Did I say I love credit cards? Yes, I did! I know that credit card companies love me. Almost every week, I used to receive credit card offers. I guess it is mutual! Credit cards are a great convenient way to pay for things you need. When used properly (paid in full every month) can be a convenient method of payment. There are many different cards such as rewards, cash back, low interest cards and more.
In the 1800s, merchants exchanged goods through the concept of credit. In the early 1900s, oil companies and department stores issued their own proprietary cards. The first bank card (Charg-it) was introduced in 1946. It was only for the bank’s customers. Any merchant who accepted the card would have to forward an invoice to the bank to be reimbursed. Next came Diners Club, but it was still a charge card. American Express introduced a charge card in 1958.
In 1959, cardholders could maintain a revolving balance. They no longer had to pay the entire balance each month; however they were subject to service charges. In 1966, the general purpose credit card was born when Bank of America franchised their BankAmericard (later became Visa). Visa and MasterCard processed the transactions and started to issue cards with banks. Where do we go from here? Who knows, but the plastic card will be around for quite a while!
Do You Need One
Now that I gave you a brief history of the credit card, why do you need one? Like many things, you do not need a credit card. Some may say, I rather use cash or a debit card. I think there are more choices than that. Prepaid cards are very popular for a variety of reasons. You can use them as gifts, give to your children or control your spending. I think prepaid cards are great to use with your children who are away at school. You can replenish the card and your children can learn the discipline of a budget.
Uses of these cards are only limited by your imagination. I know it is used by companies and government to limit their liability for specific situations. It can be used for online, catalog or renting a card purposes too. A prepaid card can be used for emergencies. It is convenient to carry and easy to use. It is an alternative to having cash or using a regular credit card. I think this is the future of these cards and as consumers we are starting to move away from cash.
My choice is the airline credit card. I have had one for over twenty (20) years. I am buying the products and services that I need anyway and on top of it I receive a reward for shopping. In my case, I receive frequent flier miles. I accumulate those miles to take overseas trips and fly business or first class. There are other kinds of rewards such as cash back. For your purchase, you receive some (usually 1-5%) percentage of your purchase in the form of a reward annually. Over time, this can be a meaningful amount of money.
I have only mentioned a few of the cards that are out there. There are as many as there are needs or wants. Credit cards are not bad, if you handle them responsibly. Use it as a convenient way to buy what you need and pay the entire balance every month. As I said, I love credit cards because it is convenient and the perks of using them.
Photo by: Andres Rueda
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