12 Little-Known Credit Facts

It's true, the world of credit can be a little dry sometimes. So I compiled these 12 little-known credit facts to spice things up a bit. Who knows? They may come in handy during your next round of Trivial Pursuit.

1. People have been "buying now and paying later" for thousands of years. For instance, in the Sumerian period (around 3000 B.C.), you would be charged 33% in annual interest for borrowing barley and 20% for borrowing silver.

2. Frank McNamara is said to be the inventor of the modern day credit card. After not having the cash on hand to pay for dinner one night in 1949, McNamara thought it would be a great idea to have a form of payment (other than cash) that could be accepted at multiple locations. He created the Diners Club Card in 1950 which could be used at 14 different restaurants in New York City. The concept was, of course, wildly successful.

3. MasterCard and Visa are actually card associations (cooperatives comprised of thousands of issuing banks). They are not standalone financial institutions.

4. Before American Express was a credit card company, it was the FedEx of its day. In the mid-1800s, American Express earned a name for itself by delivering parcels, gold, stock certificates, and currency (usually for banks) all over the country. Then came the money order business, and then traveler's checks, and then currency exchange. The first AMEX credit card wasn't released until 1958.

5. Three different bankruptcy laws were passed in America in the 1800s and all three were repealed. Bankruptcy cases today are governed by a piece of legislation called the Bankruptcy Reform Act (which wasn't passed until 1978).

6. The 2007 American Express television ad called "Animals" won an Emmy for Outstanding Commercial. It was a comical black-and-white two-minute spot starring Ellen DeGeneres. Other American Express commercials have featured more than fifteen different celebrities, including Jerry Seinfeld and Beyonce.

7. You don't legally have to supply your driver's license when you use a credit card. According to vendor agreements with MasterCard, Visa, AMEX, and Discover, your driver's license is unnecessary to complete a transaction. Keeping your license private is a good safeguard against identity theft, too.

8. When you signed your credit card contract, you most likely waived your right to sue the creditor. Rather, any disputes must be settled through arbitration. Arbitration firms have recently come under fire from state attorney generals and Congress, and two major firms have left the credit card dispute business altogether. This leaves little opportunity for new credit card disputes to get resolved or find justice.

9. Credit card dimensions adhere to the size constraints laid out in the ISO/IEC 7810 standard. Identification cards like drivers licenses must also follow these international guidelines.

10. When you use your card, you agree to the terms of the account (no formal signature is required). Likewise, when the creditor updates the terms, you "agree" to them with the next swipe of your card. A phrase like "You agree to these terms by using your account" is most likely buried in the fine print of your credit card agreement somewhere.

11. Discover was originally launched by Sears in 1985. The first Discover cards featured the Sears Tower (Sears' headquarters at the time). The Discover card became popular because it had no annual fee attached to it, which was uncommon in the 1980s. Plus, it offered 2% cash back.

12. Merchant agreements with MasterCard, Visa, and Discover prohibit merchants from charging a surcharge to consumers for using credit cards. But the agreements say nothing about prohibiting discounts for using cash, which has become a common practice.

Posted August 12th, 2009 by Carrie Davis.