Credit cards have become an integral part of modern finance, with an impressive 82% of Americans owning at least one. With individuals averaging around 3.84 cards and a total average balance of $6,365 per person as of 2023, the prevalence of credit cards cannot be overstated.
The origin of credit cards dates back to the early 20th century, marking the evolution of credit systems that have been utilized by merchants for centuries, allowing consumers to purchase goods on credit and settle their accounts later. The introduction of credit cards formalized this process, enabling consumers with a physical card and a predetermined credit limit accessible at various retailers.
The following presents a concise timeline highlighting significant developments in credit card history:
The inaugural credit cards emerged in the 1900s, primarily utilized by department stores and oil companies, resembling modern store cards due to their limited usability at select outlets.
Store-like credit options surged in popularity during this period, particularly cards from department stores and dining establishments, catering to affluent users who preferred not to carry cash.
The launch of the Diner’s Club card in 1950 revolutionized dining out, facilitating cashless payments for restaurant visits. Subsequently, in 1958, American Express unveiled its inaugural charge card.
By the late 1950s, credit cards that permitted revolving balances came to market, contrasting with charge cards that required full payment every billing cycle.
The introduction of the BankAmericard in 1966 marked a pivotal change as it became the first generalized credit card, distinct from the limitations of specific merchant cards.
The rise of the BankAmericard and similar credit products captured significant public and regulatory attention, leading to the 1968 enactment of the Truth in Lending Act, which mandated clear disclosure of credit terms, allowing consumers to effectively compare different credit card offers.
The 1970s heralded crucial shifts within the credit industry, highlighted by landmark regulations such as:
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The Fair Credit Reporting Act, which set new standards for the collection and reporting of credit information, outlining what data the bureaus could gather, including a consumer’s payment history, outstanding debt, and previous loans. It also established regulations on who could access a personâs credit report, allowing insurers to pre-review applicants’ credit before issuing policies.
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The Unsolicited Credit Card Act of 1970, which restricted the automatic issuance of credit cards to pre-approved individuals who had not applied for them.
A significant transformation emerged with the Equal Credit Opportunity Act of 1974. While women were technically eligible for credit cards, they often faced systemic biases. Many banks denied credit card applications from women without a male co-signer, despite their income.
This act forbade discrimination based on gender or marital status in credit applications.
Throughout the 1980s, credit cards primarily functioned as vehicles for purchases via revolving credit. However, the landscape shifted dramatically with Discover Financial Services launching the first rewards credit card.
Today’s Discover offerings, like the Discover it® Cash Back and Discover it® Miles, continue to attract cardholders eager for rewards.
In the 1990s, credit card companies turned their focus towards travel rewards. American Express debuted Membership Miles, which laid the groundwork for todayâs Amex Membership Rewards Points, enabling consumers to accumulate points redeemable with airlines. Current Membership Rewards-enabling cards include the American Express® Gold Card (see rates and fees) and The American Express Platinum Card® (see rates and fees), providing premium travel rewards.
The emergence of EMV (Europay, Mastercard, and Visa) technology, embedding a microchip within cards for enhanced security, was prevalent during this period.
Want to discover more? See our recommendations for the top American Express credit cards
The surge in popularity of rewards and travel cards led to the introduction of premium credit cards with elevated annual fees offering exclusive benefits, such as access to airport lounges. Today, premium rewards cards remain in high demand, including options like the Chase Sapphire Reserve® and Capital One Venture X Rewards Credit Card. Co-branded travel cards, like the United Club℠ Infinite Card and Delta SkyMiles® Reserve American Express Card (see rates and fees), continue to deliver attractive travel perks.
The enactment of the Credit Card Accountability Responsibility and Disclosure Act in 2009 introduced safeguards, regulating how often companies could increase interest rates and requiring 45 days’ notice before such changes.
In the 2010s, contactless payment systems gained traction, including digital wallets, enabling customers to simply tap their cards at checkout.
With the embrace of technology, merchants adapted to support these smooth and swift payment methods.
Related: The best Chase cards available today
The journey of credit cards is remarkable and extensive. Today, leading credit card networks like Visa, Mastercard, Discover, and American Express operate alongside thousands of issuers, from banks to credit unions.
This wealth of options allows consumers to pick cards tailored to their unique financial needs at any stage of life. For instance, you might select the Chase Slate Edge® for balance transfers, the Capital One Quicksilver Cash Rewards Credit Card to maximize cash back, or the Hilton Honors American Express Card (see rates and fees) to save on travel expenses.
Canât decide on a credit card? Check out Yahooâs best credit card picks
This article was edited by Rebecca McCracken
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