6 ways credit cards have changed over the years

The invention of the credit card dates back only to 1947, but if we compare to the beginning credit card what we have now is like comparing cavemen to modern humans. Progress has been made in leaps and bounds, and today’s credit cards offer more than their ancestors.

To really understand this difference, here are the main changes that have been made to credit cards since their inception.

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1. They can be used almost anywhere

These days, it’s a hassle when a merchant doesn’t accept your credit card. That’s a far cry from the early years of using credit cards, when you’d be lucky enough to find a retailer that did.

Although the first credit card was invented in 1947, it could only be used by a few merchants. The same was true of every credit card that came out over the next decade. Card issuers could not convince many merchants to accept their cards due to a lack of cardholders, and they could not enroll customers for cards that merchants did not accept.

That all changed in 1958, when Bank of America sent a BankAmericard to all of its customers in Fresno. Since these customers made up 45% of the city, this provided the motivation for merchants to accept BankAmericard.

The wide acceptance of credit cards means that many consumers no longer even bother to carry cash. And it all goes back to a Bank of America marketing strategy.

2. You don’t need to pay your full balance every month (but you should)

This 1958 Bank of America BankAmericard was also unique in that it offered a revolving line of credit. Previous cards required cardholders to pay off their entire balance each month. You couldn’t make a partial payment and continue to use your card.

While it’s nice to have flexibility in how much you pay when money is tight, the goal with a credit card should be to pay in full. There is no reason to pay interest on a balance if you can avoid it.

3. Transactions are processed in seconds

Imagine checking in at the grocery store. You give your credit card to the cashier. There is no card reader, so they phone and call the credit card company to ask if you can afford the purchase. By the time they’ve managed to reach someone, your ice cream has melted and you try to avoid eye contact with the 20 people lined up behind you.

Before card readers could authorize transactions immediately, paying by credit card was a much more laborious process. Merchants should call the credit card companies to verify that there was sufficient credit for the transaction. And to record a credit card transaction, merchants had manual machines that copied all the details of a credit card, including the account number and the cardholder’s name.

Magnetic strips then became the norm, allowing merchants to process transactions with a swipe of a card. However, the technology has developed further. These types of transactions are vulnerable to fraud, which is why most credit cards now come with EMV chips that offer more secure payments.

4. They are not sent en masse

Bank of America’s “Fresno drop” may be the most famous example of unsolicited credit card mailing, but it wasn’t the only one. After that, the credit card companies would send out ready-made cards in the mail to any potential customers they could find.

As you might expect, this led to its fair share of problems including fraud and cardholders found themselves in debt because they could not afford to pay back what they borrowed.

This practice was abandoned in 1970, when an amendment to the Truth in Lending Act prohibited the sending of unsolicited credit cards.

5. Credit card companies have changed the way they design their cards

The most glaring difference between past and present credit card designs is in the materials. The earliest credit cards were made from paper or cardboard, but plastic eventually became the material of choice. This is still the case today, although many card issuers now also use metal, especially for their more high-end credit cards. And in an effort to be more environmentally friendly, there are also card issuers that make cards using recycled plastic.

This is just one of the many ways credit card companies have updated their card designs over time. They also put more emphasis on the aesthetic with the colors and patterns on the front of each card. A more recent trend has seen card issuers put the credit card number on the back of the card, instead of the front, for a more elegant look.

6. You can earn rewards for every dollar spent

Consumers have become accustomed to lucrative rewards credit cards, but it hasn’t always been so. During the first 37 years of the credit card’s existence, there was no additional incentive to use it.

It was Diner’s Club that broke the mold when it started offering rewards by credit card in 1984. This paved the way for the many cash back and travel cards that are now on the market. At this point, the rewards aren’t just a nice perk, they’re part of the journey. Those with good credit expect a card to have a competitive reward rate and a signup bonus.

The evolution of the credit card

Credit cards have undergone quite a bit of change since their early years. Designs have become more fashionable, cards have all kinds of useful features, and the transaction process has become much smoother. With the rise of payment apps, you don’t even have to hold a credit card in your hand to use it.

It’s unclear what will come next, but if history is any indication, the credit cards of the future will be quite unlike anything we’ve seen to date.

About Dora Kohler

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