Why Do Credit Cards Exist?

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Man holding a card with his fingure - Why Do Credit Cards Exist?

Credit cards are just one of the many forms of payment that everyone has used in the past to keep the economy flowing. But have you ever wondered why credit cards exist?

What’s the point of swiping a piece of plastic when you could just use cash or a debit card? It seems like an unnecessary hassle, right? Well, believe it or not, credit cards are important in our modern society.

So if you’re ready to dive deep into why credit cards exist, keep reading and let us do the heavy lifting.


When Were Credit Cards Made?

Picture this: it is the mid-20th century, and people are starting to brace right now and pay later. But how do you do that without carrying around wads of cash? Enter the credit card!

The concept of a credit card dates back to the late 19th century when merchants in Europe and the US began issuing charge plays to their customers. These were metal cards with the customer’s name and account number engraved.

The customer charged their purchase to their account and paid the balance at the end of the month.

But it wasn’t until the 1950s that the modern credit card as we know it today was introduced. The Diner’s Club Card, created by businessman Frank McNamara in 1950, was the first credit card.

The card was initially intended for use in restaurants but quickly expanded to include other merchants.

Around the same time, other companies like American Express and Bank of America also began issuing credit cards, and the rest is history.


What is the Real Purpose of a Credit Card?

While credit cards are often associated with overspending and high-interest rates, their real purpose is much more practical. At their core, they’re a convenient way to make purchases without carrying around cash or writing checks.

They are to make transactions online or in person, and many parts also offer rewards like cash back or airline miles for using them. But there are other benefits, including:


  • They help you build your credit.
  • Offer a heightened level of protection against fraud and unauthorized purchases.


Why Do You Have to Have a Credit Card?

The truth is the answer to why you have to have a credit card is that you don’t have to have one.

However, there are some situations where having one makes your life much easier. For instance, if you want to make online purchases or book travel, accommodations are often required.

Many online retailers and hotels won’t accept debit cards, and car cash isn’t an option when booking a flight or rental car. However, a credit card can also come in handy for emergencies.

For example, if your car breaks down or you have an unexpected medical expense, having a credit card can help you cover the cost until you’re able to pay it off.


Why Are Credit Cards a Trap?

Ah, the age-old debate about credit cards. While credit cards can certainly be useful tools, they can also be traps if you’re not careful. The main issue with credit cards is the potential for high-interest rates and fees.


  • If you don’t pay off your balance in full each month, you can end up paying a lot of money and interest charges if you miss a payment or go over.
  • Another trap of credit cards is overspending. Spending more than you can afford to pay back is tempting.
  • Plus, carrying a balance on your credit card can hurt your credit score.


All that being said, credit cards can only be a trap. If you don’t use them to pay off your balance in full, you can take advantage of the rewards and benefits without falling into debt.


Is It OK to Never Use a Credit Card?

So is it OK to never use a credit card? Of course! Some people prefer to use debit cards or cash for their purchases, and that’s totally fine if you don’t want to deal with the potential risk and fees that come with using a credit card.

However, there’s no need to force yourself to use one. Ultimately this decision to use a credit card or not is up to you. It’s important to weigh the pros and cons and choose the best for your financial situation and goals.


Final Thoughts on Why Credit Cards Exist

So what’s the verdict? Should you have a credit card? Ultimately that question is about finding what works for you. If you can use a credit card responsibly and pay your balance in full each month, then it’s a good idea for you.

But one thing you should understand is what the purpose of a credit card is. And we hope that the information that we’ve given has helped you figure that out.