Who invented credit cards?

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A definition of the word “credit” is “trustworthiness.” Any time you borrow something with intent to pay it back can be considered credit — someone is trusting you to pay them back.

The idea of credit has been around for a long time — but it wasn’t until thbe late 1940s that the concept of modern-day rewards credit cards was sired. Do you know the backstory?

We’ve come a long way since the trading of cowrie shells, furs and wampum. (Photo by Joseph Hostetler/Million Mile Secrets)

Who invented credit cards?

It’s hard to imagine a system of exchanging goods like spices or cattle, a world existing not too distantly in our rear-view mirror.

The irony is that even cash seems antiquated for those of us who have been in the miles and points hobby for years. I rarely ever have cash on my person (which is actually pretty irresponsible), because I wouldn’t consider paying a bill with it. The most rewarding way to make purchases doesn’t require ANY physical exchange at all. Just swipe a travel credit card, take what you want, and invest in your upcoming free vacation.

A couple gadgets in the 19th century were designed to represent credit. The first widespread credit card is considered to be the Diners Club card, which came out in 1951. But predating that card substantially, the first semblance of the modern-day credit card, a product you’ve never heard of, was introduced by a man named John Biggins in the mid-1940s.

Why was the credit card invented?

John Biggins was a Brooklyn banker working for Flatbush National Bank. He introduced his invention, a bank card called “Charg-It,” in 1946, to members of his local community. Biggins’ goal was to bring more loyal customers to his bank. Only those with accounts at Flatbush National Bank could use the “Charg-It” card. Because this was experimental, they could use this bank card only at participating local stores.

When the customer used the card to make a purchase, the merchant would give them the items without paying on the spot. The merchant would then deposit sales slips at the bank. The bank would reimburse the merchant, and later bill the customer who used the card.

Major banks jumped into the mix around 1958, when American Express and Visa were the first to introduce their own credit cards. Discover, JCB, and MasterCard were close behind. It wasn’t until the 1980s that airlines created frequent flyer programs and began partnering with banks to give us more incentive to use credit cards decades later.

How did credit cards become popular?

Traveling salesmen were the target audience of the first widespread credit cards. Initially marketed as convenience for use on the road, customers quickly learned the time-saving aspect of the cards, which skyrocketed their popularity. In fact, before it was against the law, card issuers would mail pre-activated credit cards to people who never even applied, in an attempt to gain their business!

How have credit cards changed over the years?

In 1960, IBM augmented the credit card by adding a magnetic stripe to the back, storing sensitive data such as your name, card expiration date and account number.

Since then, we’ve seen a large number of experiments (many of which have not endured) to make credit cards more fun, flashy, convenient and prestigious.

Capital One allows you to put just about anything on the face of your card. (Photo by Joseph Hostetler/Million Mile Secrets)

More successful examples of this include:

  • Mini credit cards meant for your keychain
  • The ability to add a personal picture to the front of the card
  • RFID credit cards that allow for contactless payments
  • Chip + PIN capabilities
  • Digital card number for payments via mobile apps like Samsung Pay and Apple Pay

Card issuers are continually chasing improved security, and at the moment the best solution has been the addition of EMV computer chips.

One “improvement” that makes no real difference other than putting a spring in your step is the introduction of cards stamped from metal, such as:

  • Chase Sapphire Preferred® Card
  • Chase Sapphire Reserve®
  • IHG® Rewards Premier Credit Card
  • Marriott Bonvoy Brilliant™ American Express® Card
  • American Express® Gold Card

Bottom line

The idea of credit has been around for a long time. But a Brooklyn banker named John Biggins invented the model of our modern-day credit cards in 1946. It wasn’t until the 1980s that we could earn travel rewards for spending on their credit cards. You and I were was definitely born into the right era!

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Joseph Hostetler is a full-time writer for Million Mile Secrets, covering miles and points tips and tricks, as well as helpful travel-related news and deals. He has also authored and edited for The Points Guy.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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