Where Do Credit Cards Come From

There is an amusing story behind the origin of the first official credit card. According to the story, in 1949 Frank X. McNamara, head of Hamilton Credit Corporation. was having dinner with Alfred Bloomingdale and his attorney Ralph Schneider at the famous Major’s Cabin Grill, a restaurant beside the Empire State Building. They were going to discuss a credit problem with one of his clients who was unable to pay him back. At the end of the meal, Mr. McNamara realized that he has forgotten his wallet so he called his wife to bring him some money. From this incident, an idea came to life. So in 1950, Diners Club was founded and the first “multi-purpose” credit card was born.

It gives its holder the privilege to make purchases without cash and pay for it on a later date. When a person opens a bank account, he may apply for one in order to receive a specified credit limit equivalent to cash. The bank assigns a certain interest rate per month, and this will be charged on the account whenever the credit limit is exceeded or whenever there is an unpaid balance past due.

For many people, owning one has become a lifestyle. When applying for a credit card, it is always advisable to do extensive research on the different terms and conditions that each bank offers. Doing so enables the customer to choose the type of credit account that is best suitable to his needs. It is also important to understand all stipulations before signing up to any agreement. Because credit cards allow for more freedom to buy, it is a common tendency for many people to splurge and overspend, frequently resulting with unpaid bills and increasing debt. To avoid the misery of bad credit, one must learn how to use his wisely. It is sensible to always pay all balances on time and to know when it is necessary to make another purchase. Thus, owning a credit card also involve self-discipline, modesty and good financial management.