Credit cards were invented for convenience

Wednesday 25 February 2015, 8:40AM
By Harold French

Invention of the credit card is not synonymous with the invention of credit, which itself came far earlier, but rather it was developed as a way to record a creditor’s details quickly and easily without making any errors - convenience, accuracy and speed were the main motivators behind the emergence of credit cards.

“The use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers for purchases made at company outlets.” - Encyclopaedia Britannica

In fact, by the time credit cards really began to hit their straps in the early 1960s, they were promoted as a timesaving tool rather than as a form of credit. In some ways the origins of the credit card – in terms of understanding your real need and making prudent choices based on those priorities – make a salient lesson to bear in mind next time you reach for your Gem Visa.

The concept of using a card to buy stuff, and the actual words ‘credit card’, were first imagined by Edward Bellamy in his novel “Looking Backward”, which was published in 1887. The concept in the book however, was for the card to facilitate how citizens could spend a dividend paid to them by the US Government.

Charge coins – made from all kinds of materials, including celluloid and copper – made their appearance in the late 1800s and were printed with the details of the customer who held an account with the store. The charge coin had the merchant’s logo on it and essentially gave the store clerks a quick and convenient way to copy across the customer’s details without making an error or holding up the queue.

The charge coin fitted on a key ring but did not have the customer’s name, which meant anybody could use it.

In 1921, Western Union – an American financial services company – issued charge cards (printed on paper card stock) to regular customers. By the late 1930s, several companies started to accept each other’s cards.

The Charge-Plate was invented in 1928 and was used all the way through to the 1950s. Made from sheet metal, the card was embossed with the customer’s name, city and state in the USA – even providing space for the customer’s signature. When recording a purchase, the charge-plate was laid across an imprinter, with a red ink ribbon between the plate and a charge slip to capture the customer’s details – their purpose was very similar to the store cards we use today, but essentially helped reduce bookkeeping errors and were very often held in the store on the customer’s behalf.

In 1934 American Airlines introduced the Air Travel Card, which used a number scheme to identify the customer’s account and allowed customers to ‘fly now and pay later’.

The idea of paying different merchants with one card was introduced in 1950 by Ralph Schneider and Frank McNamara, who founded Diners Club with the idea of allowing customers to pay restaurant bills. The Diners Club card would pay the restaurant and the customer would reimburse Diners Card for a fee.

The story goes that McNamara was having lunch with Schneider and some others to discuss a customer who couldn’t repay his loan, when he discovered he had forgotten his wallet and was unable to pay for lunch. He had his wife come to the restaurant to pay the bill, but merged both predicaments to inspire the invention of Diners Card.

In 1957 American Express introduced a worldwide credit card network and in 1958 Bank of America launched the BankAmericard, using a revolving credit system and its overseas networks. In 1977 that same card became Visa, and the rest as they say, is history.

Sources: Encyclopaedia Britannica,, Wikipedia,,