4 credit card trends for 2017 and what they mean to you
In 2016, premium credit cards garnered a lot of attention with generous rewards and benefits. But this year, issuers are getting back to basics – and maybe charging you more in the process. Here are four credit card industry trends that are shaping up for 2017.
1. More bread and butter rewards
Instead of ambitious rewards, such as free hotel stays and airfare, issuers will focus more on “bread and butter rewards” this year, such as cash back, said David Robertson, publisher of the Nilson Report, an industry newsletter.
“In 2017, we’ll see a lot more offers aimed at middle-class people,” says Robertson. “All the major issuers have already committed to their high-end programs. They have nowhere to go except down.
The result : Keep an eye on improvement cash back offers from issuers. More competition on this front is great news, especially if you spend more on groceries than on First Class flights.
2. Higher interest rates
If you missed the news of the Federal Reserve’s interest rate hike in December, don’t worry, we’ll relive that moment soon enough.
Recent Fed projections suggest that interest rates could rise by three-quarters of a percentage point this year. This means that credit card debt could soon get more expensive, potentially costing you hundreds of dollars in additional interest over the next five years.
The result : When you pay off your balance in full each month, you never have to pay interest. But if you have credit card debt, transfer it to a card with a 0% APR balance transfer rate, if you can qualify, and pay it off without interest.
3. A growing subprime market
In 2016, the percentage of credit card accounts held by consumers with subprime loans reached its highest level since 2010, according to the TransUnion credit bureau. But that doesn’t suggest a throwback to the days of easy credit, when it looked like even domestic cats could prequalify for cards with $ 20,000 limits.
“Credit card issuers are really very diligent about managing their risk and the amount of credit they provide on an account basis,” said Paul Siegfried, senior vice president of financial services at TransUnion. Unpaid bills remain relatively low.
The result : If you have bad credit, now is a good time to get credit secure credit card and start rebuilding your score. It might be easier to get started than in the past.
4. Smoother transactions
About three-quarters of people with a smartphone and a checking account or debit card said they had used a mobile device to make at least one purchase or other type of payment in the past 12 months, according to a 2016 study by First Annapolis. Consultant. On top of that, issuers are giving cardholders more ways to make purchases and redeem rewards directly from merchants online and through apps. “We will be making new payments that we wouldn’t have made before,” says Robertson of these frictionless payments.
The result : If you take advantage of these faster payments, avoid overspending by sticking to a weekly spending limit. Don’t let convenience get in between you and your budget.
FOLLOWING:
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Claire Tsosie is a writer atNerdwallet, a personal finance site. E-mail:[email protected]. Twitter:@ ideclaire7.
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