Credit cardholders have had plenty of reasons to celebrate throughout 2016, including some amazing sign-up bonuses, new luxury lounges and free Uber rides. So what’s in store in the new year? As we look forward to 2017, here are five predictions for the future of credit cards.
1. APRs will rise.
While the news surrounding the Federal Reserve’s recent rate hike may not be at the top of your must-read list, the Fed’s move will translate to higher interest rates for credit cardholders. The rate has been near zero for the past eight years, but with the economy improving, it seems likely that the Fed will continue to increase the federal funds rate in 2017. When that happens, variable credit card interest rates rise. So, if your APR is currently around 15 percent, you might see it go up to 16 or 17 percent over the next year. If you’re carrying a balance from month to month, that increase should serve as a reminder to make an effort to pay off your entire credit card balance and avoid forking over additional finance charges.
2. Banks will reevaluate bonus opportunities.
As banks deal with credit cardholders who aren’t making payments, consumers with excellent credit scores will make their lives easier. However, it’s not clear if banks will be able to offer more enticing sign-up bonuses to attract this A+ audience. Why? Because they’re paying out a sizable chunk of cash in rewards. As 2017 kicks into gear, banking executives could be pondering whether offering 100,000 bonus points and annual fee credits is really worth it to their bottom lines. My advice: If you’re considering opening a new credit card, act sooner than later. These top offers probably can’t get much better.
3. Debt will climb to the sky.
There are a lot of Americans failing to listen to the pay-your-balance-in-full advice. According to data from the Fed, Americans are collectively carrying nearly $1 trillion in credit card debt. That translates to an average of approximately $16,000 for each household in the country. This figure is poised to keep rising as Americans get more comfortable racking up debt. In 2017, TransUnion forecasts that this addiction to borrowing will lead to bad news for banks with more credit card defaults.
4. Swiping will disappear.
Outside of how much you will pay and how many rewards points you’ll earn, another fundamental aspect of the American credit card experience will continue to change in the new year: how you use cards. As more merchants adopt EMV-enabled payment terminals, you won’t have to ask what to do with your card at checkout much longer. However, there is one place where you can still expect to swipe for the foreseeable future: the gas station. Visa just gave gas stations permission to delay the chip rollout until 2020. If you’re concerned about fraud, that’s not exactly helpful; the pump is one of the easiest targets for skimming card numbers.
5. Mobile payments will make a bigger impact.
We’re all addicted to our smartphones, but we’ve been slow to turn to our devices to make purchases. In 2017, more cardholders are expected to recognize the potential perks of taking a break from texting to tap their phones on a payment terminal — mobile payments are expected to account for $1 trillion in sales worldwide by 2017. Samsung created a loyalty program for Samsung Pay users, and Android Pay offers benefits such as Uber discounts.
Want to get a preview of getting from here to there in the new year? Check out “10 Travel Predictions for 2017.”
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Intro APR
Regular APR
Annual Fee
Foreign Transaction Fee
Credit Rating
N/A
16.24%-23.24% Variable
Introductory Annual Fee of $0 the first year, then $95
0%
Excellent Credit