18 Amazing Facts You Didn't Know About Your Credit Card

If you’re like me, you never ever give your credit cards a second thought. However, after recently getting stuck in a supermarket line behind a nice lady who decided to pay for her groceries with a giant bag of loose change, I developed a new-found appreciation for their convenience.

Heck, nowadays I use credit cards to pay for almost everything. Naturally, I also make sure to pay off my balance in full every month to avoid paying interest.

Anyway, this renewed love affair with my credit card inspired me to learn a little more about them. Here are a few credit card facts you probably didn’t know:

1. In 1950, Diner’s Club became the first company to offer a credit card that could be used at multiple locations. Initially the credit card was accepted at just 14 restaurants in New York. Even so, within a year, over 20,000 people were using it.

2. Diner’s Club founder, Frank X. McNamara, came up with the idea one evening after dining at a restaurant — and realizing he had forgotten his wallet.

3. By 1952, Diner’s Club was being accepted by 400 restaurants, 30 hotels, 200 car rental agencies and 4 florists. Even so, McNamara, thinking credit cards were just a fad, sold his share of the company that year for $200,000 — that’s equivalent to roughly $1.6 million today.

4. Unfortunately for McNamara and his heirs, credit cards weren’t a fad. Around the world, there are now 10,000 credit card transactions made every second.

5. Today, Americans have an astounding 609.8 million credit cards in their wallets. If all those cards were stacked up, they would create a tower 288 miles high.

6. In 1958, Bank of America launched the first general purpose credit card by mailing 60,000 real BankAmericard credit cards to the good folks in Fresno, California. That unsolicited credit card “drop” was the brainchild of bank employee Joseph P. Williams.

7. By October 1959, two million unsolicited Bank Americards had been “dropped” throughout California. Unfortunately, the obvious loose lending standards imposed by Williams’ ingenious marketing strategy resulted in more than one of every five accounts being delinquent; credit card fraud caused even more problems for the bank. As a result, Bank of America initially lost $8.8 million on the launch of its new credit card — and Williams lost his job.

8. In case you’re wondering, the first BankAmericards were made of paper and had a credit limit of $300. The terms and conditions also held the cardholder liable for all charges — including those resulting from fraud.

9. Today, federal law states that your maximum liability for unauthorized credit card use is $50 per card — and $0 for any charges that accrue after you report a card lost or stolen.

10. Speaking of fraud, MasterCard introduced the first credit card hologram in 1983 to help thwart counterfeit credit card operations.

11. In 1976, BankAmericard changed its name to VISA. They’re not the only credit card to rebrand itself; until 1979, MasterCard was known as Master Charge.

12. American Express introduced the first credit card made of plastic in 1958. They also introduced the first credit card made of anodized titanium: the highly-exclusive Centurion card (informally known as “the black card”).

13. Before you get any bright ideas, keep in mind that on top of the annual $2500 fee, American Express’s Centurion card also has a one-time initiation fee of $5000.

14. As far back as the mid-nineteenth century, and up until the modern credit card first appeared, high-end merchants issued “charge coins” to their best customers. These coins, usually made of metal, came in a variety of shapes and sizes, and many also had holes that allowed them to be placed on a key chain. The charge coins also had a unique customer identification number stamped onto them.

15. While charge coin identification numbers were usually no bigger than five or six digits, most credit cards today have 16. The first digit in the string is an identifier that denotes the type of industry that issued the card:

  • 1 and 2 are for airlines
  • 3 is for travel and entertainment
  • 4 and 5 indicate a banking or financial institution
  • 6 is for merchandizing and banking
  • 7 is petroleum
  • 8 is for telecommunications
  • 9 is for other assignments

16. Although the first six digits of your credit card number are known as the Issuer Identification Number, you don’t need all six digits to necessarily tell what type of card you have. For example, cards that start with 34 or 37 are American Express. Visa cards start with a 4, and MasterCards start with numbers between 51 and 55. As for Discover cards, they start with 6011.

17. Digits 7 through 15 make up your personal credit card account number. As for the last digit, it’s a special number known as a “checksum” that’s used to make sure your credit card number is not invalid via a cleverly simple math trick known as the Luhn algorithm.

18. Here’s another math trick: Assuming you have a credit card balance of $2500 with an interest rate of 18%, and only make minimum payments equivalent to the interest for the month plus 1% of the balance, it will take you 17 years to pay it off at a total cost of $5673.22. Of course, that’s only true if you also cut up the card and never use it again. I bet the credit card companies wish you didn’t know that.

Photo Credit: orphanjones

23 comments to 18 Amazing Facts You Didn’t Know About Your Credit Card

  • DC

    (As an engineer you probably already know this. For the wider audience.) A checksum digit is an old data processing trick that predates databases, going back to the early days when it was common to keep data on punch cards and magnetic tape instead of disk.

    The idea is to check validity by calculating the checksum and comparing the calculated digit to the stored checksum digit. A checksum calculation saved time by NOT generating an I/O (access to a file, the slowest step for a computer).

    It’s not 100% effective of course, but if a number passes the checksum test, it’s probably okay.

    Checksums also appear in checking account numbers. The old mark/sense check reading machines that read the OCR/MCR (optical and magnetic ink character recognition) account number printed on the check bottom could send checks that failed the checksum test to a reject bin without being connected directly to a mainframe computer.

    • Len Penzo

      Yes, I am familiar with checksums, DC. Thanks for taking the time to put together the primer and history lesson on them with everyone else though!

  • I didn’t realize that credit cards are relatively new. I can remember receiving unsolicited credit cards (oil companies) when I graduated college (1968). Things have changed! I used to receive unsolicited offers (Capital One) every week until I stopped it.

    • Len Penzo

      I can’t remember the year, but Congress eventually passed a law making it illegal to “drop” unsolicited credit cards in the mail. Now companies can only send applications.

  • Interesting that Bank Americard lost so much money on their initial drops and loose lending standards. Back then they thought it was a bad thing. Today almost half their profits stem from those loose lending standards.

  • My grandparents divorced because my grandpa wouldn’t let my grandma get a charge card back in 1963. (That is my own little-known fact.)

    I wonder what one of those charge coins would fetch today? I bet they look kinda interesting.

  • Wow..that’s scary about the unsolicited credit cards in people’s names. I guess government does need to exist on some level to prevent corporations from putting all the risk onto the people they are pedaling stuff too.

    So was it really a fact that if a bank sent you a credit card in the mail, someone stole it from your mailbox and used it, you’d be liable not the bank? Nutso.

  • David

    Let’s see now. In Fact #2 we were told that the inventor of charge cards was inspired by having left his wallet at home.

    In personal experience and Fact #5, we learn that charge/credit cards are typically carried in one’s wallet.

    So, how would the hypothetical card have solved Mr. McNamara’s problem of leaving his wallet at home, had the card been in that wallet?

  • Mary Clark

    I worked for Atlantic Refining Co 1953-1956. We alphabitized new accounts by hand leaving 15 digits between names. Was to last for years. We ran out of number in months. Mostly in common names like Smith. Dealers soon found out that we did not zero balance and would deduct the cents under $0.50. Housewives would use the cards like a debit card by having the service station give them cash and charge it to the credit husband’s credit card. Employees were given a 15% heating oil discount. When we had VIP tours the most popular machine would be the bursting machine that seperated the pages not the accounting machines. The new computers could not go above the 3rd floor because they were too heavy. The only air conditioning was in the computer room. IBM technicans could only (must) wear bow ties because long ties coult get caught in the machines. Computers had to be operational 24/7 to justify the expense. This was all happening on South Broad St., Philadelphia, PA.

    • Len Penzo

      Wow, that is some interesting stuff! Thanks for sharing, Mary. I especially love the explanation as to why IBM employees wore bow ties.

  • kayumochi

    My father, who is now 75, helped to develop the modern department store credit card. Growing up he always warned us about the dangers of the very thing that was his job.

  • Brian

    I was a University student in the late 70s. At that time, Bank of America was issuing “student” visas to college students with an automatic credit limit of $500 based on a very short application that asked mostly for PII. Nothing about a job or credit worthiness.

    After graduation, when I went to work for BofA, I was told they did that to build brand loyalty and because degreed people had a substantially higher lifetime earning potential.

    • Len Penzo

      Well, in theory, it makes good business sense going after college kids. And I don’t think too much has changed today, Brian. They’re still going after them today!

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