Disney has released it’s latest version of The Christmas Story, and as a credit risk assessment planner counseling people regarding their decisions of the past, present and future, it came to me the similarities. This story will start with Credit Card Past just like in the movie !
IF you were born after 1980, it may be hard for you to believe that credit cards have not always played such an important part of our lives. Credit has existed for many decades, but not the buy-anything-anywhere-anytime-you want that is so familiar in today’s world.

In rural areas, there was the old general store where the storekeeper extended credit to regular customers, friends and neighbors until their crops came in and the farmers had to cash to pay their bill. As places grew so did the trend, until it reach the cities where the storekeepers were extending credit on merchandise to more and more people but still regular customers. It was a simple process that involved just a ledger entry with one column showing the amount the customer owed, and on the right side, a column where the customer paid.

Then as the population grew, there were more people requesting and needing the service of extended payments, this involved tracking the people, which required more information to be recorded and more data than simply two columns in a ledger. It also came apparent to the merchant this could be used as a marketing tool to increase sales to people they didn’t know.

The first credit card were simply made of cardboard or paper. Sometime in 1920, embossed metal plates like Army dog tags ( ID’s) were introduced. The merchant could actually run these through a little roller type of machine and get an imprint of the customer’s card to verify his status as a qualified customer. Macy’s and Bloomingdales were big on using customer cards. But if you traveled where there weren’t these particular stores that issued your card, you had no credit.

The Diner’s Club card was introduced in 1949. Again, just a simple idea to use the card instead of cash or a checkbook. But it was a big innovation, the first CREDIT card, meaning the balance had to be paid at the end of the month and accepted by more than one merchant. Then American Express came along in 1958.

Banks also issued their own credit cards throughout the 1950’s. Visa was introduced in 1958 recognized as ‘BankAmericard’ named after the issuing bank in California Bank of America. This was a true credit card as recognized today, the first where you could make payments over a period of time.

In 1966, Visa set up a national franchise program where banks across the nation could issue the ‘BankAmericard’ credit card. However, the franchise idea didn’t fly, but the beginning of a bank cooperative and the birth of Visa in 1976 as we know it today. Look for our next series on the creation and implementation of the Mastercard.

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