Credit cards celebrate their 40th birthday

In today’s world, credit and debit cards are increasingly becoming the main means for people to pay for goods and services. There are predictions that as soon as micro payments can be made using plastic, then cash will rapidly become a thing of the past. It seems that credit cards have come a long way since the first Barclaycard was introduced by Barclays 40 years ago on 29th June 1966.

In 1966 half the population of the UK did not have a bank account and needed to be paid in cash, and the idea of modern cash machines on most street corners would have seemed like the stuff of science fiction. The world’s first cash machine which opened in 1967 was a far cry from those available today, requiring the insertion of prepaid hole punched vouchers to dispense money. Currently there are about 32 million credit card holders in the UK alone, with each card holder owing an average of £1772 according to APACS the UK payment association.

Last year a massive £124 billion was spent using credit cards via the 790,000 retail outlets in the UK which now accept card payments. With the removal of annual fees, the addition of financial extras such as travel insurance, customer loyalty schemes, introductory rates, the explosion of online shopping, increased security, variable and low rate credit cards, it is not surprising that UK card expenditure exceeded cash transactions for the first time in 2004 and look set to continue rising.

The UK seems to have become a thoroughly plastic society, with consumers used to the security and flexibility that plastic has to offer, reaching 6.2 billion transactions last year being made by card in the UK and abroad.

Now we are presented with many different payment choices which were not available 40 years ago, and these are constantly changing and new products and providers are emerging all the time. Direct debits, standing orders, debit cards, store cards, phone or online banking, are just some of the ways that consumers now control their finances, and while cheque payments are in decline, there are still 1.6 billion cheques written each year in the UK making total annual transactions of £1.15 trillion.

While the introduction of plastic payments has made shopping easier and safer, there are now so many different choices to be made choosing between different payment methods, and deciding between all the thousands of products available in the financial marketplace, that it often seems as though personal finance has become harder not simpler than it was back in the 60’s.

Today the levels of competition between lenders, due to all the many different lenders chasing new clients to whom they can sell their financial products, has thankfully meant that customers are getting much better deals than they were in the past, but it has also lead to increased complexity within the personal finance market and the need for personal finance and credit card comparison websites to help make sense of it all.

The predictions are that plastic cards are set to increase even further over the next few years with less traditional providers offering their own financial services to customers. Increased security measures such as biometrics, as well as real-time payments and fund transfers are also expected to become common place. Whether these changes will lead to future payment methods becoming quicker and easier or cause more confusion over what the best card to have is, can only be answered with time.

Disclaimer:

All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.


You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.