by Lyle Daly | Jan. 14, 2020
This year could bring major changes to the credit card marketplace.
2019 was an exciting year for consumers who are interested in credit cards, as there were plenty of major developments. Cards were relaunched with upgraded benefits and higher rewards rates. Several new cards were released, some by new entrants to the industry such as Apple.
The big question now is what's on the docket for 2020, and it looks like this will be another year with plenty of credit card news. Based on the trends, here are a few predictions for the year.
We've already seen several popular brands and startups -- including Amazon, Uber, Apple, and Petal -- release their own credit cards in recent years. While launching a new credit card requires considerable resources, it also gives a company the opportunity to boost consumer loyalty and spending.
Considering those benefits, it's likely that more companies will launch their own cards soon. There have been rumors of a Lyft credit card for years. Maybe we'll see that or a Postmates credit card in 2020.
Credit card companies have been slowly raising their annual fees, and that's unlikely to change. The American Express Gold Card® raised its fee by $55 in 2018. The Citi Prestige® relaunched in 2019, costing $45 more than before. And to kick off 2020, Chase has elected to raise the annual fee on the Chase Sapphire Reserve® by $100.
If a credit card has had the same annual fee for several years, there's a good chance that fee will rise soon. Although that's not ideal for consumers, there is at least some good news regarding credit card fees.
Eliminating fees is becoming a popular marketing tactic, and not just for credit cards. The end of 2019 saw many popular online brokers eliminating their commissions for trading stocks. Robin Hood introduced fee-free stock trades, which was unprecedented at the time, and that led to a wave of brokers following suit.
What happened to broker fees could set the tone for credit cards. In the credit card marketplace, some card issuers have gotten rid of many common fees, such as late fees and foreign-transaction fees. There are even credit cards that charge no fees at all. Now that no-fee credit cards have come out, it could lead other credit card companies to cut fees, too.
If you've shopped around much for credit cards, there are probably some benefits you've seen about a dozen times, such as:
There's nothing wrong with those benefits, but they don't make a card exceptional anymore. And credit card companies want their cards to stand out from the competition.
That's why credit card companies are branching out from the typical benefits. They're partnering with merchants and apps to offer perks that haven't been seen before.
It used to be fairly easy to "churn" credit cards -- that is, to open up card after card to earn as many sign-up bonuses as possible. That's no longer true. Most card issuers now have at least some internal application rules that they follow to prevent this.
A common example is denying an application if the consumer has opened or applied for too many credit cards recently. However, card issuers could start denying applications for consumers who simply have a high number of credit accounts open, regardless of how recently those accounts were opened. On a recent denial letter for a credit card application of mine, one reason listed was my total number of credit accounts.
Credit card debt statistics show that the average amount of credit card debt is the highest it has been since 2009, and total U.S. credit card debt recently hit an all-time high.
For the consumers who have credit card debt, it's a serious problem. For credit card companies, it's an opportunity. By offering balance transfer credit cards with 0% intro APRs, card issuers can convince consumers to transfer over their credit card, gaining new cardholders in the process.
Given how credit card debt is rising, it's probable that card issuers will improve their balance transfer offers and highlight those offers in their marketing.
The world of credit cards is constantly changing, and we usually get a mix of good news and bad news. When annual fees go up, rewards and benefits tend to get better at the same time. Although none of these predictions are guaranteed to come true this year, it's almost certain that we'll see some big credit card news in 2020.
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases into 2022, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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