Did you know the first credit card was made of cardboard? Here are five random (but fascinating) facts about credit cards
The first credit card was cardboard
The first independent credit card was Diners Club, founded in 1949 after hungry co-founder Frank McNamara took clients out to dinner and realised he’d left his wallet in another suit. His wife paid the bill and Frank thought up a charge card that would help him avoid embarrassment next time. He pitched the idea to the restaurant owner, and next day consulted his lawyer to get the ball rolling. Frank’s first Diners Club card was a cardboard charge card and a signature.
American Express made a fictional credit card come to life
Before 1999, there was a myth about an American Express Black Card, ultra-exclusive and hard to get. The myth became so popular that American Express decided to go ahead and actually make the card. “There had been rumors going around that we had this ultra-exclusive black card for elite customers,” said Doug Smith, director of American Express Europe. “It wasn’t true, but we decided to capitalise on the idea anyway.”
If you pay your credit card each month, you’re known as a ‘deadbeat’
If you’re the sort of person who pays off your credit card balance in full and on time every month, there’s a term in the industry for you: a ‘deadbeat’. (Other terms are ‘nonrevolver’ and ‘transactor’, but those aren’t quite as funny.) Deadbeats are less profitable customers for a credit card company, because they never pay interest, and they often avoid account fees and other charges. Credit card companies still get merchant fees from the stores where you use your card, but other than that revenue stream, you aren’t making money for them.
The first digit of a credit card tells you what type of card it is
The first digit on your credit card actually mean something – the type of card it is. As a general guideline, 1 and 2 are for airlines, 3 is for travel and entertainment (such as American Express and Diners Club), 4 and 5 are banks or other financial institutions (usually 4 for Visa and 5 for MasterCard), and 6 is for merchandising and banking. (Get out your credit card and see if the number matches up!)
The first general-purpose credit card was sent as junk mail
BankAmerica credit cards were originally mass-mailed out in 1958 to 60,000 people, totally unsolicited, in California. The cards were made of paper and had a preapproved limit of $300. Unfortunately, 20% of all credit cards became delinquent and Bank of America lost US$8.8 million. Unsurprisingly, the bright spark who thought of the marketing scheme lost his job.
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