Top 6 Credit Card Trends of 2014

credit cards
The recent financial crisis that hit the United States has impacted dozens of different financial industries. One key industry that was affected was credit and lending. In a strategic move, credit issuers regulated lending standards more rigidly and also lowered limits on credits in an effort to protect themselves from any potential financial fallout. According to Bill Hardekopf the CEO of lowcards.com, “So many of those people defaulted on their credit cards, and issuers were forced to eat that balance.” This had significant negative impacts on the industry and as a result financial experts are predicting some significant changes and alterations for credit card holders. This blog will discuss what changes credit card holders should expect in 2014.

1) Longer zero percent APR periods

Zero percent APR balance transfer offers were common prior to the economic collapse however, they are becoming less and less common. According to Anisha Sekar the president of credit and debt at nerdwallet.com, banks are finally “shaking off the last of the wariness.” Ms. Sekar believes that lengthier periods of 0 percent APR will emerge more and more as time goes on. To support her hypothesis, an independent report conducted by nerdwallet.com concludes that the average zero percent APR balance credit card offer has increased from eight to eleven months between the years 2010 and 2013. Although this is a positive for those seeking credit cards, Ms. Sekar also expects that some cards (particularly balance transfer cards) will have other fees attached. This means weighing the these fees against the savings found on interest rates would be essential before deciding on a credit card provider.

2) Interesting Perks

Becoming more noticeable in 2013, credit card issuers have begun offering “interesting” perks along with credit cards. These perks could include free Amazon Prime or Triplt Pro memberships or even credit scores to be included with no additional charge with each credit card statement. This incentivizing is a technique used by credit card issuers in an attempt to compete for more of the market share. This trend is also blatantly evident when retailers and credit card issuers team up and offer incentives such as sporting event or concert tickets when cards are used at particular retailers. These perks aren’t always harmless, they can serve as a distraction from other aspects of the credit card agreement so card holders should still be very discerning in choosing a credit card issuer – tickets to the ball game aren’t always worth a higher interest rate.

3) Redemption rewards

credit card rewardsCredit card agreements are well known for including rewards packages in the forms of redeemable travel miles, gift cards or even cash. Recently, credit card issuers have been becoming increasingly more creative with their redemption packages (much like their perks, as previously mentioned). Curtis Arnold founder of cardratings.com and author of “How You Can Profit from Credit Cards” states. “I think you’ll see reward programs getting more competitive and offering out-of-the box things like experiential rewards or redemption directly through retailers like amazon.com.” Again, while not necessarily a bad thing, rewards may distract the less experienced credit card holder from making a better financial decision by taking attention off the basic stipulations of the credit card agreement.

4) Mobile Accesss

Mobile Credit CardMobile accessibility for all industries is becoming more and more necessary but they have become increasingly more popular for paying bills. Users report a high level of satisfaction when they are able to manage their finances from their mobile device instantaneously. Clients expect to be able to have access to their accounts anytime and anyplace. Recent innovations such as Google Wallet, Paypal and Square have begun providing users with this type of accessibility. In the near future, a program called “Coin” will be available on the market and will allow a user to store and maintain multiple credit and/or debit cards on a single device. If credit card issuers wish to remain competitive, they will have to adapt to technological modernization and provide their clients with mobile access.

5) PIN and Chip cards

Chip and Pin cards also known as EMV cards are the current European standard since the mid-2000. These cards differ from the standard card used in the United States structurally. PIN/Chip cards use a tiny chip implanted in the card rather than a magnetic strip to transfer information and automatically limit the card’s expiration date. Industry professionals commonly hold the opinion that PIN/Chip cards are more secure than magnetic strip cards however, only a small percentage of Americans utilize them. According to Curtis Arnold, “The days of the magnetic strip are numbered. I think PIN and chip and mobile bills are really going to accelerate and change the way consumers make purchases.” Again, credit card issuers will have to either modernize or risk falling behind to remain falling behind in the future.

6) Options for bad credit

In previous years, credit card issuers have typically rewarded cardholders with excellent credit with more generous credit card rewards, interest-free introductory periods and other creative perks. However, as the market continues to change and develop, credit card issuers will need to adjust what type of users receive perks if they want to remain competitive for the market share. This means adjusting for individuals with less than excellent credit. Hardekopf states, “Credit card issuers will typically start to loosen credit standards in minor ways in an effort to appeal to the largest number of consumers possible.” Although these alterations may still not be as generous as those offered to individuals with excellent credit, they certainly begin to cater to those with less than excellent or even poor credit.

credit card rewards
Having a credit card is a major part of being able to function in the modern day United States. They can be both a blessing and a curse. Being aware of these six growing trends can give a new user insight as to how credit card companies are competing for their business. We encourage all prospective and current credit card holders to be discerning when choosing a company to work with/continue to work with. As always, feel free to contact Patel Law Firm with any questions and thank you for reading.