Credit card reward programs: a short history

By Jeremy M. Simon

The popular reward credit cards of today draw their concept from an idea that has been around for some time. 

Rewards programs began in the late 1800s with the founding of a company by Thomas Sperry and Shelly Hutchinson that sold stamps to merchants. S&H Green Stamps (also known as Green Shield Stamps) could be earned by consumers when making purchases at supermarkets, department stores, gas stations, and other retailers. 

The S&H Green Stamps acted as bonuses for consumers based on how much they bought. Once a certain number had been collected, consumers could redeem the stamps for products from the company's catalog or at the local Green Shield shop. S&H Green Stamps were popular in the United States from the 1930s to the early 1980s.  

By the 1980s, airlines began to take part in rewards programs with the creation of frequent flier programs that provided airline miles to consumers.  The credit card industry would introduce a greater array of loyalty programs a few years later. 

The AT&T Universal Card was the first credit card to offer rewards to customers who used it, providing cash back on every purchase that could be applied toward the cardholder's phone bill. 

In 1986, the popular "cash back" program from Discover Financial Services, a division of Morgan Stanley, appeared. Discover introduced the concept of dolling out cash to the cardholder at the end of every year based on the total amount of charges placed on the credit card.

At present, more than 60 percent of all credit cards issued in the United States are linked to a rewards program, based on industry estimates. Versions of rewards credit cards still provide both airline miles and cash back. Next time you swipe your reward credit card when making a purchase, you can think back on the history of reward programs.

See related: The history of credit cards

Published: November 14, 2006

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