8 Little Known Credit Card Facts

There’s little doubt that we live in an age of secure, no-wait credit card purchases. The process of saving up a few dollars here and there to make luxury purchases has been replaced by rectangular pieces of plastic with your name on it and a logo. You can even get your credit card customized with a sports team logo if you like.

The modern credit card is pretty cool and incredibly convenient, and these are 8 little known credit card factoids you may enjoy knowing.

1: Credit Card Origins Date Back To 19^th Century

Among the first to use credit card systems were farmers and general store owners during the 19^th Century. Due to the way that farmers earned a living based on harvest times, store owners would often extend credit for a portion of the year. In regions with a large number of farms to a single or few general stores, the shops’ proprietors began issuing cards made out of cardboard with numbers on them to identify the local farmer and keep track of the debt.

Although the farmer-general store credit card system ranks among the first used in the U.S., John Briggs is considered the inventor of the modern day credit card. In 1946, Briggs issued the first bank-supported credit card in conjunction with Flatbush National Bank of New York. The fledgling product was initially called the “Charge-It” card, a line that later became associated with Betty and Wilma on the TV cartoon series “The Flintstones” when the ladies went shopping.

The Briggs-invented cards were only issued to members of the Flatbush bank and balances had to be paid off at the end of each month to maintain good standing. Cardholders were limited to local purchases.

In 1950, Hamilton Credit Corporation chief Frank McNamara took the basic idea of the credit card and expanded it to create the Diners Club card. As the story goes, McNamara forgot his wallet when attending a business dinner. His embarrassment prompted him to think about how convenient it would have been to be able to pay without cash on hand. The first Diners Club cards were only issued to 200 people and were accepted in only 27 New York eateries. That figure grew to more than 20,000 in just one year and 1.3 million cardholders by the 1960s. The rest, as they say, is history.

2: Credit Cards Part Of Women’s Rights Movement

The equal rights movement continues to be hotly debated in American culture, but women have come a long way since winning the vote in 1920. It may come as something of a surprise given the prevalence of women who enjoy the benefits of multiple credit cards and rewards programs, but a single woman had almost no shot at getting one until the U.S. Senate passed the Equal Credit Opportunity Act in 1974.

Until the equal rights legislation was signed into law by Pres. Gerald Ford, married women who wanted their own credit card were routinely denied by banks unless their husbands co-signed. This put inherent limits on their ability to establish credit. Single and divorced women were also commonly asked to bring a male co-signer and, if approved, were offered disproportionately lower credit thresholds.

But the good news is that today we have more than 200 women serving in Congress, and they have the same access to credit cards as men.

3: Credit Card Digits Tell A Story

To many credit card holders, the numbers appear as random as a Powerball lottery ticket. But all those seemingly scrambled digits tell a story about your card’s origins.

For example, the first number of your credit card has a direct connection to the type of industry it was issued. The numbers 1 and 2 generally indicate the airline industry issued it. The number 3 highlights a relationship to entertainment and travel. The numbers 4 and 5 trail back to a bank and 6 is similarly traceable to banking and/or merchandising.

You might notice that your gas card starts with the number 7 while the number 8 relates to telecom and 9 is national standards bodies. Amex generally begins with 3, Visa with 4, MasterCard with 5 and Discover with 6. What seems entirely random to many cardholders is no accident.

4: Expiration Dates Not What They Seem

There’s a school of credit card thought that contends the expiration date on your card is basically meaningless. If that has your head spinning thinking this is credit card anarchy, relax.

Your credit card remains active and useful until one of two things occurs. Either you cancel the card, or the lender does. When a lending institution issues you a new card, it often cancels the old one at the same time. It isn’t that uncommon to swipe a card and be declined because a new one is sitting in your mailbox even if the expiration date has not yet passed. This begs the question: why bother updating cards?

• Maintenance: Plastic cards wear out with normal use. They will eventually be unreadable by credit card machines. The expiration date generally works as a scheduled maintenance appointment.
• Security Matters: Changing expiration dates every few years provides an added layer of security. If a cybercriminal uncovers your credit card number, they will still need to know the expiration date to use it. The CVV code on the back of your card is another example of enhanced security.

5: Credit Cards Excellent Way To Rebuild 

It may seem counterintuitive but getting a credit card after a financial and credit score setback ranks among the best ways to get back on your feet. There are a wide variety of credit card products that can be strategically employed to enhance your portfolio and amp up your credit score. These range from secured cards to low-limit options to gold and platinum cards. Regardless of your credit history, there may be an option that can be used as a building block to earn a high FICO score.

6: Banks Open Arms To Credit Card Consolidation

It’s not uncommon for everyday people to have two or more open credit cards. Sometimes you end up paying interest on multiple cards at different rates. At the end of the day, a sound money management strategy would be to pay one card at the lowest possible rate. Seems like a no-brainer.

The good news is that many lenders are willing to expand the limit or issue a brand new credit card and allow you to transfer all of your debt to a single account. If the interest rate is right, credit card consolidation can save you plenty on unnecessary interest. Don’t hesitate to call around and negotiate.   

7: By Using Simple Math You Can Validate A Credit Card

The Luhn or “Modus 10” algorithm is a simple checksum process that you can use to determine if a credit card is valid. Begin on the right and multiply every other digit by 2. Add up all the other digits and add the two sums together. If the total can be divided by 10 evenly, the credit card number is likely to be a valid one. The method is not necessarily meant to validate cards. It’s primarily used by companies to avoid errors.

8: Credit Card Companies Spend Money On You

Between the marketing, advertising and administrative costs, the average credit card company will spend more than $80 to acquire each new customer. In today’s economy, outfits don’t mind the price because the average new customer earns them about $120 in profit.

This is all good news for customers because you know card companies are eager to get your business. It’s also good news for card issuers, considering the first all-purpose credit card was sent as junk mail in 1958 with a pre-approved limit of $300. Credit cards have come a long way.