become a
lifestyle. When applying for a credit card, it is always
advisable to do extensive research on the different terms
and conditions that each bank offers. Doing so enables the
customer to choose the type of credit account that is best
suitable to his needs. It is also important to understand
all stipulations before signing up to any agreement.
Because credit cards allow for more freedom to buy, it is a
common tendency for many people to splurge and overspend,
frequently resulting with unpaid bills and increasing debt.
To avoid the misery of bad credit, one must learn how to
use his credit card wisely. It is sensible to always pay
all balances on time and to know when it is necessary to
make another purchase. Thus, owning a credit card also
involve self-discipline, modesty and good financial
management.

Clearly, credit cards play a major role in business
transactions all over the world today. It is used in almost
every business establishment around the globe. It also
dominates the world of online shopping and e-commerce.
Truly, credit cards has come a long way and it is
interesting learn how it all began.

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Liz Roberts is a loan consultant with NewHorizon Finance
and has been providing consumers and business owners with
financing since 1989. Bad Credit? Join our mailing list for
tips on building and repairing credit yourself, without
hiring a credit repair service or view our list of credit
cards for bad credit at
http://www.newhorizon.org/Info/unsecured.htm
Copyright 2007