Credit cards emerged in the 1950s as a way to replace cash and checks, but the concept of buying now and paying later existed long before plastic existed
The first credit card in the modern sense was the Diners Club card, issued in 1950. It was a cardboard card used at restaurants in New York City, and the holder paid the full balance monthly. American Express followed in 1958 with a similar charge card model. Bank of America launched the BankAmericard in 1958 in California, which became Visa — this was the first card to let customers carry a balance and pay interest on what they owed, creating the revolving credit system we use today.
Before plastic cards, department stores and oil companies issued paper charge plates and metal tokens in the 1920s and 1930s. These let regular customers buy goods without cash and settle the bill monthly. The idea of deferred payment is even older — merchants have extended credit to trusted customers for centuries. But the card as a portable, standardized payment tool that worked across many merchants is a post-World War II invention.
Key Takeaways
- Diners Club issued the first modern credit card in 1950, designed for restaurant payments in New York City.
- Bank of America's BankAmericard (1958) introduced the revolving credit model where cardholders could carry a balance and pay interest.
- American Express launched in 1958 as a charge card requiring full monthly payment, similar to Diners Club.
- Before plastic cards, department stores and oil companies used paper charge plates and metal tokens starting in the 1920s.
- The concept of buying on credit existed for centuries, but the portable card system that worked across multiple merchants is a 1950s innovation.
Diners Club: The First Credit Card (1950)
Diners Club was created by Frank McNamara and Ralph Schneider, who wanted a solution for paying restaurant bills without carrying large amounts of cash. The first card was issued on February 8, 1950, to 200 members in New York City. It was made of cardboard and could be used at 27 restaurants in Manhattan. The cardholder would present the card, sign the bill, and then pay Diners Club the full amount at the end of the month.
Diners Club charged merchants a percentage of each transaction and charged cardholders an annual fee. This two-sided fee model became the standard for the credit card industry. The card spread quickly to other cities and eventually to other types of merchants beyond restaurants. By the mid-1950s, Diners Club had hundreds of thousands of members and thousands of participating merchants.
Bank of America and the BankAmericard (1958)
Bank of America introduced the BankAmericard on September 9, 1958, in Fresno, California. Unlike Diners Club, the BankAmericard let customers carry a balance from month to month and pay interest on the unpaid amount. This was the first true revolving credit card — the model that dominates today. Cardholders could make a minimum payment and keep the rest of the balance outstanding, paying interest on it.
The BankAmericard expanded across California and then nationwide. In 1976, Bank of America licensed the BankAmericard brand to other banks, and the name was changed to Visa in 1977. Visa became the largest payment network in the world. The revolving credit model proved more profitable for banks than the charge card model because of the interest income, and it became the standard for most credit cards issued since then.
American Express and the Charge Card Model (1958)
American Express entered the credit card market in 1958 with a card that worked differently from the BankAmericard. The American Express card required the full balance to be paid each month — there was no option to carry a balance. This is called a charge card, and it remains American Express's primary product today. American Express charged higher annual fees than Diners Club but offered more benefits and accepted merchants.
American Express positioned itself as a premium product for business travelers and affluent consumers. The company built a reputation for customer service and fraud protection. While American Express never became as widespread as Visa or Mastercard, the charge card model proved durable and profitable. Many premium credit cards today, including some from Visa and Mastercard, now offer charge card versions alongside their revolving credit products.
Charge Plates and Early Credit Systems (1920s–1940s)
Before plastic cards, department stores and oil companies issued charge plates — metal or cardboard tokens embossed with the customer's name and account number. Sears, Macy's, and other large retailers used charge plates starting in the 1920s. A customer would present the plate at the store, and the clerk would use it to imprint the account number onto the sales slip. The customer would receive a bill at the end of the month.
Oil companies like Texaco and Shell issued similar cards in the 1930s and 1940s so drivers could buy gas without cash. These were single-merchant systems — a Sears charge plate worked only at Sears. The advantage was convenience and a record of purchases, but the customer was locked into one store or company. The credit card innovation of the 1950s was the ability to use one card at many different merchants.
How Credit Cards Spread After 1960
After the success of the BankAmericard and American Express, other banks began issuing their own credit cards. Mastercard (originally called Interbank Card) launched in 1966 as a competitor to Visa. By the 1970s, credit cards had become common in the United States. The introduction of magnetic stripe technology in the 1970s made cards more find and easier to process.
The shift from paper charge plates to plastic cards happened gradually through the 1960s and 1970s. Plastic was more durable, easier to carry, and could hold more information. By the 1980s, plastic cards had replaced charge plates almost entirely. The development of ATM networks and online payment processing in the 1980s and 1990s made credit cards even more central to consumer finance.
Why Credit Cards Became the Standard Payment Method
Credit cards replaced cash and checks because they offered benefits to all three parties: merchants, banks, and consumers. Merchants no longer had to handle large amounts of cash and could reach customers who did not have cash on hand. Banks earned fees from merchants and interest from cardholders, creating a profitable business. Consumers got convenience, a record of purchases, and the ability to buy now and pay later.
The revolving credit model introduced by Bank of America proved especially powerful because it let consumers borrow money at will, up to a credit limit. This made credit cards more flexible than charge cards or traditional loans. Over time, credit cards became the dominant form of consumer borrowing in the United States and many other countries. Today, credit card debt is one of the largest sources of consumer debt after mortgages and student loans.
Frequently Asked Questions
What was the very first credit card ever made?
Diners Club, issued on February 8, 1950, was the first credit card in the modern sense. It was a cardboard card used at restaurants in New York City. However, charge plates issued by department stores in the 1920s were an earlier form of credit system, though they worked at only one merchant.
Did credit cards exist before 1950?
Credit systems existed for centuries, but the portable card that worked at multiple merchants did not exist before 1950. Department stores and oil companies issued charge plates starting in the 1920s, but these were single-merchant systems. The innovation of Diners Club was a card accepted at many different businesses.
What's the difference between a credit card and a charge card?
A credit card lets you carry a balance from month to month and pay interest on it. A charge card requires you to pay the full balance each month. American Express pioneered the charge card model in 1958. Most cards issued today are credit cards with revolving balances, though premium charge cards still exist.
When did Mastercard start?
Mastercard, originally called Interbank Card, launched in 1966 as a competitor to Visa (then the BankAmericard). It was created by a group of banks that wanted an alternative to Bank of America's card. Mastercard and Visa became the two largest payment networks in the world.
Why did plastic cards replace charge plates?
Plastic cards were more durable, easier to carry, and could hold more information than metal or cardboard charge plates. Magnetic stripe technology in the 1970s made plastic cards more find and faster to process. By the 1980s, plastic had replaced charge plates almost entirely because of these practical advantages.