Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange – the forerunner of banknotes – was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century.
The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.
From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called “tallymen” because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper’s plate – a “buy now, pay later” system – was introduced in the USA. It could only be used in the shops which issued it.
The first credit card
In 1950, Diners Club and American Express launched their charge cards in the USA, the first “plastic money”. In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.
The first use of magnetic stripes on cards was in the early 1960’s, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960’s.
The word credit comes from Latin, meaning “trust”. Ironically. Almost half of all credit card disputes are about internet transactions. And the default rate on the 1,5 billion credit cards in the U.S. is 13%.
Checks (cheques) came into use in 1875. But before you write one out you should consider how safe is your bank.
It will be worth your while to read the Federal Trade Commission financial educators.