History of Credit Cards Timeline

In 1966, the United Kingdom's Barclays launched Barclaycard, the first credit card outside the United States, marking the beginning of international expansion of revolving credit cards.

Image source: Barclaycard

During the late 20th century, credit cards reached very high adoption levels in several countries: the United States, Canada, the United Kingdom, Australia, and New Zealand.

As of 2006, the US probably had one of the world's highest ratios of credit cards per capita; there were 984 million bank-issued Visa and MasterCard credit and debit card accounts for an adult population of roughly 220 million people. The US credit card per capita ratio was nearly 4:1 as of 2003 and as high as 5:1 as of 2006.

As of 2007, the United Kingdom was one of the world's most credit-card-intensive countries, with 2.4 credit cards per consumer, according to UK Payments Administration Ltd.

A Japanese law enabling cash back from a credit card came into force in 2010. On 19 October 2010, Hideki Fukuba became the first operator of such an online cashback service to be charged by the police.

In June 2018, there were 7.75 billion credit cards in the world, underscoring the massive global scale of credit card adoption.

As of 2023, credit cards are one of the most widely used forms of payment in the world, continuing a decades-long trend of growth in electronic payments.

According to Life magazine, cards were 'mailed off to unemployable people, drunks, narcotics addicts and to compulsive debtors', which Betty Furness compared to 'giving sugar to diabetics.' These mass mailings were known as 'drops' in banking terminology, and they were outlawed in 1970 due to the financial chaos they caused. After 1970, only applications for credit cards could be sent unsolicited in mass mailings.

In the US, the ability of states to enforce usury laws for their residents was limited by the 1978 Supreme Court decision Marquette National Bank of Minneapolis v. First of Omaha, one of several landmark antitrust court cases that reshaped the industry. A 2024 study estimated that these competitive reforms resulted in significant gains for consumers, particularly the poor.

In the US, until 1984, provisions of the federal Truth in Lending Act prohibited surcharges on card transactions, after which merchants gained more flexibility in pricing payment methods.

Through The Credit Cards (Price Discrimination) Order 1990, UK merchants won the right to charge customers different prices according to the payment method used; this right was later removed by the EU's 2nd Payment Services Directive.

The 1996 decision Smiley v. Citibank further shaped the regulatory landscape for credit cards in the United States, affecting how issuers could set fees and interest rates.

Image source: Smiley v. Citibank (South Dakota), N. A.

Profiting from a customer's mistakes is arguably forbidden in two ways: under UK common law if the charges constitute penalties for breach of contract, or under the Unfair Terms in Consumer Contracts Regulations 1999. Given the 1999 ruling by the Office of Fair Trading, it seems unlikely that any further test case will arise.

In 2009, the Credit CARD Act was signed into law, enacting protections against many of the problems that Levin had raised. It specifies that a credit card company must send cardholders a notice 45 days in advance of increasing or changing certain fees, and requires that consumers opt in to over-limit charges.

Image source: Credit CARD Act of 2009

In 2010, the Federal Reserve conducted a public policy study concluding that cashback reward programs result in a monetary transfer from poor to rich households.

At one point, First Premier Bank offered a credit card with a 79.9% interest rate; however, the bank discontinued this card in February 2011 because of persistent defaults.

In a series of lawsuits that began in 2005, merchants in the US have been fighting what they consider to be unfairly high fees charged by credit card companies, culminating in major settlements years later.

In the US in 2008, credit card companies collected a total of $48 billion in interchange fees, or an average of $427 per family, with an average fee rate of about 2% per transaction.

This practice was prohibited by most credit card contracts in the US until 2013, when a major settlement between merchants and credit card companies allowed merchants to levy surcharges on card transactions.

In December 2013, a federal judge approved a $5.7 billion settlement in this case, which offered payouts to merchants who had paid credit card fees—the largest antitrust settlement in US history.

In April 2015, the EU imposed an interchange fee cap of 0.3% for consumer credit cards and 0.2% for debit cards, significantly reducing costs for merchants across Europe.

Image source: Interchange fee

The change proposed in 2022 for interchange fees, by encouraging the use of multiple card networks, was criticized as likely to reduce fraud detection capabilities.