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In 2020, you’ve probably traded the thrill of booking an island getaway with your credit card with the excitement of placing an empty order for a margarita kit at home. It has been a difficult year in the face of the pandemic, but there is good news ahead for the new year.
“I think 2021 will be a real rebound year for card companies,” said Ted Rossman, industry analyst at CreditCards.com and Bankrate. “While we will have to watch what happens with the virus, the vaccine and the government stimulus measures, the worst is over for the banks. Consumers can use this to their advantage. There are going to be some good deals and real opportunities for rewards. “
What are you waiting for the plastic (or titanium or whatever else your card is made from) in your wallet next year? Peek into the credit card crystal ball for seven predictions that will shape 2021.
Some temporary features of the map will become permanent items
In 2020, banks recognized they need to make the premium cardholder valuable even when you are staying at home, and adjusted higher values for redeeming points for errands, statement credits accordingly. for delivery of food and other means of earning and redeeming points during quarantine. Most of these benefits come with an expiration date, but Rossman believes “there’s a good chance a lot of these benefits will stay.”
“Even before the pandemic, there was a move towards more flexibility with rewards,” Rossman says. “Most people prefer Cash Back Rewards. It’s simple and it’s universal.”
Rossman believes cardholders should watch other daily features as well. “There is a trend towards memberships with discounts on home exercise and benefits from food delivery companies,” he says.
Prepare to choose your benefits
Saving money on a Platoon or not paying a delivery fee can be nice, but these benefits don’t matter to everyone. Alex Miller, founder and CEO of UpgradedPoints.com, believes banks will ask customers to choose rather than receiving them all automatically.
“A lot of consumers won’t use a shared rideshare credit, but will use a streaming credit, for example,” Miller says. “So the hardest part for card issuers is to find a balance between offering a card that lists attractive benefits and making it usable by consumers.”
Miller expects the cards to follow the lead of airlines giving elite status members the flexibility to choose which perks they want to use.
“If you know you won’t be eating out, you can choose wireless credit, or if you know you will be doing a lot of grocery shopping, you can choose that. [instead of] continuous credit that you couldn’t otherwise use, “says Miller.” Card companies need to make their respective cards attractive to more consumers, especially in a rapidly changing environment like COVID.
At some point your points will take a hit
Here’s one thing you sure won’t find appealing: less potent points.
“At the beginning of next year, consumers will have accumulated a lot of points this year [when they weren’t traveling]Miller says, “So we can at some point expect miles and points to devalue because there are too many miles in the market that aren’t being used. Airlines have to reverse this with a devaluation of their pricing tables and offers. Expect to see several devaluations or lots of big sales to encourage consumers to get rid of the points they’ve accumulated. “
While devaluations are never good news, you can get a head start. Miller points out that airlines and hotels will all offer flexible booking policies so people will feel excited and comfortable about leaving home. So if you are even planning on taking a trip at some point next year, consider cashing in your points now. If the policy says you can cancel, Miller says “there really is no harm in booking now, because you know you can get your points back if needed.”
Look for a different rewards currency
Speaking of points, some new cards are brewing to disrupt the system. Instead of accumulating points that translate into dollars and miles, Fold plans to help cardholders join the world of cryptocurrency by rewarding them with Bitcoin for every purchase made with cash.
The card is not yet accepting applications, but you can subscribe to a waiting list. With PayPal’s recent adoption of cryptocurrency, Fold appears poised to gain traction. The company won’t be able to compete with the marketing budgets of the big banks, but for anyone interested in delving into the world of Bitcoin without buying it, it seems like a risk-free solution.
Contactless still has a hill to climb
Before the pandemic, American consumers were not on the contactless payment train. At that time, scanning was still a regular routine at gas stations, and the migration to smart cards looked like a recent move. Concerns about virus transmission have certainly helped spur the contactless revolution this year, but Rossman believes it will be a “slow enough evolution” to replace habits of using cash or inserting a card in the cash register.
A July Mastercard survey showed that more than 50% of US consumers now use some form of contactless payment – an impressive figure from the low base in the US, but it’s clear there’s still a long way to go. browse to make contactless ubiquitous. . This growth will be up to you, so expect any new card you receive to have the contactless symbol on it. It will also rely on small businesses – especially restaurants – to embrace a contactless transaction experience.
If you have good credit, prepare for some great signup offers
“If you have good credit and good income, you have options,” he says.
Rossman points out that banks seem to be feeling better about the economic outlook and less concerned about the possibility of a dramatic increase in delinquencies. “The banks are feeling better,” he said. “We will see a lot of high bonuses. Airlines and hotels will come up with great deals to get people to travel again.”
However, Rossman points out that these great bonus opportunities will be reserved for upper tier consumers with very good to excellent credit scores.
If you don’t have good credit, there’s good news too.
What if you’ve never had a credit card? How are you supposed to have that great score without someone giving you a chance to build it?
“There is a lot of room for innovation, and in the short term, I think we’ll see fintechs continue to work to provide better access to credit,” says Rossman.
Rossman cites Petal and Tomo as two prime examples of companies developing alternatives to traditional credit scoring measures to help people with little or no credit enter the credit card world.
“For young adults and immigrants, building credit has been a real problem,” he says. “In 2021, I think we’ll continue to see fintechs doing what banks can’t or won’t do to give more people access.”
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