Oops, IOU? How the World's First Modern Credit Card Was Invented.

Former West Coast Editor
5 min read

If you’re sitting on a pile of credit card debt, some would say you have no one to blame but yourself. Turns out you can also point the finger at Frank McNamara -- well, in a roundabout way. He invented the credit card.

As legend has it, the scrappy entrepreneur created the first credit card after a faux pas. In 1949, he took a business associate out to dinner in New York City. When the bill arrived, he realized he’d left his wallet in a different suit. Luckily, his wife had his back. She paid the tab. Disaster (and dishwashing duty) averted.

Related: 7 Credit-Card Blunders That Could Hurt Any Small Business

The following year, McNamara returned to the same restaurant determined to pay in a new way. This time he wouldn’t be humiliated. He settled his bill with a small cardboard rectangle -- a credit card, the first of its kind.

The feat -- successfully signing the bill and promising to pay it by the end of the month -- went down in credit card history as the “First Supper.” But, depending on who you ask, it might never have happened at all. As charming as the story was and still is, some say it’s nothing more than a tall tale, marketing gold spun to impress the press.

Hogwash or not, there’s no denying that McNamara is credited with devising the world’s first widely used consumer-facing credit card with his business partners, Ralph Schneider and Matty Simmons.

Related: How an Industrial Oops Led This Gunk to Become a Stretchy Smash-Hit Toy

The trio called their pocket-sized portable tool the Diners Club Card, along with the eponymous company they co-founded in 1950 to get the revolutionary payment system off the ground and, more importantly, into people’s wallets.

Like many first-time entrepreneurs, McNamara’s initial customers were mostly friends, family and acquaintances -- basically anyone who would listen to his impassioned pitch. At first, he convinced 200 of them to sign up for Diners Club Card memberships for $3 a month.

Apparently it didn’t take him long to perfect his sales schtick. By the end of his first year in business, the Club had ballooned to 10,000 members in all. With his pioneering credit cards in hand, his customers signed now and paid later at the 2 hotels and 28 restaurants he’d also sold on his innovative idea that year.

Related: The Greasy, Glamorous Rise of Mascara

By 1951, the Diners Club was a sweeping success, doubling its entire customer base. In time, it spread out across the U.S., then far beyond its borders. Later, in the 1960s, the company’s flimsy trademark cardboard cards gave way to sturdier, imprintable plastic. On top of the overall concept, the switch to plastic set the stage for the ubiquitous credit cards that now line our billfolds.

Today, the average American carries 3.7 credit cards in his or her wallet -- and the debt to prove it. The average U.S. household owes approximately $15,355 in outstanding credit card debt, according to a 2015 NerdWallet study. By some estimates, our country’s total credit card debt teeters somewhere in the ballpark of a whopping $900 billion. Think about just how much money that is and maybe you’ll think twice the next time you’re tempted to swipe your credit card.

Related: The Fasten-ating History of the Humble Zipper

Though McNamara’s brainchild -- the invention that paved the way for our twisted love affair with debt -- is still issued in more than 200 countries around the globe to this day, we don’t often see it flashed in restaurants in the U.S. anymore. Nowadays, people more commonly use it to cover international travel expenses. Once the first and only credit card option, Diners Club was largely outshined in the late 1960s by its seductive successors, you know, all those other credit cards we use and abuse. Mainly Discover, MasterCard, American Express and Visa.

In the 1970s, Diners Club bounced back with the launch of its first family of corporate cards. A decade later, the brand followed up with its popular Club Rewards purchase points program, also the first of its kind and also copied by its successors. 

If you can’t beat them, join them.

Should you catch a rare glimpse of them in the wild, you might notice that many Diners Club cards now prominently display the logo of MasterCard, once one of its stiffest competitors. MasterCard’s iconic red and gold symbol, displayed below Diners Club’s own trademark, enables the payment cards to be accepted at more than 38 million merchants worldwide -- and, by extension, the Diners Club legacy to stay afloat.

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