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History of Credit Cards
The concept of credit cards came into fruition just before World War I when Western Union
provided some of its customers with a
deferred-payment service. But it wasn't until the 1930's that we saw the origination of actual credit cards in the United States. Their use became widespread during the 1950's. Diners Club issued a
card in 1950 that could be used in various locations.
The idea became very popular and soon banks got into the act. While early credit cards usually
required payment in full in less than 90 days, bankers saw other income possibilities. They could extend the repayment period and attach an interest rate, thus creating a new profit center. In 1951, the
Franklin National Bank in New York introduced the first modern credit card to its customers.
Today, Americans love to use their credit cards. According to November
1998 Federal Reserve Board statistics, the total American credit card debt exceeded $550 Billion.
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Credit Card Categories
Credit cards fall into the following categories:
Bank Cards
As the name indicates, these cards are issued by banks. Examples
are Visa, MasterCard and Discover.
Travel and Entertainment (T&E) cards
Examples are American Express, Diners Club and Carte Blanche.
House Cards
These are local and national department store cards such as Sears, or Macy's, and gas companies such as Mobil, Shell or
Chevron.
Travel and Entertainment and National House cards (like Sears) have the same terms and conditions wherever you apply..
For a list of the best credit card deals you can visit www.bankrate.com, which provides lists of
current interest rates, fees, grace periods and other pertinent information you should evaluate prior to choosing the credit card that's best for you.
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The Myth behind the Minimum Charge
There is never a minimum charge required for Visa or MasterCard and
generally not for American Express. Although this is not actually stated in law, it is part of the agreement with Visa or MasterCard. According
to Bankcard Holders of America, if a merchant accepts American Express and Visa or MasterCard, American Express does not allow the merchant to impose a minimum purchase on American Express users.
This would discriminate against the American Express users. However, merchants who accept American Express, but do not take Visa or
MasterCard may impose minimum charges although American Express officially discourages this practice.
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Credit card surcharges and cash discounts
In some states the customer can be assessed a surcharge for using a
credit card. However, there are laws against credit card surcharges in CA, CO, CT, FL, KS, MA, ME, NY, OK and TX. Additionally, Visa and
MasterCard prohibit surcharges. American Express discourages them in general, and prohibits merchants from charging them if they also
accept MasterCard or Visa. Discover allows surcharges on credit card purchases except in the above states. According to Bankcard Holders of
America, there is one exception to the no surcharge law. If you pay state license fees by credit card, you may have to pay a surcharge. There are no exceptions for retail merchants.
Cash is still king however.
Although merchants are often prohibited from charging surcharges for
using credit cards, they are permitted to give cash discounts. In many areas they can't charge you more than the ticketed price if you pay by
credit card, but they can charge you less if you pay cash. Confused yet? (We are!)
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Credit Card Companies
CardRatings.org – Consumer credit organzation devoted to credit card research that provides free credit card rating info.
StudentCredit.com is
becoming the new way college students apply for credit cards and learn good credit management skills. StudentCredit.com has a large credit
management section and offers a variety of credit cards and loans for students.
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Books on Credit and Managing Debt
Can't find the right book or need to look in a different category? Use the search engine below:
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