Most of us can agree that credit cards are great to have, especially when you don’t have any cash handy. There’s only one big problem about having them — .when you have to pay your bills at the end of the month. I’m certain you all agree with that.
The history of how credit cards got started is rather interesting. A former Valley College student in Los Angeles during the semester of Spring ’92, wrote about the history of the credit card in the college magazine called “Crown Magazine.” Since I was a student there at the time, when I found this magazine among my college papers, I reviewed some of the articles in it. The article called “Charging it,” by George Simonov caught my attention The following is what I learned from this article.
In 1949, Frank McNamara, a business man, went out to eat with his two friends. At the end of the meal, when he reached for his wallet to pay for his meal, he was embarrassed when he realized he left his wallet at home. He immediately called his wife.
Of course, since there were no cell phones at the time, he called her on the pay phone which was nearby. Fortunately, he had some coins to pay for this call. Luckily, she was home so she was able to rush over to give him the money. This embarrassing situation gave McNamara the idea that revolutionized the American way of spending. He invented Diner’s Club at that time.
Since then, Americans have been on a spending spree, and all because of this addicting piece of plastic. In 1992, it was reported in the “American Heritage” magazine that there were more than 285 million Visas, Master Cards, Discover cards, Diner’s Club cards and American Express cards in use. It was at that time when college students received pamphlets inviting them to apply for a credit card.
One of the former students of Los Angeles Valley College in 1992, remembers reading a report from a newsletter in Los Angeles suggesting carrying two cards; one with no annual fee for purchases to be paid off when an individual received the statement. The other card used at that time, carried an annual fee. The interest rate at that time was 15.9 for a visa card. The average interest rate for credit cards in 1992 ranged from 12 to 22 percent.
When credit cards first came out, financial advisors who have done research stated that those who charged their purchased items spent 34 per cent more than those who did not.
A Business instructor at the college recommended good advice to his students. He told them never to make impulsive purchases. He told them to wait a week, and if after seven days they still have a desire to purchase a certain item, then it might be worth making a second trip to purchase it by a credit card.
Source: “Crown Magazine”
Article “Charging it” by George Simonov