Credit Cards Replacing Paper Money By Shahid A card is a small piece of rectangular plastic that is no thicker than a sheet of paper, though it cannot be folded. Initially cards were metal tokens in the shape of coins, then they changed to metal plates to celluloid then fiber and now plastic with perhaps a photo of the holder and a magnetic strip on the reverse containing security information such as a personal identification number enabling the card to be used at money dispensing machines (ATM’s) and merchant establishments.
What is meant by ‘Credit’? Credit is the system of buying some produce or service without having to pay for it at the time of the transaction. The payment is made at a pre-determined later date with the addition of a fee to the bill amount. This is like loaning someone money to buy something without actually giving them the cash but instead giving them the product they want to buy. So, the system of is not new to humanity in fact, it is as old as civilization itself or perhaps even older. The entrepreneurs of the inhuman kind have been proclaimed responsible for identifying human needs and wants as a rollicking business, and so they invented the card system. Though, disputed by many, The Diners Club is credited to be the ones to invent the card in 1950.
When Were Cards Invented? In contradiction to the theory that ‘The Diners Club’ started the card system, the Encyclopedia Britannica records the origin of cards in the United States as far back as the 1920’s. During this time firms such as oil companies and hotel chains started issuing cards to their regular and valued customers who were free to use their services and pay them at a later date. These cards were only useful for purchasing goods and services from the companies and establishments that issued the card. However, references to cards have been found as early as 1890 in Europe. It was only in the late 1930’s that companies started accepting each other’s cards and this is when things began to get complicated for accountants.
Computers Promoted The Use Of Cards In the beginning there were no computers to record the card transactions and the process of verifying the balance of the card was done manually through a regularly updated card directory, much like a telephone directory. This system was time consuming and tedious and provided many loop holes for card fraud. Today, with computerization, the use of a card is instantaneous. All one needs to do is to ‘swipe’ the card through a slot machine and the amount entered. If there is adequate balance in the account of the holder the transaction is completed and the customer billed a month later. Usually cards allow for a 50 day free period. If the outstanding bill is paid during this time the customer
does not have to pay any interest on the transactions, else there is a whopping 2.9% charge per month on the bill amount.
Who Issues Cards? Banks and financial institutions are the main issuers and promoters of cards. The invention of the first bank-issued card is credited to John Biggins of the Flatbush National Bank of Brooklyn in New York. This was the year 1946 and Biggins did not know at the time that he had hit upon an idea that would take the world of by storm in times to come. From this first card called “Charge-It” many cards have flooded the market such as the all famous “American Express” card and the Diners card. The Bank of America issued the BankAmericard in 1958. This card is now known as the “VISA” card. Around the same time the popular MasterCard came into being. These are the two prevailing cards being used today. The era of plastic money had begun.
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credit Definition
Money received in an account either from a deposit or a transaction that results in increasing the account cash balance.
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