It’s hard to imagine a world without them, but the plastic rectangle in your wallet is a relatively new invention. The story of the history of credit cards isn’t just about money. It’s a fascinating journey of innovation, risk, and societal change that started with a forgotten wallet.
As a financial planner who got his first Discover card in the 90s, I’ve had a front-row seat to the modern evolution of credit. That first piece of plastic taught me a powerful lesson about the psychology of spending. A lesson that began for society decades earlier.
This guide will walk you through the complete, chronological history, from early charge coins to the revolutionary “Fresno Drop” and the digital wallets we use today.
We’ll cover what the first true credit card was, who the key inventors and companies were, and why the 1950s became the explosive starting point for the world of consumer credit.
Key Takeaways: A Quick History
- The First Modern Card: The first general-purpose **charge card** was the **Diners Club card**, created in 1950 by Frank McNamara after he was embarrassed by forgetting his wallet at a business dinner.
- The Birth of Revolving Credit: The first true **revolving credit card**, the BankAmericard (which became **Visa**), was mass-mailed to residents of Fresno, CA in 1958 in an event known as the “Fresno Drop.”
- Key Technological Leaps: The **magnetic stripe**, invented by an IBM engineer in the 1960s, revolutionized transaction speed and security, followed by the **EMV chip** in the 1990s.
- Consumer Protection Arrived Late: Major legislation like the **Truth in Lending Act (1968)** and the **CARD Act (2009)** was created to protect consumers from the high-risk practices of the early industry.
Key Takeaways Ahead
Phase 1: What Came Before Plastic? (1800s – 1940s)
The Earliest Forms of Credit
Long before banks got involved, the concept of “buy now, pay later” existed in simpler forms.
In the late 1800s and early 1900s, large department stores, hotels, and oil companies issued their own metal tokens or “charge plates.”
These small metal tags, embossed with a customer’s name and address, allowed loyal patrons to make purchases on account at that specific store.
John Biggins and the “Charg-It” Card
The first true bank-issued card was invented in 1946 by a Brooklyn banker named John Biggins.
His “Charg-It” card allowed members of his bank to make purchases at local stores.
When a customer used the card, the store owner would deposit the sales slip at Biggins’ bank. And the bank would pay the merchant and bill the customer. It was a revolutionary idea, but it never expanded beyond his local neighborhood.
Phase 2: When Was the First Modern Credit Card Invented? (The 1950s)
The most famous origin story belongs to Frank McNamara, the founder of Diners Club. In 1949, while hosting a business dinner at Major’s Cabin Grill in New York City, he realized he had forgotten his wallet. To avoid the embarrassment, he vowed to create a solution.
The “First Supper”: The Diners Club Story (1950)
In February 1950, he returned to the same restaurant and paid with a small cardboard card—the first Diners Club transaction, an event now known as “The First Supper.” The Diners Club card was a charge card; it could be used at multiple participating restaurants, but the balance had to be paid in full each month.
The “Fresno Drop”: BankAmericard and Revolving Credit (1958)
The game truly changed in 1958. Bank of America, led by executive Joseph P. Williams, decided to launch a new type of card, one with a “revolving” feature that allowed customers to carry a balance and pay interest.
To kickstart the program, they conducted an infamous experiment known as the “Fresno Drop.” In September 1958, the bank mass-mailed 60,000 live, unsolicited BankAmericard credit cards to nearly every household in Fresno, California.
This event, while causing initial chaos (a staggering 22% delinquency rate), successfully proved the model for a general-purpose, bank-issued revolving credit card. This BankAmericard program, later named Visa by founder Dee Hock, would eventually become a global payments network.
💡 A Planner’s Perspective: My First Credit Card
I got my first card, a Discover card, in college around 1990. The limit was only $500, but it felt like a superpower. It taught me my first hard lesson about >how credit card interest works when a $70 concert ticket ended up costing me nearly $100 after a few months. That’s a lesson no textbook can teach and highlights the risk that came with the convenience of revolving credit.
Phase 3: How Did Credit Cards Go Global? (1960s – 1970s)
The success of BankAmericard sparked a wave of competition. In 1966, a group of banks formed the Interbank Card Association (ICA), which would later become Mastercard.
American Express, already a giant in traveler’s checks, had launched its own charge card in 1958, issuing its first plastic card in 1959.
The Rise of the Networks and the Magnetic Stripe
The most important technological leap of this era was the magnetic stripe. Developed in the 1960s by an IBM engineer named Forrest Parry; thanks to a clever suggestion from his wife involving a household iron. I
t allowed a card to store customer data securely, paving the way for electronic transaction processing and the end of clunky manual imprinters.
Phase 4: What Key Laws Shaped the Credit Card Industry?
The early days of credit cards were like the Wild West, with few consumer protections. This led to a series of landmark laws designed to protect consumers.
| Law / Act | Year | What It Did in Simple Terms |
|---|---|---|
| Truth in Lending Act | 1968 | Required lenders to clearly disclose key terms like APR and other fees. |
| Fair Credit Reporting Act | 1970 | Gave consumers the right to see their credit report and dispute inaccuracies. |
| Fair Credit Billing Act | 1974 | Established procedures for resolving billing errors on credit card statements. |
| CARD Act | 2009 | The most significant modern reform, it restricted retroactive interest rate hikes, limited fees, and required clear payment disclosures. |
To understand your rights fully, you can visit the official Consumer Financial Protection Bureau (CFPB) website.
Phase 5: How Has Technology Changed Credit Cards Since the 1990s?
- The EMV Chip (1990s):
The small microchip on the front of your card, known as an EMV chip, was developed to combat counterfeit fraud. It creates a unique, encrypted code for each transaction, making it far more secure than the static data on a magnetic stripe. - Contactless Payments (2000s):
Using RFID and NFC technology, “tap-to-pay” became mainstream, offering a new level of speed and convenience. - Mobile Wallets (2010s):
The launch of Apple Pay, Google Pay, and other digital wallets moved the physical card into our smartphones, adding layers of biometric security like fingerprint and facial recognition.
Conclusion: From Charge Plate to Digital Wallet
The journey of the credit card is a story of accelerating convenience. What began as a simple solution to a forgotten wallet has evolved into a global financial system that powers modern commerce. From the first cardboard Diners Club card to the secure digital wallets on our phones, each innovation has shrunk the time between desire and purchase. Understanding this history gives us a critical context for the powerful financial tools we carry in our pockets every day.
Ready to master your own cards? A good place to start is knowing if credit cards have routing numbers for payments.
❓ Frequently Asked Questions
1. What was the very first credit card?
The first general-purpose charge card was the Diners Club card, created in 1950. The first revolving credit card was the BankAmericard, launched by Bank of America in 1958.
2. Who invented the credit card?
Frank McNamara is credited with inventing the modern charge card (Diners Club). Bank of America is credited with inventing the revolving credit card (BankAmericard/Visa). John Biggins invented the first bank-issued card in 1946, but it was limited to his local neighborhood.
3. When did credit cards become plastic?
American Express issued the first plastic credit card in 1959. This innovation made the cards more durable and was a necessary step before the invention of the magnetic stripe.
4. What was the “Fresno Drop”?
The “Fresno Drop” was a 1958 marketing experiment where Bank of America mass-mailed 60,000 unsolicited, active Bank of America credit cards to residents of Fresno, California, to launch their new revolving credit program.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
