7 Hot Credit Card Trends for 2013
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Every December, I start thinking about what’s ahead for credit cards in the new year. No, I’m not psychic. Just a credit card geek who spends hours and hours every week following the credit card industry.
These trends are listed randomly and not in any particular order. For example, number one isn’t any hotter than number seven. I thought about trying to put them in a “hot-to-hottest trend” order, but I decided I really would need to be psychic to pull that off successfully.
OK, so let’s get to it. Here are the seven hot credit card trends I see for 2013. (See also: How the Election Will Affect Your Credit Cards)
1. Easy Credit
OK, maybe not super easy, but much easier than in the recent past. I see credit getting looser as the year wears on. The economy really is showing signs of life, and this will help banks feel more confident about taking chances again.
As always, consumers with excellent credit will be sought after by the banks. But in the past year, consumers with less-than-perfect credit started to break into credit again. I think that trend will continue.
Now, I do worry that this trend might bring out more predatory lenders. So if you’re in the subprime category (FICO score less than 650 or so), just be careful about signing up for a new credit card. Read the fine print carefully. And then read it again.
2. Mobile Wallets
I’ve always been fascinated with the intersection of credit cards and technology. The possibilities are exciting, and I think that Americans are slowly getting more comfortable with the idea of using something like Google Wallet.
So I really do think mobile wallets will continue to get a lot press and be a hot topic in 2013. Now, there’s a difference between talking about mobile wallets and actually using them. There are always early adopters, but honestly, I don’t see the majority of consumers actually using mobile wallets for a few more years.
The general public tends to be slow when it comes to embracing new ways of doing things, especially when it’s a technology that “solves” a problem we’re not sure we have. Is it really such a bother to pull out a credit card? I’m just saying that the public needs incentive to make a change.
There are also security concerns with mobile wallets that haven’t been addressed to everyone’s satisfaction. Now, you can argue all day long that mobile payments are more secure than carrying around a card with a magnetic stripe on the back that can be cloned. And guess what? I’d agree with you!
But what matters when it comes to adopting new behavior is what the public perception is. And there’s still a long way to go in that area. But it is the trend for the future, and I’m sure it will make my “hot trends for 2014” list, too.
3. Chip-and-Signature Credit Cards
Since Google Wallet gets so much press, it’s been easy to forget that we are actually making progress when it comes to credit cards that are embedded with computer chips.
Part of the reason that “smart cards” are being pushed out into the market is because some Americans have been unable to use their magnetic-stripe credit cards in Europe. Europe uses chip-and-PIN technology. So when Americans try to use their magnetic-stripe cards, they sometimes get denied unless the merchant has an old-fashioned swipe machine.
Now, the ideal smart card would be the one that’s used in Europe, which requires a PIN. The U.S. isn’t there yet, but a credit card with a computer chip that requires a signature is a step in the right direction.
One thing that’s held up progress is that it’s very expensive for merchants to get the equipment necessary to process smart cards, but Visa and MasterCard have told merchants to get the equipment necessary to process payments by 2015. If they don’t have it in place by 2015, then Visa and MasterCard are shifting liability for fraud to the merchants. I’d say that merchants now have the incentive they need to spring for the proper equipment.
4. Credit Card Apps for Smart Phones
Lately, it’s become a joke to say, “Isn’t there an app for that?” whenever you have a problem to solve. And more likely than not, there probably is an app to help you with a dilemma.
Now there are apps to help you track rewards, such as Glyph, which is a new mobile app for iPhones. Glyph tells you which credit card will give you the best rewards when you make a purchase. So you don’t even have to remember which credit card gives you the most cash back in department stores or at the movies.
Another example is Wallaby, which is in beta right now. It comes in a mobile version or in the form of a card (for those who aren’t comfortable with a mobile app). It keeps track of the rewards for all of your credit cards as well as your card limits. It’s available for iPhone and Android systems.
This area is new and still evolving. It will be interesting to see what kinds of apps we’ll see by the end of 2013. I don’t have a problem keeping up with my rewards because I limit the number of cards I use. But if you’re a rewards card ninja, this might be an area you want to keep an eye on.
5. Prepaid Cards
Sometimes legislation is a good thing. But sometimes it causes unintended negative consequences, which is what happened when the Durbin Amendment was passed. The Durbin Amendment capped the interchange fees on debit cards. The banks lost a bundle (over $9 billion in annual revenue) over this.
Banks are for-profit entities. So when one income door closes, they force another income door to open. To replace the debit card income stream, many banks are issuing prepaid cards because these cards are unregulated and are not subject to the restrictions of the Durbin Amendment.
In 2013, I do think we’ll see the Consumer Financial Protection Bureau take a look at regulating these cards. I think that would be a very good thing because some prepaid card issuers aren’t transparent when it comes to fees. I like to see details out in the open so consumers know what they’re getting into.
Now, there are some decent prepaid cards on the market, but there are many with exorbitant fees. So for now, read the fine print for a prepaid card very carefully.
6. Sign-Up Bonuses
I think as we get further away from the fiscal cliff drama, we’ll see some sweet deals from credit card issuers. I’m assuming, of course, that a compromise is reached and we’re all spared the disaster of going over the cliff. I have a hard time believing that a deal won’t get done because that’s basically political suicide for all involved.
Banks don’t like unpredictability, so even the hint of economic disaster makes the banks get antsy. When they get antsy, they don’t give out better sign-up bonuses for credit cards. But as the fiscal cliff becomes an annoying memory and the economy improves, I think we might see some good bonuses.
And here’s a tip — I think some of the really exceptional bonus offers will be mailed and not advertised online. The last time I saw really large sign-up bonuses, they were offered to consumers via snail mail. So if you have excellent, be sure you read your mail.
7. 0% Balance Transfer Offers
I usually see some pretty good balance transfer offers in the first few months of the new year. Credit card issuers, like all companies, think about marketing when they position their products.
At the beginning of the year, people make New Year’s resolutions. And a lot of these vows are related to personal finances, especially when it comes to debt. So the new year is an excellent time for banks to appeal to consumers who might want to use a balance transfer card to get out of credit card debt.
The longest zero percent balance transfer offer I see right now is 18 months. It’s possible that a bank might decide to go up to 21 months to beat the competition and reel in some customers.
In the past few years, the longest offer I’ve seen is 24 months. I’d be surprised if we see any cards offering that, but if the economy starts bouncing back, anything’s possible.