We got our revenge in 2022. We were determined to make up the time lost during the COVID-19 pandemic. However, inflation and rising interest rates began to restrict the fun. The past year has been:
Inflation caused consumers to borrow more and buy more. Credit card debt also became more costly due to increasing interest rates. According to data from Federal Reserve Bank of St. Louis, credit card interest rates averaged 20.4% as of November 2022.
The collapse of cryptocurrency was due to big price drops and bankruptcy filings on exchanges. The much-hyped launch of crypto-earning credit card cards quickly lost their appeal and were made unavailable to existing users.
Yet, travel continued to grow. TSA passenger volume data showed that Thanksgiving 2022 reached levels comparable to 2019. TSA checkpoints were visited by nearly 2.5 million people on the day of Thanksgiving 2022. This compares to just under 2.9million in 2019, which saw just 2.9 million. Travel rewards credit cards were offered huge sign-up bonuses to attract Americans returning to the skies.
What’s in store for credit card holders in 2023?
1. Credit card companies might tighten their belts
Credit card issuers tightened their lending policies earlier in the pandemic. To be eligible for many cards, they needed higher credit scores and only limited balance transfer options (only to get them back later). NerdWallet’s 2021 Consumer Credit Card Report found that nearly one in five credit card holders (19%) said that their credit limit had decreased since the pandemic.
According to Jessica Duncan (director of research and insights at Competiscan), a company that analyzes and tracks direct marketing activity, the concerns about a recession in 2023 will continue. This could cause credit card issuers again to be more cautious with their lending practices. This could eventually impact credit limits and availability of balance transfer credit card cards.
2. Popular options for lowering interest rates include
Consumers are looking for ways to reduce their debt costs due to high credit card balances and high interest rates. For those who are eligible, balance transfer credit cards are still available. There may be compelling balance transfer promotions for cards that you have held for a while.
Beth Robertson, Keynova Group managing director, said that card issuers are now more prominently promoting their built-in buy-now, pay-later features in order to compete with third parties that offer installment plans at point-of-purchase. Robertson says programs tied to credit cards could be more appealing to consumers because they offer purchase protection and reward opportunities.
Many card issuers offer ways to borrow against your credit limit at fixed interest rates that are typically lower than your standard rate. This allows you to access funds without the need for a loan application and credit check.
Michele Raneri is vice president of U.S. Research and Consulting at TransUnion. She notes that consumers may also look for other options to consolidate their credit card debt at lower rates such as personal loans or home equity loans.
3. Security is top of mind
TransUnion data, one of three major credit bureaus found that there were 127% more suspected digital fraud attempts during the Thanksgiving-holiday period in the U.S. than in 2022, before the holiday season. Your phone may give you a greater sense of security.
Digital and mobile wallets were introduced earlier in the pandemic. They allowed you to make purchases, without touching a payment terminal or placing your card in another person’s hand. High-touch surfaces weren’t trusted until we learned more about COVID-19 transmission. They are still gross for many other reasons. )
Duncan says digital wallets now have a new marketing strategy: They protect your credit card information against fraud by using tokenization. A digital wallet allows you to send a random number of numbers and letters to the merchant instead of your credit card number. This protects your data from security breaches. Online purchases can be made using virtual credit cards numbers. Tokens are used in the same manner.
4. You may be able to focus your rewards on certain merchants or lifestyle perks
Credit card rewards have been tied to merchant code codes. These codes assign broad spending categories like “supermarkets”, “department shops” and “department stores” as rewards programs. For example, purchases that fall under the codes for hotels, airlines, and rental cars may earn you extra points in your travel category.
Some cards offer more than just rewards for broad categories of spending. They also partner with specific retailers to give cardholders more opportunities to earn money where they shop most. You will feel that your card is tailored to your needs, although it may require you to log in regularly to change your merchants. Robertson states that while I think selecting merchants is a great feature, it would pose a problem for me.
Lifestyle rewards, such as extra points for rent payments and health and wellness purchases, are also gaining popularity. Nerds may be interested in cards that offer rewards on mortgage payments or day care bills. Hint, hint. )
5. You can track your subscriptions and spending with tools
Mobile experience is still important, especially for younger customers. It is becoming more robust every year. You can manage your credit cards and make important decisions like whether you want to borrow against your credit limit. You can also use new features to keep an eye on your money.
Duncan states, “Everything can be done through a subscription.” Although it is convenient, it can be easy to forget what subscription you have and add small charges each month to your card. The Stored Cards tool from Chase is one example of how a card app can help you better manage your expenses. It allows you to see which digital wallets and merchants have your card information, and which charge you a recurring fee. This is a great way to see if you are still paying for something that you did not intend to pay for.
The use of sophisticated virtual assistant services can reduce the need to contact customer service. U.S. Bank’s Smart Assistant allows you to type or speak into it to ask questions, find out about charges, or complete financial tasks. Capital One’s Eno, a similar tool, answers your questions and reminds you when the free trial ends. It also alerts you to unusual charges. Although neither of these tools is new in 2018, they are part of a growing trend to provide more sophisticated ways for you to monitor your card usage.