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It’s been a busy year for credit cards with plenty of good news for TPG readers: some great new offerings, big moves from Capital One to become a major player in the points arena, loads of 100,000-point bonus opportunities and much more. As 2018 comes to a close, what can you expect to see in the new year? Today, we peer into a crystal ball for credit cards to offer some predictions for 2019.
1. Contactless Cards Will Enjoy Crazy Growth
Keep an eye on your mailbox for a new credit card that will let you skip the process of swiping or inserting for payment. Chase announced a shift to contactless payments in November, but the big bank’s move is only the beginning. In a September earnings call, Visa CEO Alfred Kelly told listeners that he believes the company will issue 100 million contactless cards by the end of 2019.
While many merchants will need to adopt contactless-enabled payment terminals, plenty of retail locations are ready for the contactless revolution. According to data from Visa, 79% of quick-service restaurants and 77% of drugstores and pharmacies are ready to accept payments via NFC communications. Get ready to tap in the new year.
2. More People Will Get Credit Cards
Some of those cards will arrive in the mailboxes of consumers who may have struggled to get approved for a new line of credit. By the middle of 2019, most lenders will be able to use UltraFICO, a new method of calculating a credit score. The new approach uses data from consumers’ bank accounts to gauge their creditworthiness. Instead of relying solely on the traditional elements that make up a credit score, strong money management habits (saving on a monthly basis, avoiding overdrafts and other basics of personal finances) can play a role in boosting scores.
3. Banks Will Work to Stay Ahead of Savvy Points Strategists
As banks welcome a new cast of credit card holders with lower credit scores (the UltraFICO score seems primed for those with scores in the upper 500s to lower 600s), they will also be focused on the opposite end of their customer bases: those who are opening premium credit cards with plans to maximize earning opportunities and never pay a dime of interest.
Over the past three years, we’ve seen banks compete with each other to spur new credit card applications and attract new customers. From the Chase Sapphire Reserve with a 100,000-point sign-up bonus in 2016 (currently 50,000 points after spending $4,000 in the first three months) to Capital One’s recent massive bonus offers, banks have been focused on outdoing one another. In 2019, banks will shift their focus to outdoing their customers who are winning the points game. Consider the news in J.P. Morgan Chase’s Q2 earnings announcement that credit card customers were cashing in points at a pace that the bank didn’t forecast. “This is maybe larger than we have seen over the course of the last several years,” Marianne Lake, CFO of JPMorgan Chase, said at the time. “We do pretty regularly review our rewards liability in light of evolving consumer behavior.”
Score one for TPG readers who have managed to rack up more rewards than their card issuers predicted in 2018. Looking ahead, though, it’s important to recognize that banks don’t want unexpectedly large chunks eating into their profits. I don’t expect to see a big drop in sign-up bonuses drop in the new year, though. Instead, I expect more adjustments to the fine print that echo the decline of price protection and other benefit cuts we saw in 2018.
4. Annual Fees Will Continue to Increase
This isn’t really a will-this-come-true prediction; it’s a continuation of a change that no one wants to see. It started in 2018 with the announcement of a $45 bump for Citi Prestige card holders (not currently open to new applications) and the $145 bump for anyone with (See Rates & Fees) the Business Platinum Card® from American Express. Be on the lookout for a notification from your issuer with similar news next year.
While paying a higher annual fee for a credit card isn’t on anyone’s list of New Year’s Resolutions, it’s important to point out that credit card issuers are balancing more fees with some more benefits. However, those perks will only matter to certain people. For example, if you use WeWork and buy Dell products, the changes on the Amex Business Platinum are great. As more issuers hike their fees in 2019, card holders will need to calculate whether the price tag is actually worth it.
5. Airbnb Will Enter the Credit Card Landscape
As brands compete for your attention, the most valuable place to be is inside your wallet. In 2019, get ready for some notable new names to enter the credit card landscape. Lyft is working on its own credit card with Synchrony, and it seems likely that the product’s debut will be timed near the company’s IPO.
I’ll be watching for news from Airbnb, though. While there are no rumors about the home rental company getting into the credit card game, it seems like a logical step that could make a loyalty program — a concept that has been especially challenging for Airbnb — a reality. And if Airbnb really wants to compete with Marriott, Hilton and the rest of the traditional travel industry, they’ll need to make staying in one of their properties feel more rewarding — not just more affordable.
What else will happen in 2019? Share your predictions in the comments section below.
Featured image by Sasha Stories via Unsplash.
For rates and fees of the Amex Business Platinum, please click here.
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