Who Invented Credit Card?

Credit cards were not invented but they started out as a business strategy by the businessmen, especially in the United States, to lure the customers to buy new products and thus, to keep up the consumption. The term ‘credit card’ was first used by an American writer Edward Bellamy in this novel ‘Looking Backward’, which came out in 1888. The author uses the term ‘credit card’ eleven times, and also forewarns about the dangers of using credit cards.

The early credit cards of the 1920s were little more than slips of papers which could easily be counterfeited. They were issued by merchants back then and not the banks. To counter the problem, new credit cards of metal were introduced and they were known as ‘charga-plates’. The use of charga-plates continued until the 1950s. In 1956, banks started issuing credit cards. The big advantage of owning a credit card issued by bank was that it was accepted by a lot of merchants, shops etc. compared with the ‘merchant-issued-credit card’ which were only accepted by a few, mostly local, merchants. Several similar attempts were made by smaller banks, but the repeatedly resulted in failure. ‘BankAmericard’ of the Bank of America was the first, and a big, successful venture. Although credit cards are used in almost all the nations, but nowhere is the market penetration as much, as there is in the United States and Canada.

The Europeans and particularly the Japanese, although rich societies, don’t use credit cards much. In Japan, the world’s second richest nation, usually only the rich business men or big merchants use credit cards. A possible reason could be the social impact. The North Americans are now wary of the fact that many of their youngsters, who are not so good at managing their finances, are using credit cards and burying themselves in debt. According to a survey, a family with a credit card owes $8000 to the credit card company on an average in America.

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