by : Andrew Regan

Using credit cards has become a part of everyday life in the 21st century. People no longer have to bring cash with them when they go shopping, regardless of what they're buying. Some people do it for the convenience of not carrying cash; others use it to purchase items they cannot afford at present.

Though the concept of credit has been around for over thousands of years, the credit card itself is a relatively new invention, created at the middle of the 20th century by businessman Frank X McNamara. Head of the Hamilton Credit Corporation, in 1949 he went for a meal with Ralph Sneider, his attorney and Alfred Bloomingdale, a close friend and grandson to the founder of the Bloomingdale's store. The topic of conversation at the dinner was a problem customer of the Hamilton Credit Corporation.

The customer in question had gotten into trouble when he had lent a number of his charge cards from individual gas stations and department stores to his poor neighbours who needed items in an emergency. In return, the man required his neighbours to pay him back the cost of the original purchase plus some additional money. Unfortunately for him, many of his neighbours were unable to pay him back quickly enough, which led him to borrow money from the Hamilton Credit Corporation.

At the end of the meal with his two friends, McNamara reached into his pocket for his wallet to pay up, but was embarrassed to realise he had forgotten to bring his wallet. He then called his wife at home and had her bring him the required amount of money. Annoyed at the idea that someone with enough funds would have to pay on the spot for a purchase, McNamara vowed never to let this happen again.

Merging the two concepts from that dinner, McNamara came up with a new idea - a credit card that could be used at multiple locations, with a middleman between companies and their customers.

At the time, stores would make money with their own charge cards for use only in their stores, thus advocating customer loyalty and maintaining a high level of sales. However, the new card, called the Diner's Club, needed a different way to make money since they weren't actually selling anything. To make a profit without charging interest, which became a much later concept, the companies that accepted the Diner's Club credit card were charged 7% for each transaction while customers were charged a $3 annual fee. The newly founded company initially focused on salesmen as customers, since they would often need to dine at multiple restaurants to entertain clients, giving the company its name.

In the beginning, progress was difficult - merchants didn't want to pay the 7% fee and didn't want competition for their own store cards; while customers didn't want to sign up unless there were a large number of merchants that accepted the card. However, the concept of the card grew and in 1950 the total number of Diner's Club users grew from 200 to 20,000 people.

The demand for credit cards quickly led to other companies, such as American Express and the Bank Americacard - later known as VISA - entering the market. Today credit cards are a multibillion pound industry and potential consumers are spoilt for choice, having to compare credit cards before filling in applications, making it all the more remarkable that it all started from a chance dinner and dinner topic.