As the story goes, 60 years ago, Frank McNamara, the founder of what's considered the first credit card, was eating out at a restaurant, and when the check arrived, he realized that he had not brought along his wallet. The embarrassing situation led him to eventually create the Diners Club card, which allowed members to pay restaurant bills monthly. The card itself was wallet-sized and made of paper and wasn't any fancier than a library card. But the idea behind it-a third party facilitating a "buy-now, pay-later" process-was revolutionary.
The first bank credit card, the BankAmericard, was unveiled when Bank of America gave out 60,000 unsolicited cards in Fresno, Calif., in 1958. Unlike in the past, when getting a loan might have meant taking a trip to the bank’s basement, this card was a ticket for anyone to spend freely and decide when was best to pay it back.
Plenty of large and small players saw the opportunity in the card business and jumped in quickly. American Express(AXP) differentiated itself from other providers by offering the first-ever plastic credit card in 1959. As opposed to flimsier cards, the plastic alternative was designed to “better withstand day-to-day use.”
Through aggressive marketing and the mass mailings of unsolicited credit cards, companies were able to sign up millions of customers in a short amount of time. American Express carved a niche in the saturated market when it released the gold-colored version of its executive credit card in 1968. It was one of the first in a line of color-coded luxury cards geared toward the affluent market—a low-risk, and often heavy-spending, group. The card was simultaneously a status symbol for those high-rollers who wanted everyone to know it.
Here’s one corporate logo that hasn’t changed much over time. Though “Master Charge: The Interbank Card” changed its name to MasterCard (MA) in 1979, the iconic intersecting circles stuck around.
By 1984, 71 percent of all Americans between the ages of 17 and 65 carried a credit card. In fact, the country was downright swipe-happy. By 1986, the average outstanding balance of cardholders with revolving accounts was $1,472, up from $649 in 1970
The first Discover Card debuted in a Super Bowl ad in 1986. Its message: “Very few things cost you nothing to get and pay you back every day. But the new Discover Card does.” The card had no annual fee and cash-back bonuses, which became standard offerings on many cards. It also featured the image of a rising sun, one of the earliest attempts to incorporate art onto the face of a card.
Eventually, it became apparent to providers that the credit card could be a marketing canvas in itself. Instead of their logos occupying the entire face, in the late ’80s, Visa (V) and MasterCard began experimenting with more aesthetically appealing cards. The provider logo was reduced to a tiny stamp on the corner of the card. Organizations, like the NFL, were happy to co-sponsor the cards.
Marketers banked on the idea that customers would want cards that offered them some sort of emotional connection. It turns out, they did. In the mid-’90s, Rolling Stones fans could use this card to get discounts at selected music shops and earn frequent-buyer points to buy items from the band’s merchandise line.
By the late 1990s, over 70 percent of college students had credit cards. Many a parent was not pleased. Students, who often have little or no income, tend to rack up debt (and interest charges)—which is precisely why the credit card companies market heavily on campus. Various companies began to face criticism for placing the school logos on the card, as well as for offering slices of pizza to students who applied for accounts.
The Austin Powers TM Titanium Visa from First USA was a big hit when first released. The sales pitch: “It's Titanium, Baby!” According to a news article at the time, its rate was 10.9 percent, compared to 9.9 percent for the plain, old Titanium Visa. But, as an enticing selling point, cardholders got a wide-screen video edition of Austin Powers: International Man of Mystery after the first use.
Pets are among the most popular designs that customers select for their credit cards these days. AtDiscover (DFS), the orange tabby cat card is a top seller, according to its PR department. While card designs like this one may be appealing, it’s a troubling trend, says Robert Manning, author of Credit Card Nation. “People are picking out a card because they can have a picture of a cat on it rather than looking at the terms,” he says.
Source: www.bigmoney.com, By Caitlin Mcdevitt.
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