When I was search on web to find out some interesting articles about credit card, I came across the the story about the first credit card. I think this would be a very interesting topic for my friends. Although we are using credit cards daily, we might not be aware how the first credit card came from. In the early 1900, people were using cash to pay for everything. Although we could see the increase in individual store credit accounts, a credit card could be used at more than one store was not invented until 1950. It all started when Frank X. McNamara went out to have supper with his two friends.

In 1949, Frank (head of the Hamilton Credit Corporation) were eating with his two friends at Major’s Cabin Grill, a famous New York restaurant located next to the Empire State Building, to discuss a problem customer of the Hamilton Credit Corporation. The problem was that the customer borrowed money from the corporation couldn’t be able to pay the money back. The problem came when the customer lent a number of store charge cards to his poor neighbors who needed items in an emergency. It’s too bad that the neighbors were unable to pay the money back to him and then he was forced to borrow money from the Hamilton Corporation. At the end of the meal, McNamara reached into his pocket for his wallet so that he could pay the money by cash. he was shocked that he had forgotten his wallet. He then asked his wife to send money to him and pay the bill. He then sweared that he would never let this happen again.

Then McNamara came up an idea—a credit card that could be used at multiple locations. However, people still needed a lot of cards in order to do shopping in multiple stores. McNamara had the idea of needing only one credit card. McNamara discussed his two friends Bloomingdale and Sneider and then they started a new company in 1950—Diners Club.

Instead of individual companies offering credit to their own customers, the Diners Club was going to offer credit to individuals for many companies (they pay the companies rather than the customers do it).

Previously, stores would make money with their credit cards by keeping customers loyal to them. However, the Diners Club used a different way to make money. They were actually not selling anything. The companies was charged 7% transaction fees while the customers was charged $3 annual fee for a Diners Club card. We should note that this card was not charging interest. (interest bearing cards came much later)

The first Diners Club credit cards were given out in 1950 to 200 people and accepted in 14 restaurants in New York. The cards were not made of plastic; instead, the first Diners Club Cards were made of a paper stock with the accepting stores on the back.

It’s amazing to see the concept of credit card grew and by the end of 1950, 20,000 people were using Diners Club credit card. —-this is the story of the first credit card.