In early 2021, vaccine news had Americans ready to roll up their sleeves, take off their masks and enjoy a nationwide celebration. But thanks to COVID-19 variants, “Hot Vax Summer” has turned into “Can’t-Find-a-Rapid-Test Winter.”
Still, some consumers remained hopeful: traveling for the holidays, returning to the office, and going back to personal school. The cautious optimism also extended to credit cards, which offered tantalizing benefits to those ready to get out. In 2021, we saw trends like big bonuses, new ways to redeem rewards, the return of balance transfer cards and an explosion of credit card variations in buy now and pay later.
This is what awaits credit cards in 2022.
1. A focus on breathing room as prices rise
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According to the US Bureau of Labor Statistics, the total cost of living has increased by 7% in the past 12 months. More cardholders are looking for cash-back rewards to help save on things like groceries and gas purchases, or travel rewards that can help cover vacation expenses. And because these prices are higher, consumers want ways to spread those purchases over time:
An abundance of 0% APR offers
Cards extend offers with 0% interest on new purchases and balance transfers, even extending such offers to existing cardholders. According to Competiscan – a company that tracks and analyzes direct marketing activities – email and email marketing to existing cardholders for balance transfer promotions doubled between Q4 2020 and Q3 of 2021.
And those interest-free periods are getting longer. Competiscan also found that in Q3 2021, 34% of balance transfer offers to current cardholders lasted 15 months or longer, compared to approximately 10% of offers in Q4 2020.
More ways to split payments
Many credit card issuers have a version of Buy Now, Pay Later, but it differs from third-party providers in that it’s largely done after the purchase: you may be able to select individual card purchases to split into multiple payments, but only after you’ve got it. item purchased.
But card issuers are coming up with ways to offer payment plans at the point of sale, said Beth Robertson, president of Keynova Group, a financial services intelligence firm.
That would give users the benefit of a buy now, pay later service with the consumer protection of a credit card.
2. Rewards that get you in – and keep you in the room
For years, 1.5% back was the industry standard pay rate, but it looks like 2% back may eventually become the norm. Rewards are now standard even on many starter credit cards, giving cardholders a reason to keep using those products long term.
But keep an eye out for more than just ongoing rewards percentages:
Bonuses you should put your shoulders under
Additional generous welcome offers for new cardholders will likely continue to pop up every now and then in 2022, but your wallet may have to work a little harder.
Instead of the traditional one-time lump sum of rewards for reaching a specific spending threshold, we may see more tiered bonus offers that award additional rewards for larger spend over longer periods of time. This may mean, for example, that you have to use one card exclusively for the entire first year.
We may also see more recurring “anniversary bonus” offers, especially with high annual fee cards that aim to incentivize cardholders to stay.
‘Choose your own adventure’ rewards
Many credit cards offer bonus rewards in specific spending categories. However, we’re increasingly seeing cards that give consumers a choice of what those categories are, and that customization trend is likely to grow.
Some of these cards let you pick your favorite categories from a list, while others automatically pick them for you based on your highest spend for the month. Either way, it gives cardholders more control.
‘Coupon Book’ Rewards
On the other hand, paradoxically, in 2022 some cardholders may need to jump through more hoops to fully realize the value of their credit cards, especially if they carry premium cards with a three-figure annual fee.
Sure, these cards might offer a laundry list of benefits to offset that fee… but can you use them all? If it’s merchant-specific credits being handed out in parts, maybe not.
For example, your card may offer hundreds of dollars for a gym membership. But that benefit can come in monthly increments and may only be valid for a specific gym company.
Since not everyone will use these types of incentives, they are less expensive for the issuer to offer. Expect to see more of it.
3. A more connected consumer experience
NerdWallet predicted last year that when it comes to credit cards, the customer experience would be crucial. And as Americans’ collective well of patience dries up than ever, card issuers will look for more seamless ways to request and manage their products:
Cards with less effort
“With this continued increase in map products, we will see many more improvements in selection tools, applications and comparison tools,” said Robertson. “The information that helps a prospect evaluate a product and then choose one and apply for it.”
Robertson cites Discover as an example of a publisher that streamlines the application process. By entering your zip code, date of birth, and the last four digits of your Social Security number, Discover will fill in additional information for you, such as your home and email address. (You can unsubscribe from this and fill in all fields yourself if you wish.)
Robust apps that let you manage your finances in one place
Credit card issuers are recognizing consumer demand for managing finances digitally. Many of their revamped mobile apps aren’t just for easy bill payment. They function more like “money welfare” platforms, giving you a more complete picture of your finances. (The more accounts you have at one bank, the fuller that image will naturally look in one app.)
According to Meg Cipperly, senior director of insights at Competiscan, Chase’s redesigned app provides a one-stop shop of financial management tools. You can track your expenses, manage credit card rewards, and view balances for various Chase accounts.
Wells Fargo follows suit, launching its redesigned app in 2022 with many of the same all-in-one-place features.
Improved customer service options
With so much communication technology at your fingertips, there is simply no excuse for poor customer service. Credit card issuers offer alternatives to calling the number on the back of your card and listening to 25 minutes of smooth jazz.
You may be able to request a callback or get an estimated wait time. Publishers are also looking at ways to connect asynchronously. For example, you can contact the publisher through the app for help and get notified when they’ve replied. Maybe 2022 will be the year you finally feel like your phone call really matters to them.
4. Features that boost your behavior
Whether they prevent you from overspending or encourage specific spending, cards will add benefits that look appealing but also encourage you to use those cards in a certain way:
Some newer secured credit cards change the rules a bit.
Instead of asking for a fixed deposit up front, these products allow you to set aside a desired amount, which becomes your credit limit. When your bill is due, it’s paid with the money you’ve already allocated, meaning you don’t risk getting credit card debt.
Credit limits based on cash flow and assets
Some new products essentially tell you how much money you can safely spend by basing your credit limit on your cash flow rather than your credit scores. Grain will pre-approve you for a line of credit tied to your checking account, so you can use a debit card as a credit card to build credit. Grain charges 15% APR on outstanding balances.
Titan, an upcoming payment card, will base your spending limit on your income and assets. While you have to pay your bill in full each month and can’t carry a balance, the emphasis on money you actually have as a line of credit means you can’t spend more than you could afford.
Incentives to use cards for recurring charges
Additional rewards for subscriptions to streaming services became popular as the number of such services grew rapidly. Some cards partner with ridesharing companies, food delivery platforms, and fitness apps and offer discounts on monthly subscriptions to these services.
Do credit cards work to provide value at a time when we are all at home, watching TV, ordering food and working alone in our basements? Absolute. But they also benefit from this, because subscriptions are recurring costs.
5. A renewed relevance for travel maps
As travelers stayed home during the pandemic, travel credit cards struggled to stay relevant in their wallets. Publishers offered incentives such as bonus rewards for stay-at-home spending categories, monthly restaurant credits, and the ability to redeem travel points for more than just travel. But since most of those temporary incentives have expired, travel credit cards seem to be taking center stage again:
Itching to travel after COVID-19 has crushed plans for so long? You are not alone. According to a December 2021 Trendex trend report from American Express, 55% of Americans surveyed plan to take up to three trips by 2022.
If this is indeed the year consumers can start to travel more safely, expect travel credit cards to once again take the top spot in their wallets, thanks to perks like travel insurance, lounge access, automatic elite status and more.
More lounge options
Why sit on the plastic seat by the crowded gate when you can grab a plush seat and grab a smorgasbord of snacks before boarding? Airport lounge access is a coveted perk that comes with several travel credit cards, and in 2022 you’ll have even more choices:
- American Express is expanding its Centurion Lounge options this year.
- Capital One launched its first lounge in late 2021 and plans to open more this year.
- Chase is also unveiling its own line of airport lounges.
Unless you have an eligible credit card, you will have to wait for your flight at the gate.