Plastic cards created a revolution in personal finance.
When credit cards were introduced in 1951, people were able to handle their personal finances in a dramatically different way. They didn't have to wait for a paycheck to reach the bank before they could make a purchase. And they didn't have to make a new arrangement every time they needed access to money. By having a one-time credit application approved, they could hand over a plastic card instead of cash or a check, walk away with the goods, and if necessary pay over an extended period of time.
That doesn't mean cards created credit. They just made it easier to use, and available to more people.
VARIATIONS ON A THEME
Credit cards, including American Express Blue, Discover, MasterCard, and VISA, let you charge purchases up to a preset dollar limit, called your available credit or credit limit. That amount can range from $500 to $10,000 or more per card. You can pay back the amount of credit you've used in full, or at your own pace, provided you pay the minimum due each month. Once you repay an amount, it's again available for you to use.
Charge cards, including American Express and Diners Club, let you charge purchases but require you to pay your bill in full each month. If you fall behind, they may charge interest , block use of your card, or both. With these cards, you aren't given a credit limit, though you may sometimes find that no further charges will be approved if you have a large outstanding balance.
Debit cards aren't credit cards at all. They're more accurately check replacement cards that allow a retailer to debit your bank account directly for the amount of a purchase.
BEFORE CREDIT CARDS
Layaway plans, which were once common, let you pay a small amount each week against the purchase price of clothing or a piece of furniture, for example, which the merchant held until you paid off the cost. But if winter came before you finished paying for your coat, you'd still be cold.
Department stores provide charge cards that let you make purchases within that particular store and make a single monthly payment. In the past, you generally had to pay in full, or you could no longer use the card. And you couldn't use it across the street, let alone around the world. Today, however, most charge cards work like credit cards, though they're still limited to a single retailer or affiliation of stores.
Many retailers in the US and around the world accept both credit cards and charge cards, while some accept only one or the other. In fact, most of the major cards are so widely accepted that they have reduced your need for separate cards for different retailers, and the hassle of multiple bills.
VISA and MasterCard are payment networks that handle trillions of dollars of credit and debit card transactions around the world.
Most merchants that accept one of these cards accept both, so from a purchasing perspective there's little difference between them. But some banks have stronger relationships with one or the other network or with American Express and may offer additional benefits for using a particular card.