Look Out for These 2021 Credit Card Trends: CardRatings.com Shares Predictions

Rhea-AI Summary

CardRatings outlines credit card trends for 2021 in response to the pandemic's impact on finances. Key predictions include:
- Continued caution among banks in approving new cards and setting credit limits.
- Expansion of 'limited time' credit card perks due to restricted travel.
- Growth of tiered bonus structures to encourage card usage.
- Anticipation of rising interest rates as the economy recovers. The report indicates banks will compete for customers with enticing rewards as travel resumes, emphasizing a shift back to travel-focused credit products.

Positive

• Expansion of 'limited time' credit card perks may lead to long-term benefits for cardholders.
• Banks are likely to compete aggressively for customers with attractive travel rewards as travel resumes.

Negative

• Banks are cautious in approving new credit cards and setting modest credit limits, affecting consumers and small businesses.
• Interest rates are expected to rise, which could increase costs for cardholders.

FOSTER CITY, Calif., Dec. 22, 2020 /PRNewswire/ -- R.E.M. sang "It's the end of the world as we know it," and they may have been right. While the past year bungled nearly every facet of life, Americans adjusted to their "new normal." That includes with their finances, and CardRatings.com discusses trends that could continue, or may emerge, for cardholders and card issuers in 2021. 

"There's no doubt that 2020 has been a challenging year with the COVID-19 pandemic changing our lives in myriad ways," remarks Brooklyn Lowery, senior managing editor for CardRatings. "How we used credit cards, as well as how banks market their cards and make them valuable to cardholders, weren't immune to the changes."

The leading credit card ratings site analyzes these trends in its new report: Credit Card Trends to Watch Out for in 2021. The predictions include:

COVID causes continuing caution

Mirroring any economic downturn, banks have been more hesitant to approve new cards, and even when approved, offer more modest credit limits. Small businesses seem to have been hit particularly hard by this. CardRatings' analysts believe this trend will likely continue until the rippling effects of the pandemic ease up.

"Thankfully, with the recent vaccine rollout," continues Lowery, "there's reason to be hopeful the economy – and credit card approvals – bounce back sooner rather than later."

Those "limited time" credit card perks won't be so limited, after all

Since travel has been severely limited during the pandemic, credit card companies found alternative ways to make their travel rewards cards valuable. The Chase Pay Yourself Back program, for instance, allows those with the Chase Ultimate Rewards® cards to redeem points for several categories of everyday purchases. That "limited time" feature has already been expanded to additional cards and extended into next year. CardRatings predicts we may see programs such as this and others get long term or even permanent status as banks work to retain and attract cardholders.

Tiered bonuses gain traction

Credit card issuers want consumers to use their cards, rather than earn a quick bonus and put the card in a drawer. Some issuers are experimenting with tiered bonus offers designed to keep cardholders swiping for longer.

"Sure, this strategy is good for the banks as they make money from processing fees every time you use your card," explains Lowery. "But it also means cardholders might have some stellar opportunities to earn sky-high bonus rewards."

Have health, will travel

Americans are eager to travel again when life is back to normal. CardRatings' researchers predict that banks will diligently compete for new customers by offering bonuses, and travel rewards cards will bounce back in a big way. During this year of staying home, banks offered extensive cash-back rewards bonuses and perks. That focus likely shifts back to travel rewards cards when the world again opens for travel.

Sorry, but interest rates are going to rise

Low interest rates have held steady during the pandemic, with cardholders enjoying lower APRs than is typical. When the economy rebounds, our experts expect those rates to climb.

"Historically, interest rates tend to go up as the economy improves," remarks Lowery.

About CardRatings
CardRatings is owned and operated by QuinStreet, Inc. (Nasdaq: QNST), a leader in providing performance marketplace technologies and services to the financial services and home services industries. QuinStreet is a pioneer in delivering online marketplace solutions to match searchers with brands in digital media. The company is committed to providing consumers with the information and tools they need to research, find and select the products and brands that meet their needs. CardRatings is a member of QuinStreet's expert research and publishing division. 

CardRatings innovated online credit card ratings and has been offering independent ratings and reviews of credit card offers since 1998. The website collects and maintains data on more than 700 credit card offers and carefully compiles objective lists of the top credit cards by card type, making it easy for consumers to find the right card to fit their needs. Sign up for the bimonthly newsletter here.

Twitter: @CardRatings
Facebook: facebook.com/CardRatings

Media Contact
Charlene Arsenault
Media Outreach Specialist
508-832-8918
carsenault@quinstreet.com

 

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SOURCE CardRatings.com

FAQ

What are the predicted credit card trends for 2021 according to CardRatings?

CardRatings predicts trends such as cautious approval of credit cards, expanded perks, tiered bonuses, and rising interest rates.

How has COVID-19 impacted credit card approvals?

The pandemic has made banks more hesitant to approve new cards and has led to lower credit limits.

Why are tiered bonuses gaining traction in credit cards?

Tiered bonuses encourage cardholders to use their cards more frequently, benefiting both issuers and consumers.

What will happen to interest rates as the economy improves?

Experts expect interest rates to rise as the economy recovers from the pandemic.

What is the expectation for travel rewards cards in 2021?

As travel resumes, banks are expected to focus on travel rewards cards, competing for new customers with bonuses.