Forty years ago the vast majority of people used cash to pay for everything, with just one in four Britons even having a current account. Instead most people were paid in cash and used cash for all their purchases.

Figures from payment group APACS show that in 1965, the year before credit cards were first introduced in the UK, 95% of transactions were done in cash with cheques accounting for the remaining 5%.

But cheque guarantee cards weren't introduced until 1969, enabling individuals to write guaranteed cheques of up to 30, and prior to this the majority of cheques were either written by companies or by individuals for big payments, such as their mortgage.

In 1966 those with bank accounts couldn't even visit a cash machine to withdraw money, as these were not introduced until 1967, when people were able to buy hole-punched vouchers worth 10 each from their bank and use them to get cash out of an ATM.

The only form of payment card available at the time of Barclaycard's launch was the American Express charge card, which was introduced in 1963 and charged an annual fee of 3 and 12 shillings, or 49 in today's money.

People needed an annual income of 2,000 or just over 27,000 in today's terms, to qualify for one of the cards, which was only accepted in 3,000 outlets in the UK.

But despite the UK being predominantly a cash society, people were no strangers to credit. Unlike today, where the majority of credit is provided by financial institutions, back then retailers were the main source for borrowing money.

In terms of borrowing from financial institutions, credit cards didn't exist, and taking out a loan involved going cap in hand to the bank manager.

While the introduction of the first credit card sowed the seeds for the credit revolution, unsecured lending did not really begin to take off until the late 1990s.

But despite this in 1975, three years after the second major credit card provider Access was launched, credit card purchases continued to account for less than 1% of all transactions.

Between 1995 and 2005 the total proportion of transactions carried out by credit cards doubled, and by 1999 half of all UK adults had a credit card and the average value of a credit card transaction passed the 50 barrier for the first time.

Competition in the market hotted up with the entrance of new players such as Egg, Smile and Marbles, and companies began to ditch annual fees and offer extras such as travel insurance and loyalty schemes in a bid to attract new customers.

The housing boom in the early part of this decade, combined with low interest rates, encouraged people to spend more on their cards, as soaring property prices increased their sense of wealth and low interest rates meant the cost of borrowing was cheap.

Fears that interest rates could rise this year, combined with a slowing housing market and rising unemployment, have made consumers more conservative about borrowing.

The rate at which people are racking up credit card debt has slowed, and in three out of the first five months of this year people actually repaid more than they borrowed.

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