History and Concept Of Credit Card
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Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange – the forerunner of banknotes – was established in the 14th century. Nowadays credit card is a most wonderful times of the year for the banking industry’s most lucrative business.
In beginning of the twentieth century, people had to pay cash for almost all products and services. Although the early part of the century saw an increase in individual store credit accounts, a credit card that could be used at more than one merchant was not invented until 1950. It all started when Frank X. McNamara and two of his friends went out to supper.In 1949, Frank X McNamara, head of the Hamilton Credit Corporation, have supper with Alfred Bloomingdale, McNamara’s long-time friend and grandson of the founder of the Bloomingdale’s store, and Ralph Sneider, McNamara’s attorney. This 3 men start the credit card concept, “BUY NOW, PAY LATER” after this dinner.
This story is start from one of McNamara’s customers had borrowed some money but was unable to pay it back. This particular customer had gotten into trouble, when he had lent a number of his charge cards (available from individual department stores and gas stations) to his poor neighbors who needed items in certain emergency cases.when the man required the money,his poor neighbors unable to pay him back and then he was forced to borrow the money from Hamilton Credit Corporation. This is not the ending of story,at the end of dinner, Mcnamara was shocked to discover that he had forgotten his (cash) money.Then he had to call his wife to bring him money.He vowed not to let the same cases happen again.Merging the two concepts from that dinner, the lending of credit cards and not having cash on hand to pay for the meal,he came up a new idea-Diners club credit card.
DINERS CLUB FIRST CREDIT CARD
In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.The first use of magnetic stripes on cards was in the early 1960’s, when the London Transit Authority installed a magnetic stripe system.
At beginning, progress was so difficult. Merchants didn’t want to pay the Diners Club’s fee and didn’t want competition for their own store cards; while customers didn’t want to sign up unless there were a large number of merchants that accepted the card. However, the concept of the card grew and by the end of 1950, 20,000 people were using the Diners Club credit card. Diners Club credit card continued to grow more popular and didn’t receive competition until 1958. In that year, both American Express and the Bank Americard (nowadays called VISA) arrived. After that,the concept of a universal credit card had taken root and quickly spread across the world.
While the concept behind credit has been around for thousands of years it hasn’t been until the past few decades that credit cards became an important force in world economies. Credit card companies profit through sometimes controversially high interest rates.As conclusion,although the credit card provide us a lot of benefits and convenient but you still need to take some time to plan which is the best credit card for your situation.