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I remember having only 2 credit cards in the early 70's, Gulf Oil and Texaco. You would pay in full each month and use to get which ever was on sale during the "price war". Of course, that was back when mac and cheese was 20 cents per box, and on payday you got to have a burger or hotdogs thrown in....ahhhh yes, those "early years" of $20 per month payment on your apt full of furniture and $600 per month take home pay....
The forerunner of the credit card was store credit/accounts which were heavily used by many people. Run a tab at the bar, have an account at the pharmacy, have an account with the local grocer, have an account with the general store, have an account with the department store, buy large items on an installment plan, etc. All of those things existed back into even the late 19th century. The system was nearly ubiquitous, especially in rural areas, by the early 20th century. Department stores in urban areas even started issuing embossed metal plates that acted as an early credit card in the 1920's.
The change was ultimately not in the fact that people used credit to buy a variety of items, but in a re-assigning of the risk (from merchants themselves to banks) and the rise of the ability to "buy anything, anywhere, anytime" using a single non-cash payment source. All of these changes were broadly embraced by merchants.
It is very much a myth that consumer credit is a recent invention, most of the country was built on consumer credit and it allowed rural communities to survive. The issue for comparison is that since there were no central records beyond a ledger book at the local store, no one knows exactly how much consumer debt was carried in the past. It is certainly higher today in sheer dollar numbers, but many of those charts also aren't indexed for inflation.
I think BankAmericard (which became Visa) was the first national credit card that any one could get, in about 1960. Although AmEx and Diners Club were already in existence as elite cards, and were usually accepted only in places like upscale restaurants and hotels and transportation tickets, pretty much used only for travel and entertainment, not for purchases of retail goods. But then, there were no malls then, either. A few chains like Sears issued charge cards before 1960, but most merchants just let customers open charge accounts, which were accounted on paper in-house and a hand-written bill mailed out at the end of the month, or the shopper just reminded at the end of the month that his charge account is now due. My parents had accounts at the gas station and grocery store, and would just say "charge it" and pay at the end of the month. I think that was common throughout the 20th century. Even in the 1800s, regular customers ran a tab at the general store. The song "16 Tons" was a celebration of the black hole of credit and how it was a form of virtual slavery.
As late as the 1970s, some oil companies were still mailing out unsolicited credit cards like junk mail. They got burned, because users had not signed any user agreement, but it was good for business for a while.
Before the 1960s, there was no such thing as credit ratings, virtually anyone could get credit without any collateral. Nearly everyone was honest, and respected the principle of trust on a credit transaction, and people were conscientious about not getting in over their heads. When buying a car, you just give the dealer a down payment and he hands you the keys and the pink slip, and a few days later you get a payment book in the mail from a finance company you've never heard of.
Getting credit in the 1970s wasn't all that hard. You got one of the gas company cards, used it a couple times and got another, did the same and suddenly American Express would send you this happy mail that you now qualified for a $50 per year American Express card. Once you had that, Master Card and then Visa would get all kissy-kissy with their offers. Solid payment on a car loan was another way of getting offers.
Many people of that era who defaulted on those easy high interest credit cards, but who now have significant equity in their homes bought during the same period, have become prime targets for debt collection agencies who are now buying the bad debts for pennies on the dollar. These collection companies now see the accumulated home equity as an easy source of gold and are using the easy-to-access online credit reports as road maps to the gold.
Those folks who thought they were escaping one set of highway robbers by waking away from high interest CC loans are now finding themselves in the hands of a completely new set of high interest bandits who are using old laws and open credit reporting to get very rich.
My dad had American Express and Diner's Club...and it always seemed fancy when he pulled one out of his wallet (70s/80s).
Especially since we lived overseas.
I remember in the 1970s my father was the talk of the town because he got an AMERICAN EXPRESS Charge Card. He told us only the elite got an American Express and no one else we knew had a mass market credit card. A few people had a Sears Charge Card but you had to pay off the bill every month and the credit limits were very small.
Credit Cards like Visa and MasterCard that were given to pretty much everyone was more common in the 1980s and on. And then then you had to have a great job and credit to get one and the credit limits were really small.
I think credit cards for nearly everyone is one of the things in recent American history that has had an incredible impact on individuals and society.
What do you remember about credit cards back in the 1950s to 70s?
They were called BankAmericard and Master Charge back then. Instead of Visa and MasterCard. I don't think American Express was very important.
[quote=NJGOAT;29255176]The forerunner of the credit card was store credit/accounts which were heavily used by many people. Run a tab at the bar, have an account at the pharmacy, have an account with the local grocer, have an account with the general store, have an account with the department store, buy large items on an installment plan, etc. All of those things existed back into even the late 19th century. The system was nearly ubiquitous, especially in rural areas, by the early 20th century. Department stores in urban areas even started issuing embossed metal plates that acted as an early credit card in the 1920's.
The change was ultimately not in the fact that people used credit to buy a variety of items, but in a re-assigning of the risk (from merchants themselves to banks) quote]
NJGoat is ABSOLUTELY correct. The farming regions of America operated on this non-cash - credit - economy from the very early years of non-Indian settlement. Buy most of your dry goods and staples on credit from the general store in the Winter, buy your seed/feed etc. on credit in the Spring, sell your eggs/other produce to the same store at a debit in the Summer, sell your crops for debit and some cash in the Fall.
The mail-order companies - Montgomery Ward and Sears Roebuck - had a no-money-down pay-on-time option that must have started at least in the 1890s - I have a repro 1897 catalog which shows people could order in that way. I think farmers must have been accustomed to using this sort of purchasing method because of their everyday experiences with a non-cash economy. I do wonder how Sears or MonkeyWard would collect on defaulters or repossess in that period before the 1930s?
So, then when did this change from store credit to bank credit occur? Was it the late 1960s? Someone else said that it was related to the development of computerization, which makes sense.
In my personal experience, my parents sent me off to college in 1976 with their Visa card, which I was NEVER supposed to use except in the case of extreme emergencies. I think I used it first for airfare. My first personal credit card was a Texaco gas card, which I received in the mail without asking for it sometime in the mid-80's. I remember using it all the time when I moved to LA in 1986.
Just want to say that this has been interesting to think about because now I'm seeing the connection between the development of Big Banking and computerization. Which should have been obvious, but I didn't think about it until now!
The absence of credit card back in the 50s wasn't due to greater financial virtue. It was because there was no way to authorize transactions using computers and telecommunications. If the technology had existed to allow it, they'd have had them.
Credit cards were first introduced in the 1950s. The very first card was the Diner's Club card. Only a couple of hundred of people had it at first but by the end of the 50s, thousands had it.
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