The World Of Fantastic Plastic
As we now spend more on credit and debit cards than we do with cash, here's a brief history of plastic cards.
As I revealed last month, we Brits spent more on our credit and debit cards than we did with cash in both 2004 and 2005. For the record, in 2005, we spent £295 billion (29% of total personal spending of £1,005 billion) on plastic cards, compared to £273 billion using cash (27%). This trend is set to continue, so we really are heading towards a plastic economy as cash goes out of fashion.So, how did plastic cards come to dominate our wallets and purses? Here are a few of the milestones on the plastic road, courtesy of banking payments association APACS:1951First UK credit card becomes available when Donald McCullough launches Finders Services after visiting the US.1962Diners Club becomes Britain's first major credit card company following the merger of Finders Services and Credit Card facilities.1963On 10 September, American Express launches the UK's first charge card, usable in 3,000 UK outlets and 83,000 overseas. The annual fee is £3 12s (about £50 in today's money) and applicants need an annual income of £2,000 (about £27,500 today).1966On 29 June, Barclays launched Barclaycard, which is still Britain's most widely held credit card.1967The world's first cash machine (hole in the wall or ATM) was installed at Barclays in Enfield. It was opened on 27 June by Reg Varney of On the Buses fame; in order to get £10 in cash, users inserted £10 punched-card vouchers bought over the counter.1972Lloyds, Midland, NatWest and Royal Bank of Scotland (RBS) join forces to launch the Access credit card.Lloyds launches the first ATM that uses plastic cards with a magnetic strip.1974Section 75 of the Consumer Credit Act provides protection to consumers using credit cards to buy goods costing between £30 and £10,000 (now £100 and £30,000). Section 84 of the Act limits a cardholder's liability in the case of fraud to £50.1977Barclaycard issues the UK's first company credit card, and the Consumer Credit Act comes into force on 1 July.1980sUK banks begin to issue both Access and Visa branded credit cards.1985/86The LINK network of cash machines is established, with 33 members, mostly building societies; the rival Matrix network is launched in 1986.1987Barclays leads the way again by launching the UK's first debit card, the Visa Delta card, using the brand name Connect.1988Switch debit card launched by Midland, NatWest and RBS, with the first Switch transaction taking place in October.1989LINK and Matrix networks merge; MINT network launched.1990sThe American Eagles arrive in the UK, widening the choice of credit cards and introducing more affinity cards.1990Cashback on debit cards is introduced, with seven million transactions taking place in 1990.1992MasterCard launches the Maestro brand for its international debit card.1993Half of UK adults regularly use cash machines.1994Just seven years after their launch, half of UK adults have a debit card.1995For the first time, the number of debit-card transactions exceeds the figure for credit cards.1996The average cash-machine withdrawal exceeds £50 for the first time.1996/97Visa Electron debit card launched, followed by the Switch Solo card, with every transaction being pre-authorised, allowing these cards to be marketed to young adults, including students.1997/98The first trial of chip-enabled cards takes place in Northampton and Dunfermline.1998First non-bank cash machine opened (there are now tens of thousands in operation).1999Half of UK adults now have a credit card, and the average transaction value exceeds £50 for the first time. Online banks such as Egg, Smile and Marbles appear. Annual fees die out, and many card issuers start to offer loyalty and incentive schemes to cardholders.2000On Christmas Day, Egg launches the UK's first 0% on balance transfers deal, revolutionising the credit-card market overnight. Borrowers can now transfer their existing card debts to Egg and take a six-month breather from paying interest. There are now scores of 0% deals to choose from. Most banks drop their charges for withdrawing cash from ATMs using a debit card.2001More than half of all retail spending is on plastic. Over a billion cash-machine withdrawals are made during the year. Debit-card expenditure exceeds credit-card expenditure for the first time.2002Chip and PIN is launched in the UK. By 14 February 2006, almost all UK-issued plastic cards are Chip and PIN cards. More than half of all cash acquired by UK adults comes from cash machines.2003More than half of all adults regularly use debit cards; the average number of credit cards per cardholder exceeds two for the first time.2004Switch is re-branded as Maestro. UK plastic-card spending exceeds cash spending for the first time. The average debit-card user spends over £5,000 a year. Halifax launches the first cashback debit card.2005Plastic-card spending exceeds cash spending by £22 billion.So, there you have it: a history of plastic cards. Personally, I use my debit card only for cash withdrawals, and I almost never spend on it or get cashback, as I prefer to pay with my credit card. Here's why:I earn about £10 a month from my cashback credit card; you can get cashback of up to £2 for every £100 that you spend learn more here.You can enjoy up to a year's interest-free credit on retail and online spending with a 0% on new purchases card.You can transfer existing balances to a 0% balance-transfer card and dodge interest for a year or more.The legal protection offered by Section 75 makes it safer to buy goods costing £100 or more.Here's to sensible spending on our fantastic plastic!>Compare credit cards here at the Fool!