Photo (cc) by jon_a_ross
In 2008, I wrote The Future of Airline Loyalty Programs for a travel blog, and I predicted that airlines would start switching from miles to points worth a fixed amount. In the years since I wrote that, even I was astonished to find airlines such as JetBlue, Southwest, and Virgin America changing their frequent flier programs exactly as I had predicted.
In addition to studying travel, I’ve also written well over 1,000 articles on the subject of credit cards. When you follow any industry so closely, it eventually becomes clear to you where the trends are and what consumers can expect in the coming year. So as I did a few years ago for travel, here are my 2012 predictions for plastic.
As Yankees great Yogi Berra once said, “It’s tough to make predictions, especially about the future.” Nevertheless, look for these five trends in 2012…
1. More sign-up bonuses – with more spending required
In 2011, credit card applicants were able to earn sign-up bonuses of up to 100,000 miles – just by receiving a credit card and meeting the minimum spending requirements. As 2011 becomes 2012, we’re still seeing incredibly large sign-up bonuses, but banks are catching on to those who just get the miles and then cancel the card.
In the new year, expect credit card sign-up bonuses to come with bigger strings attached – such as several tiers of minimum spending requirements to receive all the possible points or miles.
2. More non-mileage perks
As customers have more difficulty redeeming the miles they already have, banks are starting to learn that consumers want a credit card that offers more than just loyalty points.
Banks and their airline partners have been adding travel perks such as priority boarding and free checked bags, and I predict that other companies will get in on this game. I can imagine an electronics company offering its cardholders the first chance to purchase a new gadget, or a retailer opening up a priority checkout line for shoppers with its co-branded credit card.
3. Fewer foreign transaction fees
There’s no point in a credit card issuer charging customers a 3-percent fee just to make a purchase over the border. Savvy travelers have known this for years, and more average consumers are realizing it as well.
In response, some banks are dropping these fees on some cards, while other issuers like PenFed and Discover have eliminated these fees on all their products. While these fees still persist on most cards, I predict that by the end of 2012, the market will triumph and the majority cards will no longer impose this charge.
4. The return of zero-percent balance transfers with no fees
It used to be that people could essentially borrow money for free by paying off their credit cards with a zero-percent promotional offer and no-balance-transfer fees. Today, nearly every one of these offers comes with a balance transfer fee of 3 to 5 percent.
Just recently, Chase tried to dip its toes back into those waters by offering a version of its Slate card with a fee-free, zero-percent-balance transfer offer. In this hyper-competitive market, expect other banks to match Chase’s offer next year.
5. More attempts to lower credit card merchant fees – and kill rewards
One of the big stories from 2011 was the regulation of merchant fees on debit cards. This helped retailers but hurt consumers: Debit card rewards were all but eliminated, while banks tried and failed to impose monthly fees on debit card users.
In 2012, merchants will again ask Congress to regulate swipe fees on credit cards as part of a financial reform bill – or any other piece of legislation they can attach it to. If the retailers have their way, expect credit card rewards to be as scarce as debit card rewards are now.
This time next year, I’ll take a look at how my predictions worked out – and offer more for 2013.