The use of credit cards in contemporary American society has become ubiquitous. They may be used for convenience, to make it easier to track spending, to access pre-determined lines of credit or as a means of building up points in affinity rewards programs. There are a wide variety of types of credit cards designed to accommodate the lifestyle of the card holder.
According to the Public Broadcasting System, more than 115 million American credit card holders carry a balance on at least one card. The average credit card holder owned at least three different credit cards, and the credit card debt in households that carried a balance averaged nearly $16,000. As of May 2010, Americans owed more than $852 billion in revolving debt, and 98 percent of that revolving debt was owed on credit cards.
Department stores and oil companies developed proprietary revolving credit accounts in the early part of the 20th century as a means of encouraging customer loyalty. The paper or cardboard cards issued to account holders were only good at the issuing establishment. The Diner's Club card, which was introduced in 1950, was the first true credit card to gain wide acceptance beyond the local area. The American Express card followed in 1958. In 1966 BankAmericard, the precursor to the Visa credit card, became the first general purpose bank credit card. The InterBank Card Association was formed that same year and later introduced their MasterCharge card, which later became MasterCard, as Visa's prime competitor in the bank revolving credit card market.
There are three primary types of credit cards including proprietary credit cards, travel and entertainment cards and revolving credit cards. Proprietary credit cards are issued by individual companies and may only be used by outlets owned by or authorized by the corporation. Department store credit cards and oil company credit cards are examples of proprietary credit cards. Travel and entertainment cards, such as Diner's Club and the traditional American Express card, differ from revolving credit cards in that they must be paid in full at the end of each billing cycle. Revolving credit cards such as MasterCard and Visa, represent a line of credit that may be accessed through the card. A balance may be carried on this card up to the credit limit assigned by the issuing organization.
Proprietary credit cards are less prevalent as many companies have partnered with revolving credit card issuers to produce co-branded, or affinity, credit cards. These cards relieve the proprietary company from the burden of maintaining credit accounts, while still providing a means of encouraging loyalty from their customers. Airline branded bank credit cards are an example of co-branded credit cards.
Credit cards provide a safe means of transacting business for consumers. If a credit card is lost or stolen, the consumer is liable for no more than $50 of fraudulent charges. Most credit card companies provide a detailed statement of purchases which may be useful for tracking spending or to verify expenses for budget or tax purposes. Many travel and entertainment cards do not have a pre-set spending limit, but rely on the customer's spending and payment history to determine credit limits.