How was Buying on Credit in the 1920s?

Before credit cards became ubiquitous, the concept of credit was much different. My parents, who lived through the 1920s, were not even adults until their late 20s, and the world of credit had a

The Lack of Credit Cards in the Early 20th Century

Way before my time, when I am 72, and my parents have long passed, the concept of using credit cards, as we know them today, simply did not exist. My parents, who were born in the late 19th or early 20th century, never saw a credit card until much later. In fact, credit cards were not “invented until much later, and were in very limited use until the 1950s.

Credit Evaluation in the 1920s

Before the advent of credit cards, credit was still available, but it was granted on a much different scale. Individual vendors extended credit to consumers based on their evaluation of the consumer's worthiness. This evaluation was as varied as the vender, but it was generally based on the consumer's reputation, financial standing, and previous dealings with the vendor. If a store owner liked a customer and felt they were a responsible individual, they would offer credit.

Business Credit and Evaluation Systems

Business credit, however, was much more formalized. Businesses were evaluated by services like Dun Bradstreet, a company that has been providing business credit evaluations since 1841. Dun Bradstreet would provide credit ratings and reports to businesses, helping them decide whether or not to extend credit to other businesses. Major vendors would extend credit to regular business customers on a net 30, net 60, or net 90 basis, depending on the relationship and bargaining power of the vendor and the customer.

Other Forms of Credit Transactions

For other transactions, such as single purchases or project payments, the terms would be decided on a per contract basis. This meant that the buyer and seller would negotiate the terms of the credit at the time of the transaction. The contract would specify the terms of the credit, including the interests and the repayment schedule.

Conclusion

In conclusion, the world of credit in the 1920s was much different from what it is today. While credit was still available, it was not as widely available or as convenient as it is with credit cards. The evaluation of credit was much more personalized and based on the relationship between the vendor and the consumer. Understanding the history of credit can provide insight into the evolution of credit, and how it has impacted the way we shop and make purchases today.