Sunday, November 30, 2003 - Page updated at 12:00 AM

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J.P. Williams, who developed first bank credit card, dies at 88

Los Angeles Times

J.P. Williams, who spearheaded creation of BankAmericard, the first successful all-purpose credit card that provided both convenience and instant personal credit, has died. He was 88.

Mr. Williams died Nov. 8 at his home in Atlantis, Fla.

The pioneering banker certainly did not create the first credit card. Small banks had tried the concept in local areas since the 1940s, and oil companies and department stores had installment-purchase versions.

Diner's Club successfully introduced the first travel-and-entertainment card in 1950, establishing the concept that one card could be used to buy things at different places. American Express offered a competitive card in 1958. But both required users to pay the bill within 30 days. They were convenience cards, and did nothing to extend credit to those who couldn't pay for what they were buying.

But on Sept. 18, 1958, San Francisco-based Bank of America dropped 60,000 BankAmericards into the mailboxes of Fresno, Calif. The first all-purpose credit card had landed. The card enabled a user to buy various goods and services without cash, either as a convenience by paying the bill in full at the end of the month, or as a paperless loan, paying in installments with an interest charge added.

The cards were showered on other California cities. Within 13 months, some 2 million credit cards blanketed California, and 20,000 merchants agreed to accept the cards, giving Bank of America 6 percent of each sale for the privilege.

Mr. Williams resigned two months later.

The all-purpose credit card called BankAmericard, which was licensed to banks in other states in 1966 and renamed Visa a decade later, was far from an instant success.

Bank of America lost $8.8 million in the credit card's first 15 months. Delinquency in payments reached 22 percent; Mr. Williams never had established a collection department, fraud was rampant; and politicians, clergy and editorial writers denounced the bank for promoting what they considered an immoral, credit-oriented economy.

"The biggest thing a credit card can do is enable families to take advantage of sales — to buy your skis in the summer and your barbecue grill in the winter," Mr. Williams once told Fortune magazine. "I wanted people to understand that their goal should be to make credit pay them, instead of having them pay for credit.

"If they overspent, then you might have to rap their knuckles once in a while."

Joseph Nocera set forth in detail the problematic history of Mr. Williams' innovative card in his 1994 book "A Piece of the Action: How the Middle Class Joined the Money Class" and a related article he wrote that year for The Washington Post.

According to Nocera, critics made Mr. Williams the "fall guy" for the BankAmericard startup failures, citing his lack of experience in bank-loan departments.

Mr. Williams blamed the problems on Los Angeles bank branches, claiming they were too lax in screening cardholders. In one infamous example, Nocera noted, Los Angeles branches were asked to list customers who never should receive a credit card, then by some mix-up, issued a card to each person on that list.

Part of the problem may have been Mr. Williams' naive belief in the honesty of the "little fellow" that Bank of America founder A.P. Giannini sought to serve. A staunch admirer of Giannini, who died in 1949, Mr. Williams took his University of Pennsylvania degree and drove from his native Newark, N.J., to San Francisco to ask Giannini for a job after completing his service as an infantry officer in Germany during World War II.

By the mid-1950s, Mr. Williams had become a senior vice president in charge of the six-man Customer Services Research Department. Unofficially, they were expected to create the all-purpose credit card.

Mr. Williams, according to Nocera, studied previous failures and the successful credit operations of Sears and Mobil Oil. Mr. Williams devised some features that served as the credit-card standard for decades — the 25-day grace period and 18 percent interest, credit limits and floor limits, the amount that could be charged without the merchant calling the bank for approval.

Despite the early failures, and Mr. Williams' departure, BankAmericard did survive and grow. And Mr. Williams continued to develop the credit-card industry by starting Uni-Serve in 1962 to buy Chase Manhattan Bank's struggling credit-card operation.

He paid the $9 million due on Chase's billings and in 1965 sold Uni-Serve to American Express. Mr. Williams remained president of the unit for another year and chairman until 1968. That card became Unicard, and holders later received Visas.

Mr. Williams also operated The New York Standard, a newspaper that operated for 90 days during New York's newspaper strike in 1963.

He is survived by his wife, Irene, three children, three grandchildren and two great-grandchildren.

Copyright © 2003 The Seattle Times Company


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