A Brief History of Credit

It was the year 1730 when a furniture merchant advertised that his furniture could be paid off weekly. This introduced the idea of the installment plan, which was then used by “tallymen”. These accountant-types kept a tally of clothes that were bought with small weekly payments. A wooden stick provided the means of keeping track – with one side notched to represent the amount of debt and the other side to record payments.

As the British middle class grew, clever bankers introduced the idea of overdraft protection. A type of loan that kicked in automatically if an account didn’t have enough money to cover the checks written against it, (probably keeping many out of debtor’s prison).

In 1914, Western Union decided to recognize their best customers with a metal card that allowed them to defer payments without paying interest on their services. It was known as “Metal Money”, an idea that was then applied to gasoline and automotive services by the General Petroleum Corporation in 1924. First offered to employees, it was extended to select customers and then to the general public.

Ford Motor Company let people purchase their new Model-T’s on credit, and AT&T introduced the Bell System Credit Card in the 1930’s. By then the concept had a life of its own, but World War II brought a sudden end to the credit party. After the war however, when business was booming, companies rolled out the credit carpet once again.

1950 brought America the Diner’s Club card — the first credit card that could be used at a variety of stores and businesses. They gave cardholders up to 60 days to make payment in full. Then Franklin National Bank in New York caught on to the Diner’s Club system in 1951 and became the first bank-issued credit card. After screening applicants, they issued the Charge-It card to those approved for use at local retail stores.

By 1958, American Express was urging everyone, “Don’t leave home without it”. But it was Bank of America who introduced the first revolving-credit card. The Bank of America card was marketed all across the state of California, and was the first card to offer its cardholders payment options, where they could pay the debt in full or they could make monthly payments while the banks charged interest on the remaining balances


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