After years in which the credit card scene has changed dramatically—with landmark legislative reforms that prompted more fees and higher interest rates, a steep rise in how complicated card offers have become, millions of customer accounts involuntarily closed followed by a time when card issuers are actively pursuing customers even if they have bad credit—consumers should expect a less volatile scene, with more incremental shifts in plastic in the year to come.
The experts at LowCards have consulted their crystal ball and weighed in with ten predictions for 2011. Overall, the forecast pretty much calls for more of the same that cardholders have been experiencing, to much dismay—particularly higher APRs and more fees (annual fees especially). But cards with annual fees may appear more attractive since there’s a better chance these products will also come with improved rewards, particularly for new customers. Here’s an example cited by LowCards:
Citi also has a ThankYou Premiere Card with a $125 annual fee. Customers earn 1.2 points for every dollar spent on purchases at supermarkets, gas stations and drugstores, and one point for every dollar spent on all other purchases. The same anniversary bonus applies with this card.
Hmmm … While these rewards may represent an improvement from what Citi has recently had on the table, they still seem pretty weak in light of the hefty annual fee. As I’ve noted before, this card issuer used to offer far more substantial rewards, of 2%, 3%, even 5% back on purchases at supermarkets, drugstores, and gas stations, and we’re talking about cards that came with no annual fee whatsoever and APRs far lower than what’s typical today.
Another prediction is really just an expectation that a noticeable trend—the growth of prepaid cards—will continue. While some prepaid card users say I’m totally off base in disparaging their use of fees—which, yes, are low when compared to the fees fired left and right by crappy bank accounts—banks are clearly rolling out more prepaid accounts because they are lucrative, not out of concern for consumers. As LowCards writes:
The regulations that restrict fees for credit and debit cards do not apply to prepaid reloadable cards.
Before now, banks ignored prepaid cards because they made much more revenue from debit and credit cards. Regulations have reduced much of that revenue, so now banks are looking at other options, including prepaid cards.
Two more interesting predictions, which also are basically continuations of what we’ve seen: Lending standards will slowly loosen, and credit card debt will slowly rise. Could these trends somehow be related to one another?