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It's fair to say few of us made accurate predictions about 2020. So much so, in fact, that making predictions about 2021 could be considered a gesture of hope: hope that 2021 will be a lot less unpredictable.
Well, let's be hopeful.
The latest positive vaccine news offers some light at the end of the tunnel, but immunizing 7 billion people takes time. So you can probably expect to work remotely and social-distance well into the new year. That news also means many of the financial changes from 2020, including dramatic shifts in consumer spending, will be our reality for some time.
In that vein, most of my credit card predictions for 2021 involve the same trends we saw in the latter half of 2020 -- the good and the bad. However, as the year (and, hopefully, immunization) progresses, spending will shift. I predict a lot of movement in the travel rewards space while card issuers and travel brands work to rekindle cardholders' love affair with travel after more than a year of sheltering in place.
The good: New rewards categories and brand-specific bonuses
As we all learned to make quarantine sourdough, credit card companies were learning how to keep pricey travel rewards cards in the pockets of cardholders who weren't traveling. Their solution? New rewards.
Throughout 2020, suddenly impractical travel cards like the Chase Sapphire Reserve® added extra rewards categories -- most notably, grocery rewards. The American Express Platinum Card®, for example, currently offers new cardholders 10x points per dollar at U.S. grocery stores for the first six months. With restaurants still struggling, I fully expect grocery rewards to stay a relevant rewards category throughout 2021.
Another 2020 trend likely to continue is a focus on branded bonuses. Some of the best examples are the various partnerships issuers have developed with delivery services, such as those between Chase and DoorDash, or American Express and Uber Eats. That trend could expand further as a still-struggling travel industry gropes for retention of cardholders; we may see once-common bonuses, such as TSA PreCheck reimbursements, phased out in favor of retailer credits and freebies.
The bad: Benefits rollbacks and stricter approvals
Although issuers made a lot of positive additions to rewards in 2020, not all the changes our credit cards underwent were good. Specifically, we saw even more cards cut traditional cardholder benefits like purchase protection. These rollbacks have been happening for several years as card issuers cut costs, and 2021 is unlikely to be immune to the new tradition.
While benefits rollbacks are old hat, some of the negative changes are newer -- like the tightening of approval requirements by a number of issuers -- particularly with balance transfer cards. Since unemployment numbers will take months to rebound even with a vaccine, I don't see approvals getting any easier anytime soon.
This same logic applies to credit limits. A number of issuers reportedly cut credit card limits throughout 2020 to mitigate losses during the rocky economy. This will likely continue until everything reopens and trade and travel resume.
The possible: Resurgence of travel rewards and the new work-life balance
I started by talking about the innate hopefulness of making 2021 predictions. In the spirit of that hope, here's a little more: 2021 will be full of possibility. With luck and good science, late 2021 will, hopefully, be a world of dinners with friends and movie theater marathons. And, of course, travel.
Not long after case numbers go down, I imagine we'll see big pushes from the travel industry to get Americans taking trips again. This could translate into free nights at hotels and six-figure miles offers from co-branded hotel and airline cards. Ideally, the push to get folks traveling in 2021 will mean fewer award devaluations (when brands increase the required points or miles for an award). But the opposite could prove true instead, depending on circumstances.
Even when we get back to traveling, however, some things are going to be forever changed. The rapid growth of remote culture over the last year is unlikely to reverse, and many of us are finding a new work-life balance sans commute.
As a result, I wouldn't be at all surprised to see the remote workforce reflected in our credit card rewards in 2021. For example, with few of us inclined to head back to the office, gas and transit rewards may get replaced by bonuses for cable and internet purchases. Less time commuting also means more time for hobbies -- another place brand-specific bonuses could see an expansion.
One way or another, 2021 is bound to bring interesting changes to our credit cards, and to life in general. Still -- here's hoping next year is a bit less interesting than 2020.
