How Have Credit Cards Evolved Throughout The Years

The credit card has been a staple of the American economy since the 1920s. These little bits of plastic revolutionized the way customers pay for goods, implementing a secure method of transferring funds.

A credit card works by providing a small loan from the credit company. The user is given a set amount of credit that they can spend to remove the need for paying with cash directly. The owner then receives a bill at the end of the month which they can pay in one lump sum with added interest. This was seen as a revolutionary way to pay for your goods; however, credit cards have come long since then.

The Beginning

Credit cards were first invented in the 1920s, as mentioned above. However, these initial cards were only available for customers of large firms, and they could only be used on these premises. Almost like the loyalty card schemes that you find today.

Credit cards for individual use did not hit the market until 1950. The Diners Club card is considered to be the very first credit card, and it was brought into the economy by Frank McNamara and Ralph Schneider. Unfortunately, this became a niche invention as the interest rate on payments started at seven percent. Also, these cards were made from cardboard instead of the traditional plastic that we know today.

Competition

The reign of the Diners Club Card remained unchallenged for eight long years until the first plastic credit card was invented. In 1959, American Express was founded. This company popularized the current design of light and durable plastic that fits neatly inside your wallet. It is no surprise that American Express is still going strong today.

The next big change came from a company known as BankAmericard. They noticed that the Diners Club card was easily manipulated, and very few people could pay off what they owed as it had to be paid off in full each month. As expected, the BankAmericard Company introduced a credit limit on their customers of $300. This meant that people would not overspend, and the company could comfortably recoup the money owed. This small company eventually grew to become the Bank of America, and eventually, their BankAmericard evolved into Visa.

Market Boom

It is easy to come across someone that holds a valid credit card in 2022. It was not always so prevalent, however. The initial teething problems of the concept were flattened out by the time the 80s rolled around, which led to a surge in credit card providers.

These companies couldn’t all function successfully in the same market. As a result, credit card companies began offering promotions and bonuses to their customers. Reward programs were set up, and that is how the model we know today came about. You will frequently see credit card promotions boasting higher credit limits and low-interest rates. All of it is designed to get your attention.

Processing Fees

One downside that businesses face when they implement credit card reading software in their stores is the processing fee. This is a fee levied by the banks that charge stores a small price when customers buy goods using a credit card. This is why you will find a payment limit in most stores.

However, companies like NadaPayments are helping to remove processing fees in 2022. Nada Payments want to ensure that you receive one hundred percent of your profits, so check them out if you are struggling with the idea of processing fees.

Digital Market

The early 2000’s saw a rise in online stores. Customers could now purchase goods on the internet and have them delivered directly to their door. Unfortunately, this convenient shift led to a rise in cybercrime. Customers were having their payment details stolen, and hackers could use these to access the money in their bank accounts. Internet security has improved significantly in the years following the invention of eCommerce; however, it is still something that concerns the average shopper. A good way to keep abreast of activity affecting your credit score is through the use of a credit monitoring service.

Now, you will find that you are encouraged to pay for goods online using a credit card instead of a regular debit card. This is because a hacker cannot gain much from getting your credit card details, and it is easier to detect credit fraud. You can pay for something online using a credit card and then pay off the debt immediately to avoid damaging your credit score. Many people now have credit cards for this express purpose.

Conclusions

Credit cards have come a long way since their initial cardboard forms in the 1950s, and companies are still seeking out new ways to improve the service. While there are certainly downsides to using a credit card, you can’t argue that it definitely has its uses. It seems that the credit card service is going to continue long past 2022.