During and immediately after the financial crisis, credit card issuers tightened up lending standards and lowered credit limits to protect themselves. "They had given credit to too many people and approved people that had too low a credit score," says Bill Hardekopf, CEO of lowcards.com, a free consumer resource on credit cards. "So many of those people defaulted on their credit cards, and issuers were forced to eat that balance."
That's been gradually changing, and experts predict more changes on the horizon for credit card holders next year. As we prepare to bid the year adieu and welcome in 2014, U.S. News talked to three industry insiders for their predictions on credit card trends to watch.
1. Longer 0 percent APR periods. Prior to the financial crisis, 0 percent APR balance transfer offers were common. Now? Not so much. As "banks are finally shaking off the last of the wariness," says Anisha Sekar, vice president of credit and debt at the personal finance website nerdwallet.com, they're now offering more balance transfer offers and lengthening periods of 0 percent APR. Nerdwallet.com reports that between 2010 and 2013, the average 0 percent APR balance transfer credit card offer increased from eight months to 11 months. Sekar expects this trend of longer 0 percent APR periods to continue. However, she points out that some balance transfer cards have fees attached, so it's important to consider those fees and weigh them against the savings on interest rates.
[Read: 8 Potential Pitfalls of Credit Cards.]
2. Creative perks. During 2013, a few credit card issuers began offering cardholders extra perks such as free Amazon Prime and TripIt Pro memberships, or credit scores included at no charge on each credit card statement. Sekar predicts that as issuers compete for market share, credit card companies will "give you something else in addition to sign-up bonuses." Also look for more partnerships between retailers and credit card issuers, such as concert or sports tickets available to holders of certain cards or special incentives for using a card at a certain retailer. "We've seen perks that credit card issuers offer on some of their partner sites, and I think we'll see more and more of that," Hardekopf says.
3. Varied rewards redemption choices. In addition to the traditional credit card rewards that are redeemable for travel, cash or gift cards, card issuers are getting more creative, a trend that will likely continue in 2014, says Curtis Arnold, founder of cardratings.com and author of "How You Can Profit from Credit Cards." "I think you'll see reward programs getting more competitive and offering out-of-the box things like experiential rewards or redemption directly through retailers like amazon.com," he adds.
[See: 10 Dangers of Mobile Banking.]
4. Mobile payment opportunities. Mobile apps that allow consumers to check their accounts on the go or pay by scanning their phone at a checkout will continue to change the payment landscape in 2014, several experts predict. "While most smartphone owners now just want to check balances, rewards and so on," Arnold says, "look for more startups - Google Wallet, Square, PayPal and others - to keep innovating to take business away from the traditional credit card issuers." Much of the move toward mobile payments is driven by consumer demand for convenience. A new product called Coin is expected to hit the consumer market next summer and will store multiple credit and debit cards on a single device to declutter wallets.
5. Chip and PIN cards. Chip and PIN cards (also called EMV which stands for its original developers: Europay, MasterCard and Visa) have been the standard in Europe since the mid-2000's and have stymied some Americans trying to use magnetic strip credit cards abroad. Instead of using a magnetic strip to contact a bank's servers for authorization, EMV cards have a tiny chip that stores information like the consumer's credit limit and card's expiration date. Although EMV cards are more secure than magnetic strip cards, only a handful of U.S. card issuers offered them until recently. Arnold predicts that will change in the coming year. "A lot of consumers have been frustrated traveling abroad," he says. "The days of the magnetic strip card are numbered. I think PIN and chip and mobile bills are really going accelerate and change the way consumers make purchases."
6. Options for consumers with bad credit. In recent years, the most generous credit card rewards, interest-free introductory periods and creative perks have been available to cardholders with excellent credit. But "as the economy improves or stays the same, issuers need to increase market share," Hardekopf says. "They will typically start to loosen credit standards ever so slightly to appeal to more and more consumers." However, the introductory offers available to these consumers may be less generous than those heavily marketed offers given to consumers with strong credit scores.
Of course, these predictions are based on the assumption that the economy will continue in the general direction it's headed. Should it take a sudden turn, Hardekopf predicts that credit card issuers might rein in approval ratings and cut back on rewards. As Hardekopf says, "what happens with credit cards usually follows the economy."