Credit card
A payment card allowing revolving credit and debt accrual.
Wikipedia / Wikimedia Commons
A credit card is a payment card, usually issued by a bank, that allows users to purchase goods and services or withdraw cash on credit, thereby accruing debt that must be repaid later. Unlike charge cards, which require full repayment each month, credit cards allow consumers to build a continuing debt balance subject to interest. They differ from debit cards, which function like currency. As of 2018, there were approximately 6.5 billion general-purpose credit cards worldwide, and in 2020, around 500-600 million credit card accounts were in circulation in the United States, held by 72.5% of adults.
- first_successful_modern_credit_card
- BankAmericard (1958)
- global_cards_in_2018
- ~6.5 billion (general-purpose credit cards, per Nilson Report)
- US_cards_in_2020
- ~500-600 million (credit card accounts, per Federal Reserve and other sources)
- US_adults_with_at_least_one_card_2020
- 72.5% (187.3 million people)
- predecessor
- Charga-Plate (1928)
- first_general_purpose_charge_card
- Diners Club (1950)
Lore & Background
The concept of charge cards dates to the late 19th century, with cards made of celluloid, copper, aluminum, steel, and other metals, often shaped like coins with a hole for key rings. These charge coins were given to customers with charge accounts at hotels or department stores. In 1928, the Farrington Manufacturing Company developed the Charga-Plate, a 2½-by-1¼-inch rectangle of sheet metal embossed with the customer's name, city, and state, used with an imprinter to record purchases. Charga-Plates were issued by large-scale merchants and sped up bookkeeping.
Reader's Guide
The modern credit card emerged in 1958 when Bank of America launched the BankAmericard in Fresno, California, the first successful program recognizable as a modern credit card. It solved the chicken-and-egg problem of merchant and consumer acceptance by mailing cards to 60,000 Fresno residents simultaneously. This card was later licensed and in 1976 unified under the brand Visa. In 1966, a group of banks created Master Charge to compete, later becoming MasterCard. Early US credit cards were mass-mailed unsolicited to low-risk bank customers, a practice known as 'drops,' outlawed in 1970 after causing financial chaos. The system was computerized in 1973 under Dee Hock, Visa's first CEO. Landmark antitrust cases, including the 1978 Supreme Court case Marquette National Bank of Minneapolis v. First of Omaha Service Corp., made the industry more competitive. Outside North America, Barclays launched Barclaycard in the UK in 1966. Credit card adoption varied globally, with some countries slower due to cash-oriented cultures or alternative payment systems.
Did You Know?
- The Charga-Plate, developed in 1928, was a 2½-by-1¼-inch rectangle of sheet metal used to imprint customer information on sales slips.
- Introduced in 1936, the Air Travel Card was initially for airline employees and later became a widely accepted charge card for travel expenses; however, it was never a general-purpose card like Diners Club or BankAmerica
- Bank of America launched the BankAmericard in Fresno, California, in 1958, mailing cards to 60,000 residents to encourage merchant acceptance.
- Unsolicited mass mailings of credit cards, known as 'drops,' were not fully banned until the Fair Credit Billing Act of 1974 and later the Credit Card Accountability Responsibility and Disclosure Act of 2009, not in 1970
Frequently Asked Questions
Who is Credit card?
A credit card is a bank-issued payment instrument that lets the holder purchase goods, services, or pull cash against a revolving line of credit, creating a debt that must be repaid later. Unlike a debit card, which spends money you already own, it functions as a short-term loan embedded in a card.
What are Credit card's powers/role?
Credit card grants the holder the ability to carry an unpaid balance across billing cycles, with interest accruing on whatever is not settled. This revolving-credit mechanism sets it apart from charge cards, which demand the full balance be cleared every month.
How does Credit card's story end?
A credit card relationship concludes when the account is closed—either by the cardholder or the issuing bank—after every outstanding balance, fee, and interest charge has been paid in full. The physical card is then destroyed and the revolving-credit agreement is terminated.
Why is Credit card important?
With 7.75 billion cards in circulation worldwide as of mid-2018 and 1.09 billion in the United States by 2020, it is one of the most prevalent consumer-credit tools on the planet. In the U.S. alone, 72.5% of adults (roughly 187 million people) held at least one, making it central to everyday retail spending and personal credit-building.
What is Credit card's origin story?
The concept traces back to the Charga-Plate system introduced in 1928, then to Diners Club in 1950 as the first general-purpose charge card. The BankAmericard, launched in 1958, is widely credited as the first successful modern revolving-credit card that brought the format to the mass market.
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