12. Department stores helped develop the concept of revolving credit accounts
From the beginning, merchants offered credit to customers in order to move merchandise, and to attract new customers as well as repeat business. During economic downturns, credit was often the only means of purchasing available to cash-strapped customers. Wanamaker’s and Arnold Constable introduced the concept of monthly billing as a standard procedure at its stores, which was soon followed by department stores across the country, but account management and the limit a customer was allowed to charge was often problematic. Payment records were unwieldy, accounting and billing departments often became swamped with work. Household servants, common in America until post World War II, often had the authority to place orders at stores for the benefit of their employers. Just as often they did not, but charged merchandise anyway, a verbal verification to a sales clerk eager to close a deal all that was necessary.
In 1928, the first charge cards were created, though they were not cards at all. They were small metal plates containing the requisite information, and they needed to be presented when a sale was completed, an embossed copy of the transaction created by running paper receipts over the plate. They most closely resembled the dog tags then worn, and still worn, by American servicemen. Only a person in possession of the card could authorize a credit sale. At roughly the same time, stores began to allow a customer to pay off only a portion of the balance owed to the store, retaining permission to charge other merchandise up to a pre-established limit. Individual store charge accounts remained de rigeur for decades, and of course, many store chains retain them today not only as a convenience to customers, but as an important revenue chain of their own through the interest collected on balances carried.