In the United States, the common use of credit cards may seem like an age-old practice. However, the truth of the matter is that credit card usage is largely a twentieth century practice and, therefore, a relatively new experience in America’s economic landscape. Prior to the 1920s, an organized system of credit was neither widely extended by merchants, nor widely used by most consumers. However, today most Americans habitually use convenient little plastic cards to purchase a wide variety of items. So, exactly how did the phenomenon of credit spread so quickly and who invented the credit card?

In the 1920s, credit became a common practice in the hotel and oil industries. Companies routinely extended this option to their best customers and allowed them to pay for their purchases and services at a later time. Initially, it was extended directly from the merchant to the consumer who then later made payments directly to the merchant.

Eventually, department stores began to employ the practice of extending credit as a method of attracting more customers and solidifying customer loyalty. As this concept began to spread within the consumer market, merchants began to form groups that would agree to accept one another’s credit cards. This allowed consumers to shop at a wider selection of stores on the same agreement that they shared with the original merchant.

The inventor of the original universal bank charge card is widely attributed to John Biggins of the Flatbush National Bank in New York. In 1946 Biggins created the “Charge-It” program, which allowed merchants to deposit their sales slips to the bank and the bank, in turn, billed the merchant’s credit customers. A few years later, the Diner’s Club card was created which enabled customers to dine at 27 different restaurants in New York and allowed them to pay for their dining bill at a later date. Though both the “Charge-It” program and the Diner’s Club program are a part of the history that eventually shaped the credit card that we know today, neither is considered true credit programs as customers were required to pay the entire amount due at the time of billing. This is in contrast to the partial payments accepted by most credit card companies today where customers are allowed to carry balances over from month to month. Both of these early programs, however, are important to the invention of the credit card, as they were the conceptual foundation upon which it was ultimately created.

 Though also considered a charge card, American Express issued their first card in 1958 with the Bank of America introducing the BankAmericard later in the same year. The BankAmericard was later re-named the Visa card and is the first of its kind to be widely accepted by merchants throughout the United States and in many other countries.

Knowing who invented the credit card shows us how quickly good business ideas can spread and affect the ways in which we do business around the world. In a relatively short period of time, the credit card has certainly become a convenient tool in the consumer market. From its meager beginnings to worldwide popularity, it’s clear that it is a commercial system that works well for most.