Credit is not taught in College or University. The fact is that most hard working people in society do not have the basic foundational education necessary to make informed decisions around managing their credit. When educating people about credit we start from the foundation which is the History of Credit.
The History of Credit Timeline:
In 1730, Christopher Thompson, a furniture merchant, created the first advertisement for credit by offering furniture that could be paid off weekly.
The 18th century until the early part of the 20th century Tallymen kept a tally (thus the name tallymen) of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments.
Overdraft protection was introduced during the rise of the British middle class, one of the first forms of credit
In 1914 the system of credit took a real turn and “Metal Money” was created Western Union, in the interest of good customer service, gave some of their more prominent customers a metal card to be used in deferring payments-interest free- on services used
In 1924, General Petroleum Corporation issued the first metal money specifically for gasoline and automotive services. Metal money was first offered to their employees, then to select customers and because the system worked so well they offered the metal money to the general public.
In the 1930’s, American Telephone and Telegraph (AT&T) introduced the “Bell System Credit Card.”
1950 marked the real beginning of the credit cards most of us are familiar with today. Diner’s Club, Inc. introduced the first credit card that could be used at a variety of stores and businesses.
In 1958 American Express introduced the “Don’t leave home without it” card. The state of California Bank of America issued the first revolving-credit card The BankAmericard
In 1951 Franklin National Bank was the first bank to implement the system. Applicants approved for credit were issued the Charge-It card.
In 1967, four California banks formed the Western States Bancard Association and introduced the MasterCharge program.
By 1969, most independent bank charge cards had been converted over to either BankAmericard or MasterCharge cards. Banks interested in issuing cards became members of either BankAmericard or MasterCharge.
By mid 1970s, the credit card industry started exploring international waters but the name “America” caused problems.
In 1977 BankAmericard became VISA and In 1979 MasterCharge became MasterCard.
In 1979 the improvement of electronic processing, electronic dial-up terminals and magnetic stripes on the back of credit cards; allowed retailers to swipe the customer’s credit card through the dial-up terminal which accessed issuing bank cardholder information a lot faster.
There are five leaders in the credit card industry today:
• Visa International
• MasterCard
• American Express
• Discover
• Diner’s Club
Gareth Marples is a freelance writer providing valuable tips and information on the history of credit cards.
The fascinating thing about the history of credit is that at the end of World War II Banks became interested in credit cards after seeing trends of increased travel and spending among those who held charge cards. This was the beginning of the online banking system (the magnetic strips).The banks therefore saw the potential of gaining income by charging interest on credit cards, thus the year 1950 marked the real beginning of the credit cards we use today.
ReplyDeleteCan you imagine how much money in interest has been made over the years and what our financial houses would look like if interest was not introduced and credit was used the way it initially started; where you pay what you owe “principal only”?
The fact is Credit cards are set up to make the lenders money, while giving the borrower access to money. There is nothing wrong with the lenders making money; as long as the borrower knows how to use the credit given to work just as abundantly in there favor, as the interest they are being charged is working for the lenders! However, due to the lack of education around effective credit management an overwhelming number of Canadians are carrying a very high debt load. Once the interest rates start to rise (if Canadians are not pro active and get on a credit management program to pay down there debt while building their credit score) they will not be able to carry the debt any longer. Filing consumer proposals and bankruptcy will put Canadians financial lives on hold and negatively affect their credit for 7 years. Management of your credit is essential to building wealth!