The best way to properly appreciate the current convenience of credit cards is to tap your card at a payment terminal, wait for it to complete, and then think about what it replaced.
Credit cards have always had several advantages over traditional currencies, including portability, safety, and lack of intrinsic value. Furthermore, real credit cards allow you to pay your payment over a longer period, although for a little price.
Because of the development of credit cards, Historian Jonathan Kenoyer claims that the practice of representing financial transactions with worthless instruments stretches back at least 5,000 years to when the ancient Mesopotamians utilized clay tablets to transact business with the Harappan civilization. Although it was still inconvenient, a slab of clay-bearing seals from both cultures was preferable to the tonnes of copper each would have had to melt down to manufacture the coins of the time.
The Basic Design of Credit Cards
Merchants in the 1800s would credit local farmers and ranchers using credit coins and charge plates. Banker John Biggins introduced charge cards in 1946 with the Charg-It card, which could be used within a two-block radius of his bank in New York City. This "closed-loop method" involved customers' purchases being sent to their bank and merchants reimbursed for their participation.
Frank McNamara, unable to pay for a business dinner without his wallet, inspired the creation of the Diners Club Card in 1950. He suggested a little cardboard card that members might use, like a charge card, with the amount paid in full at the end of each month.
Bank Cards and the Concept of Revolving Credit
Major banks were planning to introduce their consumer credit cards, which would have a nice twist. Bank cards would effectively transform into credit cards by allowing customers to roll over a balance from month to month in exchange for a small finance charge.
In 1958, Bank of America was the first to market by sending out credit cards without being asked to certain areas of California. When BankAmericard was introduced in 1966, it was the first credit card available to the general public in the United States. Ten years later, it would be rebranded as Visa to reflect its expanded global reach.
The Interbank Card Association (ITC) was established in 1966 by a consortium of California financial institutions; it would go on to issue Mastercard, the country's second major bank card. These days, Mastercard and Visa are two rival payment processing networks managed by boards stacked with ex- and current-level corporate leaders.
In contrast to their nonbank rivals, the bank card associations run on an "open-loop" system that depends on cooperation between banks and the movement of money between them. Changes to the bylaws of both the Visa and Mastercard organizations have made it possible for banks to become members of both and issue cards for both networks.
Lawsuits and Rules of Procedure
In the 1970s, while the use of credit cards was rapidly expanding, that legislation was enacted to address consumer concerns about the sector. Some of the alterations to regulations include Because of the restrictions imposed by the Fair Credit Reporting Act of 1970, only certain types of information could be included in a consumer's credit report.
Credit card companies were prohibited from sending active cards to clients who hadn't requested them under the Unsolicited Credit Card Act of 1970. The Truth in Lending Act was updated in 1974 to become the Fair Credit Billing Act to prevent unfair billing practices and give customers a way to challenge incorrect charges.
The Equal Credit Opportunity Act was enacted the same year (1974) to ensure that no potential borrower would be denied a loan based on gender
Forbidding abusive debt collection tactics and updating the debtor's bill of rights, the Fair Debt Collection Practices Act of 1977 was an amendment to the Consumer Credit Protection Act. Limits on interest rates, fees, and other charges on credit card accounts were imposed as a measure of consumer protection by the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.
The Sears Corporation's Discover Card was introduced at the 1986 Super Bowl. Further litigation was sparked when Discover sued Mastercard and Visa for antitrust violations for allegedly blocking its member banks from issuing Discover Cards. As a result of the Supreme Court's 2004 decision not to hear the defendants' appeal, banks, and other card issuers are now free to offer multiple card brands, ending a six-year legal battle.
