For Issue # 5 of the Credit Card Reviews Industry Roundup, Credit Card Expert Jason Steele asks the following question:
What are the big trends that you see in the credit card industry in 2018?
Here are the responses from this week's industry experts which include Beverly Harzog, Gerri Detweiler, Angelina Aucello, Geoff Whitmore, Bill Hardekopf, and Jason Steele:
Beverly Harzog - Credit Card Expert, Bestselling Author, & Consumer Advocate
Over the past year, getting credit has been easier than it has been in previous years. This trend toward easy-to-get credit should continue throughout 2018 because the economy looks good, so far, and that leads to a higher level of consumer confidence. Unfortunately, I also expect interest rates to continue to rise. And since credit card balances are already the highest they’ve been since pre-recession times, this could mean trouble for Americans who routinely carry balances from month to month.
But the folks who use their cards responsibly, which means those who pay their bills in full and by the due date, can look forward to some interesting card choices. Look for credit cards, such as the Uber Visa Card, that are designed to tap into lifestyle choices. The major issuers will also start offering new rewards along these lines. For instance, the American Express Platinum Card offers an “Uber VIP” distinction, but the annual fee is $550. It’s important for consumers to look past the carrot and focus on the all the benefits of a rewards card.
Bottom line? In 2018, consumers who use rewards credit cards to their advantage (no revolving!) can benefit greatly. But those who revolve their balances could see their credit card debt grow quickly. Those who are in the subprime category, in particular, need to protect themselves. It will be an environment that encourages predatory lenders.
Hopefully, we’ll also see an uptick in the promotion of financial literacy. This will be a good year for it!
Gerri Detweiler - Education director for Nav which helps small business owners build business credit and find financing.
A combination of optimism among small business owners and favorable tax changes for small businesses means that 2018 will likely see a significant uptick in entrepreneurial activity. More businesses will be started and existing businesses will be looking to grow and expand, which means they will need access to capital.
Card issuers are no doubt going to capitalize on these trends and try to target small business owners with more lucrative card offers. Small business credit cards offer a number of advantages, including the fact that they typically don’t impact the owner’s personal credit, but do help them build business credit. Credit limits are often higher and rewards can be quite lucrative. All in all, it should result in a good year.
Angelina Aucello - EWR-based travel aficionado and expert. Her blog Angelina Travels, shares her excitement about travel, points, miles, and deals.
I predict 2018 will be a great year for the credit card industry. Hand-in-hand with a booming economy, I believe that card issuers will continue to release several tiers of their own credit card products along with co-branded cards that are precisely tailored to specific users.
Over the last several years, there has been quite a surge of “super-premium” credit cards, such as the Chase Sapphire Reserve, Citi Prestige, and Hilton Aspire/Ascend cards, all which come with a high annual fee but offer a plethora of valuable card-member benefits that has attracted the attention of top credit customers and road-warrior travelers.
Benefits ranging from lounge access, travel credits, and top-of-the-line trip interruption/cancellation insurance keeps these super-premium card members hooked year after year. Following the trend, I think we will see more “super-premium” credit card products along with an introductory no-annual version of the card that allows customers to feel rewarded on everyday spend. I also think that banks will continue to offer a mid-tier premium option with a $75-$95 yearly fee that will include perks that allow card members to earn more through category spend and that would certainly enhance the travel experience, whether it be a free night, rebate on redeemed points, or mid-level elite status.
We already know that new cobranded credit cards are in the pipeline in 2018 for Marriott/Starwood and they will be issued by both Chase and American Express (including new premium products). Let’s hope 2018 is the year for more levels of credit card products!
Geoff Whitmore - Personal finance and travel writer based in Austin, Texas. Founder of WalletPath.com.
The last couple years we've seen major banks release and enhance their premium travel rewards credit cards. This is a trend I think will continue in 2018 as the major banks compete against each other for the frequent flyers business. And as they figure out to make a profit of their premium travel products that have lucrative benefits. For example, in 2017 the Citi Prestige cut a lot of its valuable benefits making it harder to justify its high annual fee.
On the other side of the spectrum, banks and airlines have started rolling out no annual fee co-branded airline cards like the United TravelBank and Delta SkyMiles cards released last year. These no annual fee cards could continue as banks and airline look to acquire the casual travelers business.
2018 is bringing changes to some of the most long-standing hotel cards. The Marriott acquisition of the SPG hotel program is bringing us 4 new hotel cards but leaves the future of the SPG card cloudy. Also, Citi Hilton products are being converted over to American Express.
Banks, in general, have also tightened the screws on numerous applications for their products. With American Express' once in a lifetime bonus and Chase's 5/24 rule it's harder for travel hackers to rack up numerous sign-up bonuses on the same credit card products. I don't see these regulations on receiving sign-up bonuses changing in 2018.
Bill Hardekopf - CEO of LowCards.com
There are a number of credit card trends that I believe will surface in 2018.
Interest rates will continue to rise. Many analysts expect the Federal Reserve to raise its benchmark rate at least two more times in 2018. This will lead to more interest payments for any cardholder carrying a balance from one month to the next.
Since rates will continue to rise and credit card debt is at an all-time high, credit card delinquencies will likely increase, especially among those with low credit scores.
We will probably see more co-branded cards being introduced by well-known brands. We saw some of this in 2017 with the introduction of the Amazon and Uber cards.
Mobile wallets will still struggle to catch on among the mainstream consumer. Apple Pay, Samsung Pay, Android Pay, Walmart Pay. There seems to be a new mobile wallet introduced each week. Despite all the hype, the growth of this payment method has been relatively disappointing because consumers don't see paying with a credit or debit card as inconvenient.
Issuers can be expected to introduce features to enhance card security. Consumers have been inundated with credit card and payment breaches over the last few years, and cardholders need to be confident that their transactions are as secure as possible.
Jason Steele - A journalist who specializes in covering credit cards, award travel, and other areas of personal finance.
The biggest trend that consumers are likely to notice is that by the end of 2018, they will no longer have to sign for most purchases. Card issuers and payment networks have finally given up the pretense that your signature is ever being authenticated or that it plays any role in preventing fraud. Sure, they’ll claim that the security EMV smart chips in your cards now make you signature unnecessary, but in reality, many credit card users have long since stopped taking the time to actually sign their cards, and just draw a quick doodle in the signature panel.
I also continue to see the same trends from years past continuing, although perhaps not as rapidly as before. Reward cards will remain generous and new cards will offer even better rewards than before. These cards will continue to improve their features and benefits, while other cards will offer more lengthy promotional financing offers.
Finally, credit card users became more debt averse during the last recession, with more avoiding interest charges by paying their balances in full. I’m concerned that this trend will stall or even reverse itself as time goes by, but I hope it doesn’t happen.
