How to Understand the History of Credit Cards

History of Credit Cards: When Did Credit Cards Become Popular?

The use of credit cards has increased so much that people are using credit cards for every single purchase, from buying groceries and clothes to making personal purchases. Credit cards have made it very convenient. We can find ourselves transitioning from swiping our cards to just tapping them on the machine. It is evolution, which sometimes makes us wonder about the history of credit cards. And this is why we will look into- the history of credit cards.

Key Highlights

  • The first modern-day credit card was invented in 1950 by the Diners Club card.

  • As the marketability of credit cards grew, credit cards like American Express, BankAmericacard, MasterCard, and Discover emerged.

  • We can see the future of credit cards as touch-free and secure.

  • American Express was the first institution to issue plastic cards in 1959.

Ancient History of Credit Card Origin Alternatives

While studying ancient history, I came across the Harappan civilisation, where the economy was based on trade and called the urban economy. Harappan civilisation is known for its well-crafted cities, and flourishing trades spanned Mesopotamian civilisations. While going through the history of credit cards, I realised that credit cards are as old as ancient Harappan and Mesopotamian civilisations. People had revolutionary ways of conducting business during the Harappan and Mesopotamian civilisations. Instead of carrying out the quantities of goods, they use a clay tablet as a form of currency and a line of credit. They discovered a secure way of doing business as the tablets were a form of debt and used as an official transfer of money and goods. The beginning of using clay tablets is evident from the Mesopotamian civilisation, which gave birth to modern credit cards.

The Letter of Credit

In the early 1800s in Europe, a new method of financial exchange emerged known as the letter of credit. Letters of credit are simple promises made by banks where they ensure the payment of goods and services even when the purchaser is not present. It is a good way for travellers who travel to distinct lands where foreign currencies are used. A letter of credit was a document that showed reliability and facilitated the transaction without exchanging a single coin. We can say that the letters of credit are the predecessors of credit cards and traveller checks we use today. 

America’s Credit History: History of Credit Cards in America

In the 1800s, we can find the credit history of America, where the line of credit was used in the form of so-called loyalty cards. However, major progress was made when consumer credit was introduced in 1914, and Western Union introduced Metal Money, which was the first consumer credit card. With these metal plates, the consumer can postpone their payments for the debt, similar to modern credit cards and lines of credit. Looking at these, many firms, like oil companies and hotel chains, also begin offering lines of credit to consumers differently. 

In the 1930s, the Charga plate, which was a Rectangular metal sheet used to record customer information like name and address, emerged. The National Museum of American History shows the development of Charga plates in early 1928; however, they gained popularity from the 1930s to the 1950s.

In the 1950s, we can see a significant evolution in credit cards that arrived with the introduction of Diners Club Cards. McNamara, who was a businessman, once forgot his wallet during a dinner in New York City. He came up with the idea of a diner club card. It became the first multipurpose charge card. The popularity of the Diners Club card increased the following year when 42,000 people took the membership.

The Modern Credit Cards

The success of the Diners Club card made big financial institutions introduce their own cards, and this is where American Express became the pioneer in the industry and introduced the charge card in 1958.The popularity of the charge card made American Express distribute 250,000 cards before the official launch date despite having an annual fee of $6. 

With this, Bank of America also decided to join the race and initially focused on California. By 1966, Bank of America cards were so successful that they even expanded beyond other states and rebranded as Visa.

With this, the Interbank Card Association also emerged in 1966, and soon after its formation, it introduced master charge, which eventually changed its name and became MasterCard in 1979. Today, Visa and MasterCard are the two largest credit card networks, which have cemented their position and status till today. Other networks like American Express and Discover also became prominent contenders in the market.

After the years, credit cards became synonymous with plastic, and American Express was the first institution to issue plastic cards in 1959. Diners Club followed American Express and introduced its first plastic card in 1961. After that, the magnetic strips on credit cards were the other successful event in the history of credit cards.

The EMV Chip Technology

EMV Stands for Europay, MasterCard and Visa, which shows the advancement in payment technology that replaced magnetic stripe cards. The modern credit, debit and prepaid cards that offer security and usability should be thankful to the EMV technology developed in 1994. The EMV uses a microchip to store customer and transaction data, replacing the traditional magnetic stripe. It requires a signature for the transaction and a chip and pin to make the transaction more secure. Initially, it was popularised in Europe only; however, the technology gained global popularity soon. This technology lets you tap your credit card on the payment terminal and make the purchase successful.

Bottom Line

The history of credit card timelines shows that credit cards are as old as the Harappan civilisation, where trade was conducted using a line of credit. This paved the way for modern credit cards, where the EMV chip technology is used to make your transactions more secure and reliable. Moreover, the credit card industry continuously innovates and implements new methods to secure every transaction. If you have used a credit card more than once, you might know the importance of it. Therefore, you must thank the history of credit cards that have helped make your everyday spending easy.


When did credit cards become popular first?

After the Diners Club Card was invented in 1950, the credit card became famous in 1950 and 1960.

What were credit cards called in the 1920s?

The first consumer credit card was introduced in 1914, also known as “metal money”. In 1920, many firms like oil companies and hotel chains started showing lines of credit to consumers in the form of metal money.

What is the oldest credit card?

The Diners Club card, introduced in 1950, is the first modern credit card, which was introduced by Frank McNamara.

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28 Feb, 2024


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