Who deserves the credit for credit cards?

It's safe to say that those 2-inch-by-3 3/8-inch plastic rectangles in the wallets of the world have revolutionized personal finance and travel. Whether taking a shopping trip to the corner store or a globe-girdling excursion, it is difficult to imagine leaving home these days without a credit, debit or ATM card. But it wasn't that long ago that cash was king and even personal checks were regarded with suspicion.

References to credit cards date to 1890, when some European merchants offered them as perks to their better customers.

But credit for the world's first broad-use charge account goes to Frank McNamara, a New York businessman.

According to the legend, in the fall of 1949, Mr. McNamara had an experience every diner dreads. Reaching to pay the tab for entertaining a client at Major's Cabin Grill, he realized he had left his wallet in another suit. Although his wife was able to rescue him from the embarrassment of having to presumably spend the evening washing dishes, the incident stayed with him. He wondered why a businessman couldn't be free to spend what he could afford rather than how much cash he had in his pocket at the time.

Several weeks later, Mr. McNamara brought up the incident with his lawyer, Frank Schneider, and the two of them worked out the details for a club of diners who would be able to sign for their suppers at selected restaurants and settle the bill at a later date. Enrolling 27 establishments in his scheme, Mr. McNamara offered $3 memberships in his diner's club to 200 friends and acquaintances. In February 1950, the two men sat down for a meal at Major's and became the first diners to say, "Charge it." Although the Diner's Club card was technically not a credit card, since its users were expected to pay their bills each month, the credit card industry recognizes that meal as the "First Supper."

The Diner's Club was an immediate hit. By year's end, 20,000 people were card-carrying members. In 1952, franchises were established in Canada, Cuba and France. In 1955, Western Airlines became the first air carrier to accept the card for payment. Hollywood even got in on the act, with Danny Kaye etching the image in his 1963 hit movie, "The Man From the Diner's Club."

Other financial organizations followed. In 1958, American Express introduced a card designed for paying expenses for entertainment and travel. The following year, Bank of America issued a "revolving credit" card that could be used for a wider variety of purchases and paid off over a longer period of time -- at a healthy interest rate, of course. However, because of federal banking regulations, the card was only valid in California.

In 1966, Bank of America began to establish licensing agreements with other banks that enabled users in other states to charge items. That same year, 14 other banks got together to form Interlink, a bank card processing agreement that gave them the ability to exchange information on credit card transactions.

In 1967, four California banks founded the MasterCharge program, which 12 years later was renamed MasterCard to compete with the BankAmericard program that had also renamed (in 1977) as VISA.

Of course, all of these companies discovered that credit cards were a very profitable form of business. Today there are at least 2 billion credit cards in use around the world, with more than half of them issued by VISA.

The Diner's Club was acquired in 1981 by Citicorp, but the roots of the industry can be traced to Frank McNamara's simple idea. That's why the American Management Association has ranked it among the greatest management decisions ever made.