8 Fun Facts About Credit Cards

By Emily Guy Birken on 24 May 2018 0 comments

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Receiving your credit card statement each month may be the opposite of fun, but credit cards themselves are actually a pretty fascinating subject. The little plastic cards that we all rely on have a long, storied history, and there is a lot that most people simply don't know about their primary payment choice.

Here are some surprising facts about credit cards that might just change the way you look at your wallet.

1. Credit card numbers can be validated via a checksum formula

Valid credit card numbers follow a formula known as the Luhn algorithm. With this algorithm, starting from the right, you double every second digit. (For instance, 1111 would become 2121). You then add together all of the resulting digits. If the number you come up with is divisible by 10, then the credit card number is valid. If it's not divisible by 10, it's an invalid card number.

2. The first digit of your credit card tells what industry issued the card

You may have noticed that all of your cards from the same provider start with the same number. That isn't an accident. The first digit of a credit card indicates what industry issued the card: 1 and 2 indicate an airline card; 3 is for the travel and entertainment industry; 4 and 5 are for banking institutions; 6 is for merchandising and banking; 7 is for gas cards; 8 is for telecommunications; and 9 is for assignments by national standards bodies. American Express account numbers start with a 3, Visa accounts with a 4, Mastercard accounts with a 5, and Discover accounts with a 6.

3. Your card expires but your account doesn't

An expiration serves two purposes. First, a physical credit card can only last for about three-to-four years' worth of swiping and dipping. An expiration date provides your issuer with a date on which to send you a new card before the old one falls apart. Second, the expiration offers a small measure of identity theft protection for cardholders, since it is another piece of information that you would only have if you had the card in your possession.

Most credit card companies send you a new card before your current one expires. If for some reason they don't and you try to use a card that's past its expiration date, it will be declined. But your account should still be valid — you just need to ask your card issuer for a new card.

4. Farming communities used "credit cards" in the 19th century

Long before credit cards were accepted everywhere as payment, farmers would rely on credit extended by local general stores. In the 19th and early 20th century, farmers would need to use credit at their local store for at least part of the year because their income was seasonal. In areas with a large number of farmers, stores started issuing credit cards (initially made of cardboard) to help identify which customers were associated with which accounts.

5. Credit cards were "invented" by several different people

John Briggs created the first bank-issued credit card in 1946. Briggs was a banker with Flatbush National Bank of New York, and he invented the "Charge-It" card, which was technically a charge card since the balance had to be paid in full each month. However, Charge-It was only available for customers of Briggs's bank, and the card could only be used for local purchases.

In 1950, Frank McNamara, head of Hamilton Credit Corporation, created the Diners Club card — the first credit card that could be used in more than one store. McNamara came up with the idea for such a card after a business meal at a major New York restaurant. He had changed his suit before the dinner, and forgotten his wallet in his other jacket. After that embarrassing incident, it occurred to McNamara that it would be useful to have a noncash method of paying for meals. The Diners Club card was born. When it was first introduced, the card was issued to fewer than 200 people and was only accepted at 27 restaurants in New York. However, within a year, more than 20,000 people were using it.

6. Single women could not get credit cards until 1974

Until the passage of the Equal Credit Opportunity Act of 1974, women could not get a credit card without a husband as a co-signer. That meant single women and married women who wished to establish credit separate from their spouses were denied credit cards. The 1974 law made it illegal for creditors to discriminate against applicants on the basis of race, color, religion, national origin, sex, or marital status.

7. Laid end-to-end, all the credit cards on earth would circle the globe 3.5 times

As of 2013, there were over 1.635 billion credit cards in circulation around the world, according to SuperMoney. If all of those cards were laid end-to-end, they would stretch over 86,981 miles, which would circle the earth three and a half times.

8. There are 10,000 worldwide credit card transactions every second

The American Bankers Association estimated in March of 2009 that there are nearly 10,000 credit card transactions occurring every single second worldwide.

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