Information Center – News and Articles about Credit Cards
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First Credit Cards: What Were They Like?
We are used to see credit cards the way they look today, and it is hard to imagine that they looked different and served for another purpose than paying for goods and services. We call them plastics. In fact, a century ago credit cards had a different shape, size and were not made of plastic.
The appearance of credit cards dates back to the beginning of the XX century. Who were they created for? The target audience was wealthy people. The cards could be used as business certificates and licenses for the so-called "loyalty programs" at some restaurants, gas stations and merchants. Those cards, you can be surprised, were made of cardboard.
However, cardboard cards' operation life was pretty short. And card issuers have come with an idea of changing the cards' material into a more durable one. Issuers chose metal as the strongest material for cards manufacturing. So, customers were issued metal cards made by Farrington Manufacturing Co in Boston. The cards had identification information of every user embossed on their metal surface. The manufacturing process got automated.
When registering purchases the same information was printed on special commercial tape. The name of the company issuing cards was imprinted according to international credit card standards - ISO 7811-3. The script used for embossing was called "Farrington 7B". Despite today's innovative technologies imprinting ID info on commercial tapes still exists. Did you know that? Here are some other facts about credit cards you might want to know.
"Put a signature after dinner" program introduces by Sir Alfred Bloomingdale in 1950s in Los Angeles generated rapid progress in credit card industry. Frank X McNamara, Sir Bloomingdale's long-time friend, launched a similar program in New York. McNamara, Bloomingdale and Sneider started a company, called Diners Club. In fact, the company was the first financial institution issuing credit. The Diners Club became an intermediary between credit consumers and merchants.
The cards they issued were made of paper stock and had a list of participating locations printed on the back. The credit cards functioned just like a typical plastic you can find on the market today. They gave customers buying power. But credit consumers of 1950s did not have to pay interest. They were charged an annual fee of $3.
Diners Club has been a monopolist on the US credit card market for about 7 years. The company made around $60,000 revenue by the second year of existence. But in 1958 the company was attacked by numerous competitors. Besides other financial institutions struggling to win more customers, such non-banking brands as Hilton and American Express also entered the market.
Gasoline credit cards became popular in 1957. This was the time for different payment associations to appear. They merged together and formed big financial networks, later known as MasterCard, Visa and others.
The problem of finding a strong, safe, but flexible and printable material for a credit card existed until 1958. Credit card issuers through experimenting with polyvinylchloride and polyether invented plastic cards. The first plastic card was an American Express card, a charge card, to be more exact.
And then over 50 years of development and progress made it possible for a today's credit consumer to choose from a great variety of credit cards with low APR, no annual fee, rewards programs and other beneficial features.
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Most credit tips say that the sooner you pay off your credit card balance - the less money you will lose on interest. On-time payments will favorably bound back on your credit score and payment history. This kind of advice is what we all are used to hear and read on the Web, in financial magazines, in tips columns. But does this financial behavior model really have a positive effect on your FICO score and credit report?
How can it be questioned, you ask? A perfectly disciplined plastic owner that pays off his or her balance before a lender could say Jack Robinson. Is not it any creditor's dream? No, it is not always so. Let's find out why a lender would want a different behavior model from a borrower and when this kind of paying down debts can weigh heavily against a cardholder.
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There are a number of embarrassing situations that are just a nightmare for cardholder. Feel no wallet in your pocket just before the cash register? See some unauthorized charges in your credit report? Loose you wallet with all your plastics in it? Very soon we are going to have no fear of these things, thanks to amazing technical progress.
Indivos Corp. which majors in computer hardware and software development has been working on an electronic system for making payments over a number of years. The thing about this system is that it enables transactions to be made by scanning customers' fingertips. A number of retailers have already expressed interest in testing the new system.
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Active credit card use is a sign of a society with well-developed market relationships. More and more people get involved in buying goods and services with plastics. Using virtual funds to make real purchases is very convenient. But this extended buying power has led Americans to a dangerous trend. Over 40% of American households, according to the USA Federal Reserve statistics, spend more money than they make.
In the average, every American of these 40% spends $1.2 per every $1 he or she earns. Plastics have changed people's spending habits. These plastic devices allow and encourage people to spend more and more money. Around 18% of all purchases made by Americans involve credit card use. About 24% of the purchases are made with other types of plastics.
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If you are determined to eliminate your credit card debts and you have good credit, getting a balance transfer card is a good idea. You can shift your credit card balances with high interest rate to a card with much lower rate or 0% APR at all. But there is one thing that can reduce your profit from this kind of a deal. It is balance transfer fee.
Most balance transfer cards come with a fee for a transfer. Not long ago you could easily find a plastic for balance transfers with no fee. However, due to the credit card market crisis and economy slowdown, lenders have pulled these deals from the market. And now it is rather hard for a customer to find a balance transfer card that comes with no fee. But there are some ways to negotiate a better balance transfer deal.
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