FINANCE

The History of Plastic

Credit cards have evolved from a novelty for the affluent to a virtual necessity for the average consumer’s everyday purchases. People rely on them to pay for travel, gasoline, and even groceries. Without a credit card, it’s difficult — if not impossible — to rent a car, reserve a hotel, or even rent a movie.

Now considered an essential part of everyday life, the idea of paying multiple businesses with a single card started in 1950 when Frank McNamara and his associates founded Diners Club. Two hundred people signed up for the first card, and 14 Manhattan restaurants agreed to accept it. A year later, 42,000 individuals were carrying the card and more than 330 restaurants were accepting it.  The first cards were charge cards, which meant that balances had to be paid in full each month. Franklin National Bank in New York introduced bank credit cards, with their buy-now-pay-later convenience, in 1951.

Today, an estimated 157 million Americans — out of the total adult population of about 200 million — have at least one credit card. By contrast, 46 million have a valid passport and 185 million have a driver’s license.

Key Dates in Credit Card History

1950 — Frank McNamara, owner and president of Hamilton Credit Corp., dines out in Manhattan and tries settling his bill using a small cardboard card with his signature. He later founds Diners Club.

1951 — Diners Club claims 42,000 people are carrying the paper card. It is accepted by 330 businesses and eight car rental agencies. A discount fee is deducted from payments to merchants and paid to Diners Club. Membership costs $3 a year, and balances must be paid in full each month.

1952 — Franklin National Bank of New York introduces the first bank credit card, which allows cardholders to buy now and pay later.

1955 — 100 banks issue credit cards. Cardholders have a 30-day "grace period" free of any interest.

1958 — Bank of America introduces its BankAmericard in Fresno, Calif. American Express charge card is launched.

1959 — American Express introduces the first plastic charge card.

1960s — The growth of the credit card industry is fueled by agreements between states allowing banks to branch across state lines.

1966 — Bank of America announces plans to license BankAmericard nationwide. Competitors form a second national system, called Interbank Card Association, in which they agree to accept one another's local credit cards. MasterCharge is launched, and 36.5 million cards are issued.

1977 — BankAmericard changes its name to Visa.

1979 — MasterCharge announces plans to change its name to MasterCard.

1981 — MasterCard introduces the first premium "gold" card.

1990 — Life magazine calls Frank McNamara, who died in 1957 at age 40, one of the 100 most influential Americans of the 20th century.

2001 — Visa completes the world's first secure payment transaction using a Palm™ handheld computer.

2005 — There are 929.6 million General Purpose (credit and debit) cards issued by Visa, MasterCard, American Express and Discover in the United States.