Credit Cards

13 Fascinating Facts About Credit Cards

Written by Eric Rosenberg

Credit cards are easy to take for granted. You can walk into virtually any restaurant or store in the developed world and swipe your card to pay instantly, worrying about the balance later. This system is a technical marvel that took nearly a century to build to today’s modern standards. Follow along with these fascinating facts about credit cards to level up your credit card IQ.

The idea for credit cards came when the creator forgot his wallet

Frank McNamara went to dinner in New York City one evening in 1949, and found he didn’t have his wallet with him when it came time to pay the bill. Instead of being forced to wash dishes in the back, McNamara convinced the restaurant to let him leave with a promise to pay the establishment back. He ultimately called his wife, who he asked to come to Major’s Cabin Grill and deliver cash to pay for the meal. While the truth of this story is debated, McNamara is the undisputed founder of the credit card, with business partner Ralph Sneider.

The first charge card came in 1946

Charge cards are the predecessor to credit cards. They require payment in full every month, while credit cards allow you to carry a balance. John Briggs, a banker at Flatbush National Bank of New York, introduced the “Charge-It” card in 1946, which allowed customers to make purchases at local stores and pay the full balance at the end of the month. However, there were some earlier versions of the credit card model in Europe dating back to 1890. The early credit cards only worked for local participating stores, and users needed to carry multiple cards to buy products and services from multiple stores.

The first credit card was issued by Diners Club in 1950

Based on “the first supper” story, McNamara went on to create a club of 27 participating restaurants with 200 of his friends. This new “Diners Club” went on to become a smashing success, based on the “sign now, pay later” model. Diners Club International still operates today as a subsidiary of Discover. Diners Club became quite popular in the 50s and 60s targeting international and business travelers around the globe. This was the first “universal” credit card that could be used anywhere.

Computer company IBM is responsible for the magnetic stripe we all know and love

For most of our lives, most Americans would swipe the magnetic black bar on their credit (or debit) card to pay. This magnetic strip goes back to 1969, when IBM engineers began work on a magnetic striped plastic card. IBM released the magnetic stripe standards in 1971, and began producing magnetic credit and ID cards. We now use them for everything from bank cards to hotel room keys, but it started with credit cards and ID badges first.

Most Americans have at least one credit card

While no one likes to be in credit card debt, credit cards are as popular as ever. The Federal Reserve shared in 2015 that 70 percent of consumers has at least one credit card. According to math at CreditCards.com, that means 174 million American adults have at least one credit card.

The average American has multiple credit cards

While I am an anomaly with more than ten open accounts, the average person with credit cards in the US has 3.7 cards. However, 29 percent of Americans have no credit card at all, according to data from Gallup.

Credit cards are always the same size

Did you ever think about how convenient it is that every credit card slides nicely into your wallet? That is no accident. Credit cards are always 85.60 millimeters wide and 53.98 millimeters tall. While some issuers, Chase for example, issue cards made of metal, all cards must fit the same size specifications.

Americans have a lot of credit card debt

According to data from ValuePenguin, the average American household has $5,700 in credit card debt. If you eliminate the households with no credit card debt, the average jumps to $16,048. 38.1% of households carry credit card debt in some form. Households with a net worth of zero or less carry an average of over $10,000 in credit card debt.

Sears helped bring credit cards mainstream

Sears, the long distressed retailer, is partially responsible for the wide adoption of credit cards in the United States. Sears created its own credit card in 1911, a retail store card that couldn’t be used anywhere else, which remained in service until 2003 when it was taken over by Citigroup. Sears is also responsible for launching the Discover card, which came out at the 1986 Super Bowl. You can watch the original advertisement here.

In the 1950s, Bank of America sent cards with a $300 limit as unsolicited mail

We all get tons of junk mail, but none of the envelopes we get today give us a credit limit with no questions asked. That wasn’t the case in Fresno, California, where employee Joeseph Williams sent 60,000 paper BankAmericard credit cards out to people in town. He eventually sent out a total 2 million cards like this around California, but many accounts went delinquent and Bank of America lost $8.8 million on the launch, and Williams lost his job.

Women used to need a man to get a credit card

We’ve come a long way in gender equality, but have many black marks in our history. Until 1974, banks could legally deny credit cards to women unless they were married and the card was co-signed by a spouse. The Equal Credit Opportunity Act of 1974 changed that. Now women can get cards with equal ease of their male counterparts.

Credit card numbers are not random

If you have multiple credit cards from the same issuer, you may have noticed that the first digits are the same on those cards. This is not a coincidence. The first digit of your credit card indicates the industry. Combined, the first six digits tell you the card type and issuer. For example, every MasterCard starts with 51, 52, 53, 53, or 55. Visa cards all start with a 4.

Card debt is expensive

According to data from CreditCards.com, the average card interest rate was 16.32 percent at the end of 2017. Rates tend to go up when the Federal Reserve Board raises interest rates, which is common in a strong economy. With a $5,000 balance and a $25 minimum payment on a card with this interest rate, it would take 154 months (that’s almost 13 years) and $3,739.63 in interest to become debt free, assuming you don’t add any more charges along the way.

About the author

Eric Rosenberg

Eric Rosenberg is a finance, travel, and technology writer originally from Denver, Colorado living in Ventura, California. When away from the keyboard, Eric he enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and baby girl. You can connect with him at his own finance blog Personal Profitability.

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