Non-plastic credit cards

Such cards were mainly used to encourage customer loyalty. It was really kind of like a tab. You went in, showed your card, and then you had to settle at the end of the month. Use of the cards encouraged customers to keep frequenting the same stores and oil companies. However, these cards were made of celluloid or of cardboard.

In 1946, a man named John Biggins had an idea. What if he issued a card that would be good at several merchants, rather than at just one? He issued the first bank card in this way. It was called Charg-It, and could only be used locally at merchants who accepted the card. The merchants forwarded the bill to Biggins' bank, and Biggins paid the bill, and at the end of the month, the cardholder settled with Biggins. Obviously, in order to use this card, one had to belong to Biggins' bank.

The first real advance in widespread credit card use came with the Diners Club card, which was founded in 1949. This card could be used at places across the country (usually for food and other entertainment), and it is considered the
first widespread credit card.

Plastic credit cards

In 1959, a year after issuing its first card, American Express debuted the plastic credit card. American Express had already been known as the inventor of the travelers check, so it was no surprise that American Express also created local currency cards for use in various countries around the world.

Another advance was also made in 1959. Plastic credit cards became attached to revolving balances. Until this point, cardholders were required to settle up at the end of every month. No carrying a balance. With revolving credit, that all changed. Now, credit limits were introduced. If a customer didn't use the limit, he or she could keep using the card the next month as long as a minimum fee was paid. This meant that companies could earn more in finance charges, and cardholders could put more on their credit cards.

National credit card systems

National credit card systems were first introduced in 1966. A group of banks joined together to form a system that would accept cards. This means that it is possible for cards by Visa and MasterCard (which have extensive "open" systems to be accepted by more merchants in more places.

As technology has advanced, so too has credit card processing and credit card systems. Now, most credit transactions are handled electronically -- many of them in real time. Computers manage everything, using the fiber optics Internet capabilities that connect the country and the world. Your transaction is transmitted from the terminal when the card is swiped, your account is checked to make sure there is enough money, and then an approval (or denial) is issued. And it all happens in a matter of seconds.

The future of credit cards

Technology is moving at such a rapid pace that things continue to change for the way credit cards are processed. Radio frequencies make it possible for some cards to be merely tapped against the terminal to activate payment. No more swiping. And online technology allows customers to link credit card accounts with third party payment systems so that it is not even necessary to enter a credit card number for each purpose. There is even talk of connecting biological data to credit accounts so that having a card becomes completely unnecessary -- just use your finger or submit to an eyeball scan.

It will be interesting to see how credit card accounts develop moving forward, but it is important to remember that wise use of credit is important, no matter the technology used. Follow these guidelines to ensure that you are on the right track for wise credit card use:

• Avoid going over your credit limit.
• Keep tabs on your credit report.
• Check your monthly statements for errors.
• Don't spend money unless you have it.
• Pay off your balance each month to avoid finance charges.
• Pay on time.