How Credit Cards Made Money Convenient: A Journey From the Forgotten Wallet

You probably swipe your card without thinking twice, but what if I told you that credit cards almost never existed? It all started with one man forgetting his wallet at dinner.

Before Plastic: The Credit System Nobody Remembers

Here’s the thing—buying on credit wasn’t invented with the credit card. Back in the late 1800s and early 1900s, your local general store would just keep a notebook tracking what you owed. City department stores did the same. To make things faster, businesses started handing out charge coins (basically tokens with an account number), then paper charge cards. By 1928, the Charga-Plate arrived—a metal card with your name and address engraved on it.

But there was a problem: these cards only worked at the place that issued them. You couldn’t take your department store card to a restaurant.

The Accident That Changed Everything: Frank McNamara’s Forgotten Wallet

Fast forward to 1949. Frank McNamara was having dinner, reached for his wallet, and… nothing. That awkward moment sparked an idea: what if you could use one card at multiple restaurants?

In 1950, McNamara partnered with Ralph Schneider and Alfred Bloomingdale to launch Diners Club. The difference was revolutionary—their card worked at 27 different restaurants. You could actually use it somewhere other than where you got it.

There was a catch though. Diners Club was a charge card, meaning you had to pay the entire bill every month. Plus, there was a 7% interest fee on purchases and a $3 annual membership. Still, it spread like wildfire. Ironically, McNamara sold his stake for $200,000, convinced credit cards were just a fad. He was wrong—Bloomingdale predicted they’d “make money obsolete.”

Bank of America Cracked the Code: When Credit Actually Became Credit

The real game-changer came in 1958 when Bank of America launched the BankAmericard in Fresno, California. This wasn’t just another charge card—it offered revolving credit. You didn’t have to pay everything at once.

But here’s the genius part: banks had a chicken-and-egg problem. Merchants wouldn’t accept a card with no users. Customers wouldn’t get a card that nobody accepted. So what did Bank of America do?

The Fresno drop. They mailed credit cards to 60,000 people at once—45% of Fresno’s population already banked with them. Suddenly, merchants had a reason to accept the card because millions of cardholders existed. Within years, the BankAmericard (which became Visa through licensing agreements and later reorganization in 1976) was everywhere.

The Gold Rush: Mastercard, Rewards, and Why You Win Now

Other banks couldn’t let Bank of America dominate, so they teamed up to launch Master Charge in 1966—which eventually became Mastercard. By the 1980s, credit cards exploded as interest rates dropped and rewards programs kicked in.

Airlines started offering points. Then Discover introduced cash back. Today, you can literally earn thousands in travel rewards or cash back just by choosing the right card and spending smartly.

The guy who forgot his wallet 75 years ago couldn’t have imagined this. Credit cards went from a single-merchant token to the most powerful spending tool on the planet.