The Past, Present and Future of Credit Cards

 
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15 Major Credit Card Companies:

  1. Visa
  2. MasterCard
  3. Chase
  4. American Express
  5. Discover
  6. Citibank
  7. Capital One
  8. Bank of America
  9. Wells Fargo
  10. US Bank
  11. USAA
  12. Credit One
  13. Barclaycard US
  14. First Premier Bank
  15. PNC

The evolution of credit cards:

The idea of credit has been around since the beginning of time almost. Credit as we know today has only been around since the early 20th century. Credit cards today, allow you to purchase anything anywhere, at any time. These cards are super small, yet mighty, in all that they do and offer customers. They are such an important part of the financial world.

Convenience Store

About a hundred years ago or so, if some visited their local convenience store often and one day happened to be short to pay the bill, the store clerk could offer them the items on credit. In small, close-knit towns this was an okay thing to do because everyone knew each other, and there were much less people in towns to keep track of.

Diners Club Card

This was the first ever charge card. It was developed when Frank McNamara forgot his wallet while having a business dinner. His wife picked up the tab that night, but he vowed that he would never be embarrassed like that again. A year later he returned to the same restaurant and developed the diners club card. It charged users $5 a year and establishments 7% of each year. It wasn’t until 1961 that the plastic Diners Club charge card was introduced to the market. The charge card balance had to be paid at the end of every month, but this was the start of the credit card innovation.

Visa/MasterCard

BankAmericard, now known as a Visa credit card, was the very first real credit card. It was first issued in 1958. This card allowed you to make purchases, and pay back the money over time, not all at once like charge cards required. The BankAmericard, was named after Bank of America. Eventually, through a cooperative, banks across the country were able to issue these cards to their customers. As a result, Visa was born in 1976.

MasterCard, was born out of the same kind of cooperative with several banks, in 1966. Before it was MasterCard, it was known as the Master Charge/Interbank Charge card. It was created as competition to the BankAmericard, because at the time they were the only card of the sort on the market.

Deregulation

There was a Supreme Court ruling that deregulated the banking systems control of credit cards. It concluded that national banks could in fact charge consumers in other states the interest rate set in the bank’s home state. If you got approved for a Visa card living in Illinois, which originated in California, you’d pay California interest rates. However, this caused a lot of banks to move to states that didn’t have a cap on interest rates, and they could make them however high they wanted to.

Success of Reward Programs

Citibank was the first bank to offer rewards for using its credit card, it had a partnership with American Airlines. This one deal, led to every other major credit card company figuring out how to offer their customers rewards. It also caused people to use their cards more, since they were being rewarded for it.

Credit Card Reforms

There was a reform package that prevented credit card companies from raising interest rates on an account’s current balance. It also prevented credit card companies from changing the interest rate in the first year of the credit card agreement, unless previously stated.

The Future

Credit cards will never go away. Companies will continuously come up with new rewards systems and incentives to get people to sign up for them. However, to keep their bottom line intact, credit card companies only vet the best consumers who will be able to pay off their debts. It is possible that physical credit card use will grow less and less popular, with things like Apple Pay, Samsung Pay, etc. it is just so convenient to have everything you need, on your phone. Credit card companies are also tasked with making sure that their customer’s private information is secure at all times, and not just after there is a breach of sorts.

Credit cards have been constantly evolving since it has been mass produced to assist people in their everyday lives. Nothing in life is constant, so it is likely that they will only continue to change and get better over time.

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