07
Jan

There have been numerous changes to the credit card industry at large in the last several years, and it's believed that even more will come this year as lenders step forward to meet a borrower demand that is once again on the rise thanks to the improving economy.

The credit card industry made a number of major changes last year, according to a report from the Christian Science Monitor. For one thing, many began trying to draw in new customers with a large amount of extremely valuable bonus offers, particularly on travel credit cards that granted borrowers more miles. However, these types of cards also began offering perks outside of the miles themselves, such as waiving travel fees giving discounts, and so forth.

In addition, many cut foreign transaction fees, and also fees for transferring a balance from an old card to a new one, the report said. Further, many lenders also reduced the fees they charged to merchants for every purchase they processed.

What other changes are in store?
As the national economy continues to make its various strides forward, consumers will likely find themselves in a better financial position to begin borrowing more heavily on their credit cards once again (or at least consider themselves to be in one), the report said. One of the ways it's likely that lenders will try to entice borrowers without actually improving the benefits they currently provide is by giving them more options for spending.

This will likely come in a two-pronged offensive involving different technologies, the report said. The first could come in the form of so-called mobile wallet payments, which involve smartphones embedded with near-field communications technology, pre-loaded with an accountholder's card information. That, in turn, gives them greater payment flexibility. Second, banks will continue their transition from offering consumers cards that store payment data with magnetic strips to those that store them on microchips. The latter type of card is already ubiquitous in many parts of the world, and is considered far safer than magnetic strip cards.

Account changes that will affect consumers' wallets
Of course, because the economy's recovery is still in its nascent stages in many ways, most lenders will also have to keep offering consumers financial benefits for taking on new cards apart from the greater security and convenience, the report said. As such, borrowers can expect to once again be bombarded by the kind of high-quality introductory offers already seen this year, but with a bit of a catch.

While the kind of large sign-up offers currently available will likely continue, lenders will probably also continue increasing the number of qualifications consumers must meet before qualifying for them, the report said. For example, spending thresholds — such as the requirement to spend, say, $2,000 within the first three months a borrower has the card — may continue to rise, and more may be added before consumers can fully draw on everything offered at signup.

Further, borrowers who currently have rewards credit cards of many types could see big changes on those programs over the course of the year, the report said. This is especially true for cards that reward borrowers with miles that can be used for specific airlines, because many of those types of companies are expected to be changing the programs. It's believed that in many cases, frequent fliers will see more benefits at the cost of reductions in accountholders who do not travel as often.

Finally, it's also believed that the cost of borrowing probably won't go up very much this year, the report said. Interest rates on most credit card accounts have held more or less steady in the last few years, and that's not expected to change going forward. Further, it's expected that introductory terms such as several months with no interest on purchases, balance transfers, or both will likewise remain unchanged.

Credit cards largely make up two of the largest factors related to consumers' credit scores: Payment history and the amount of credit being used versus what they're allowed. These two factors alone account for 65 percent of a borrower's credit rating. As such, it's important for consumers to make sure they're making all their various payments on time and in full, and keeping their outstanding balances as low as they possibly can. Doing so will help to maximize their credit rating and qualify them for more affordable account terms in the future.

Another factor that can affect consumer's credit rating, often without their knowledge, is unfair markings appearing on their credit reports. As a result, they should take the time to order these documents regularly, and check them for these entries. If any are discovered, working with a credit repair company may be able to correct these problems.