Credit card

Lore & Background

Starting in the late 19th century, charge cards were available in various shapes and sizes; they were made of celluloid, copper, aluminum, steel, and other types of whitish metals. Some cards were shaped like coins, with a small hole allowing them to be placed on key rings. These charge coins were usually given to customers having charge accounts with hotels or department stores. Each card had a charge account number, along with the merchant's name and logo.

By imprinting the coin onto a sales slip, the charge card and charge coin offered a convenient way to copy the identifying information of a charge account. The Charga-Plate, developed by Farrington Manufacturing Company in 1928, was an early predecessor of the credit card and was used in the US from the 1930s until the late 1950s. It was a 2+1/2 rectangle of sheet metal embossed with the customer's name and address, which held a small paper card on its back for signature. When recording a purchase, the plate was laid into a recess in the imprinter device with a paper charge slip and an inked ribbon on top; these were pressed together to record the imprint.

Charga-Plates were issued by large-scale merchants to their regular customers, much like later department-store credit cards. In some cases, the plates were kept in the issuing store rather than being held by customers. When an authorized user made a purchase, a clerk retrieved the plate from the store's files and then processed the purchase.

Charga-Plates sped up bookkeeping and reduced manual copying errors. In 1934, American Airlines and the Air Transport Association simplified the process further with the advent of the Air Travel Card. They created a numbering scheme that identified the card's issuer as well as the customer's account. With an Air Travel Card, passengers could 'buy now, and pay later' for a ticket against their credit and receive a 15% discount at any accepting airline.

By the 1940s, all major US airlines offered Air Travel Cards that could be used with 17 different airlines. By 1941, about half of the airlines' revenues came through the Air Travel Card agreement. In addition, the airlines offered installment payment plans to attract new travelers to purchase airline tickets. In 1948, the Air Travel Card became the first internationally valid charge card for all members of the International Air Transport Association.

Reader's Guide

A credit card allows consumers to build a continuing debt balance, subject to interest charged at a specific rate. It involves a third-party entity that pays the seller and is reimbursed by the buyer. Cardholders must repay the borrowed amount, typically with interest if not paid in full by the due date. Credit cards differ from charge cards (which require full repayment each statement cycle) and debit cards (which draw directly from the cardholder's bank account).