Credit Card

Credit Card, card that identifies its owner as one who is entitled to credit when purchasing goods or services from certain establishments. Credit cards originated in the United States in the 1930s; their use was widespread by the 1950s. They are issued by many businesses serving the consumer, such as oil companies, retail stores and chain stores, restaurants, hotels, airlines, car rental agencies, and banks. Some credit cards are honoured in a single store, but others are general-purpose cards, for use in a wide variety of establishments. Bank credit cards, widely used in Europe, are examples of the general-purpose card. Establishments dispensing almost every form of product or service are honouring such cards, and it is predicted that credit cards might some day eliminate the need for carrying cash.

When a credit card is used, the retailer records the name and account number of the purchaser and the amount of the sale, and forwards this record to the credit card billing office. At intervals, usually monthly, the billing office sends a statement to the card holder listing all the charged purchases and requesting payment immediately or in installments. The billing office reimburses the retailer directly.

Most of the work involved in credit card operations is now handled by computers. Charges for the use of a credit card are sometimes paid directly by the card holder, and sometimes borne by the retail establishments that accept them. In the latter case, the cost is absorbed into the price of the merchandise. Credit card issuers usually charge interest to credit customers who do not settle their bills within a month. A continuing problem involved in the use of credit cards is the ease with which they can be used fraudulently if stolen or lost, although the liability of the owner is limited. Another possibility, and potential problem, is the development of “smart cards” containing microchips or other forms of high-density digital memory, allowing considerable information (including details of the holder's finances) to be held on the card. Questions regarding the civil rights and consumer protection implications of these developments have already been raised.