海角大神

When Matty Simmons first heard about multipurpose credit cards in 1950, he wasn鈥檛 impressed.

At the time,聽, who came up with the idea, and Ralph Schneider, his business partner, were trying to persuade Simmons聽to join their new company, Diners Club. The concept of a credit card didn鈥檛 seem especially useful to Simmons, who was doing聽public relations for restaurants and nightclubs at the time.

鈥淲hat concerned me most was that I would be asked to not only publicize this new conception but to persuade restaurants to honor it,鈥� Simmons wrote in his 1995 book聽聽a firsthand account of Diners Club鈥檚 early days and the evolution of the credit card industry.

But publicize and persuade he did. Simmons eventually joined Diners Club聽full time as executive vice president. He led sales and marketing, and he edited and published the company鈥檚 popular magazine. His efforts contributed to the success of Diners Club聽and paved the way for the credit card industry as we know it today.

Diners Club was just one of Simmons鈥� adventures. Now age 90, he鈥檚聽the author of eight books; a film and television producer of hits such as聽鈥淎nimal House鈥� and the 鈥淣ational Lampoon鈥檚 Vacation鈥� series; and the founder of the publishing company that produced Weight Watchers Magazine and National Lampoon. He currently splits his time between聽Los Angeles, New York City and Pompano Beach, Florida, and is working on a new screenplay and a humor book.

NerdWallet talked to Simmons聽about Diners Club and what he thinks of credit cards today. This interview has been edited for brevity and clarity.

How Diners Club began

WHAT WERE YOUR FIRST IMPRESSIONS OF DINERS CLUB?

I was a public relations guy. And among other things, I handled a lot of restaurants and nightclubs. The original idea for the Diners Club was dining. You鈥檇 go to restaurants all over the New York area, charge them, and get one bill once a month. Frank鈥檚 partner, Ralph Schneider, ran into a newspaperman, and he asked him, 鈥淲ho鈥檚 the best guy to deal with in PR and the nightclub and restaurant business?鈥� And that guy immediately said, 鈥淢atty Simmons.鈥� They called me, and I came up to see them.

Their office was at Frank鈥檚 company in the Empire State Building. It was called Hamilton Credit. 鈥� Ralph was a lawyer. Frank was working at making commercial loans. They told me about their idea, and held up a little handwritten card that said 鈥淭he Diners Club.鈥�

Frank said, 鈥淥ur idea is, you take this card around,鈥� and so forth. 鈥� And I said, 鈥淚 don鈥檛 think that鈥檚 a very good idea.鈥� I鈥檇 never charged anything in my life. I鈥檇 always used cash. They wanted me to come in with them, and I said, 鈥淟et me think about it.鈥� And I forgot about it. A week later, Schneider called me. We had lunch, and we got to be really good friends. He talked me eventually, after about a year, into [going] full time at the Diners Club. I turned the publicity business over to my brother who was my partner. 鈥�

What I first realized is that [McNamara and Schneider] didn鈥檛 have any marketing guy, and I was doing all the sales and marketing. And I hadn鈥檛 done anything like that before. But I just used common sense, and it worked. I did mailings. 鈥� We kind of created the 鈥渢ake-one box,鈥� you know, those little boxes where you鈥檇 take a folder out of it, and you could buy something to join. That was a good way of getting memberships.

And of course, the publicity was huge. The first big story was in Business Week. Right off the bat, it got us thousands of members.

[In his book, Simmons recounts that he 鈥渉ad to glamorize the creation of the credit card plan鈥� to publicize the product, so he invented a story: McNamara was short on cash after taking a colleague out to dinner. While his wife was driving over with聽the money聽to cover the meal, he came up with the idea of a credit card, which would effectively allow a 鈥渞esponsible businessman鈥� to open a restaurant tab anywhere. That apocryphal story has since been repeated countless times, and it even appears聽on the Diners Club website today.]

We didn鈥檛 charge when we started. Then we were losing money. 鈥� And I said, 鈥淵ou gotta charge for the card.鈥澛�[At the time, Diners Club charged merchants a fee for each credit card transaction, but it didn鈥檛 charge cardholders an annual fee. It also didn鈥檛 charge interest, as it required payment in full each month.]聽And Frank said, 鈥淣obody will pay for a credit card.鈥� And I said, 鈥淲ell, nobody鈥檚 going to be anybody if we don鈥檛 charge, because we鈥檙e going to lose money and go out of business.鈥� So Ralph agreed with me, and we put in a $3 charge. 鈥�

Then I created a newsletter that went in the same envelope as your bill. The guy who handled my printing was a salesman, so I said, 鈥淵ou want to make some more money? Go out and sell some ads, and I鈥檒l put them in the newsletter.鈥� So he went to restaurants, and they bought ads. And there was such a demand for ads that I turned it into a magazine. First it was the Diners Club Magazine. Eventually, we changed it to Signature: The Diners Club Magazine. It was very successful. 鈥�

We put in a charge for the magazine eventually. You paid $3 extra to get the magazine. 鈥� Almost everybody, like 90% of members, subscribed to it.

WHAT WAS YOUR BIGGEST CHALLENGE IN THE EARLY YEARS?

We didn鈥檛 really have a lot of problems. We had some competition, but they didn鈥檛 stay around. As a matter of fact, Alfred Bloomingdale was part of the group that formed the company Dine and Sign. But they did very badly, and Bloomingdale bought Frank McNamara鈥檚 interest in the Diners Club, and he became president of the Diners Club. Ralph Schneider was chairman, and I was executive vice president. 鈥�

We had no real competition until American Express came along [in 1958]. While I was at the Diners Club, which was until 1967, we were still the No. 1聽credit card in the world. 鈥�

Our credit losses were about three-quarters of 1%. Today, they鈥檙e like 3 or 4%. 鈥� Now people run up big bills they can鈥檛 pay, which is what I said in 鈥淭he Credit Card Catastrophe.鈥� We were really more of a聽. You had to pay your bill in 30 days. You were supposed to, anyway.

Credit cards today

DO YOU STILL CARRY CREDIT CARDS?

I have five of them. I don鈥檛 have a Diners Club card.

The first number on a聽Diners Club card was 1000. Frank McNamara had that. Schneider had 1001, and I had 1002. I wish I had kept it. It鈥檚 probably worth a lot of money now. But I don鈥檛 have it. I never keep anything.

DID YOU CLOSE THAT ACCOUNT?

The year after I left, they went to a computer system. It was all by hand when I was there. They lost [millions] in the next couple years.聽[This was partly because of 鈥渃omputer problems which had swallowed millions of dollars in charges that were never billed,鈥� Simmons writes in 鈥淭he Credit Card Catastrophe.鈥漖

And they sent me a card with 19 different numbers on it, like a typical credit card. Then they sent me a bill [for the card鈥檚 annual fee]! I was so insulted that they鈥檇 send me, one of the founders of the company, a bill for a credit card. I just sent it back to them and said, 鈥淵ou can have this.鈥� And I never used it after that. 鈥�

Now I have a MasterCard, bank cards and American Express. 鈥� I don鈥檛 use them that often. 鈥� The card I use most often is a MasterCard from one of our banks. That鈥檚 only like, when I was in L.A., I dined out a lot.

HOW DID YOU MAKE THE SWITCH FROM CREDIT CARDS TO HOLLYWOOD?

How it happened was, the Diners Club was acquired by a big insurance company [Continental Insurance], and I wasn鈥檛 very happy with the new ownership.

I resigned in 1967 and formed my own company. At origination, it was called Twenty First Century Communications. My first magazine was Weight Watchers Magazine, which is still around and still very successful. My second magazine was National Lampoon. That became so huge, I changed the name of the company to National Lampoon Incorporated. It was a public company. And the Diners Club, of course, was on the New York Stock Exchange.

[Simmons produced 鈥淎nimal House鈥� and the 鈥淰acation鈥� movies under the National Lampoon brand.]聽

IN YOUR BOOK, YOU鈥橰E CRITICAL ABOUT HOW CREDIT CARDS CAN TEMPT PEOPLE TO OVERSPEND. DO YOU STILL FEEL THAT WAY?

Yes, I do. I think too much credit is being given to people who overspend. And they have to spend half their lives paying it off.

Mostly, the interest rates, to me, are highway robbery. It鈥檚 ridiculous that they would charge people 17%, 20% or more on interest rates. It鈥檚 just profiteering. It鈥檚 ugly to charge people that much interest. I鈥檓 very much against it, and I said that in my book 鈥淭he Credit Card Catastrophe.鈥� That鈥檚 why it鈥檚 called 鈥淭he Credit Card Catastrophe鈥�!

Payments of the future

DO YOU FORESEE SOMETHING REPLACING CREDIT CARDS?

I don鈥檛 think they鈥檒l replace the idea of the credit card or the service of the credit card. But it will all be computerized. Everything will be computerized. So you won鈥檛 carry cash 鈥� you鈥檒l carry your computer, a little computer.

You can charge 鈥� anything now. 鈥� I remember going to the annual meeting of all baseball teams and the general managers, pitching them on accepting Diners Club cards for tickets at ballparks. And the general manager of the Chicago White Sox, his name was Frank Lane, got up and said, 鈥淸Credit cards are] only a passing thing. It鈥檒l never last. Baseball is American as apple pie, and this is just a passing fancy.鈥�

DID HE EVER TAKE THAT BACK?

I don鈥檛 think he did. But you can sure as hell buy tickets for ballgames, movie houses, everything now [with credit cards].

WHAT DO YOU PREDICT WILL HAPPEN WITH CREDIT CARDS IN THE NEXT 10 YEARS?

There鈥檚 no doubt in my mind it鈥檒l get bigger, because people will become more and more dependent [on credit cards] as years go by. And population growth. 鈥� And the simplicity of the handheld computer.

SOUNDS LIKE聽MOBILE PAYMENTS. DO YOU THINK THOSE WILL BECOME MORE POPULAR?

I think everything like that will become more popular. The world is getting so computer-conscious and so automated in every respect that things like cash and billing will be simplified to the greatest degree. Your whole life will be in your computer.

HOW DO YOU FEEL ABOUT THAT?

I鈥檓 worried about it. I think it makes spending too easy. I think cash, as I鈥檝e said in the book, cash keeps people a little more cautious. You go, 鈥淒o I have enough cash to buy that?鈥� You know? Then checks, of course, eased it. But not as much as credit cards.

Diners Club, then and now

After being acquired by Continental Insurance, Diners Club鈥檚 U.S. business has changed hands a few more times. Today, it鈥檚 owned by聽.

Frank McNamara sold his shares in the Diners Club in 1952, thinking聽it would level off at 250,000 members. He died in 1957. Two years after his death, Diners Club passed 1 million members.

Ralph Schneider, who ran Diners Club for years after McNamara鈥檚 departure, died in 1964. Al Bloomingdale later took the helm, but he and Simmons 鈥渄isagreed constantly鈥� about business plans, according to Simmons鈥� book, and Simmons left the company a few years later. Bloomingdale managed the company for several years, and eventually sold his interest for a profit of $13 million. He died in 1982.

When Simmons left Diners Club for the publishing and entertainment world, he mostly stopped following the credit card industry, he says. But he still marvels at its lasting success.

鈥淚 never expected that when it started,鈥� he says. 鈥淚 had no idea whether it would work or not. But that鈥檚 how life is. 鈥� It just happens.鈥�

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email:聽claire@nerdwallet.com. Twitter:聽.

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