The History of Credit
Credit dates way back as early as 1890 somewhere in the U.K. Back then it wasn’t considered a credit card, but rather a Charge card where a certain store will allow its customers to “borrow” moneys for purchases in good faith that they will repay the loan, making the credit in good standings. However, the credit extended only within that merchant’s store and to the selected customers.Unlike today where credit cards are made of plastic; the early versions of credit cards were made from metal coins.
Around 1938, this credit began to be shared between various merchants, as they recognized certain patrons’ spending habits. Again, it was built on trust between merchants and their faithful customers.It was more of a courteous gesture from the store owners to their most valued customers.
The origin for the use of credit cards in North America began in the United States during the 1920s, when individual well known firms, such as oil companies and hotel chains, began issuing credit cards to specific customers. Back then, only the elite customers were allowed to have credit. Those who showed the special credit proof were allowed to purchase the items/goods and or services with the promise of repaying back at the end of the term.
Consumer credit started with local merchants that offered “open book” credit to fortify customer loyalty and increase sales. As major retail chains and malls replaced small shopkeepers in the 1950s and ’60s, stores such as Sears and Montgomery Ward issued credit cards for the same reasons. But if you didn’t like what Sears had to offer, you couldn’t use its credit card anywhere else; so people were stuck shopping at Sears or Montgomery Ward. It was an brilliant way of keeping customers for bigger purchases, such as washing machines and the more expensive items.
Universal or bank cards such as Visa or MasterCard originally were reserved for high- and upper-middle-income households. They were offered to reward the banks’ best customers and served as loss leaders, as most cardholders paid off their monthly balances. Until the early 1980s, bank credit cards were an icon of high social status, used mainly for convenience rather than because of need. This was the motivation for the birth color-coded cards that emerged in the 1980s and 1990s: this gave way to the different types of credit cards, according to the income levels.
Clasically, everybody was on the same page, but the different levels of credit depended upon several factors such as household income, past credit payment, and how long one has credit. For those who have a good long stance with credit, are offered a different color card to distinguish them from the rest. It is more like a ruse to lure the cunsumer to spend more. Credit card companies offer a higher credit limit in the hopes that the customer will overspend and cannot make the payment.
It is purely psychological, in our humblest opinion, that it looks nicer in the wallet to have a “gold” or “Platiinum” card.
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