The concept of credit is not a new one. The word "credit" comes from the Latin word credo, to believe or trust, and we know that the Egyptians were using credit methods over 3,000 years ago.
The credit card is a system of payment and is named after the plastic card issued to people who subscribe to the system. Although the term was used several times in Edward Bellamy's 1887 novel Looking Backward, and Western .Union issued charge cards to users from 1914, the modern credit card was not invented until 1949. It is said that Frank X. McNamara, a New York banker, came up with the idea after forgetting his wallet when out entertaining clients. He distributed 200 Diners Club cards, which were essentially charge card accounts as the bill had to be settled entirely on issue.
Modern credit cards, where the issuer lends money to the consumer to be paid to the merchant, evolved quickly. In 1958 the Bank of America created the first credit card to be made available to the mass market. Bank Americard evolved into the Visa system, and MasterCard was established in 1966 by a group of credit-issuing banks. Arriving in the postwar boom period of growth, the credit card system was embraced wholeheartedly by developed countries. However, the perceived unreliability of the banking system in certain developing countries has meant that adoption there is still slow, even now.
Recently, alarm has begun to grow that the credit system in developed countries is out of control. The United Kingdom alone was facing a consumer debt of one trillion pounds sterling in 2004. McNamara's system, more than just a convenience, has changed the way we interact with money forever.
