My 5 credit card predictions for 2021 — and how they’ll impact you
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
2020 was a year of vast change. For those of us who use credit cards, especially travel rewards cards, there were indeed changes aplenty.
The pandemic radically transformed how we use our cards on a daily basis. As the year progressed, changes in spending behavior — along with a sudden slowdown in travel — forced card issuers to scramble to make adjustments.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
From news of payment relief to cutting credit limits to limited-time perks and extras (and much, much more), it was a busy year for the cards team here at TPG. And as interest in new cards returned toward the latter half of 2020, we even saw the launch of numerous increased welcome offers and sign-up bonuses.
Looking ahead, what can we expect from the world of credit cards — as it relates to rewards and benefits — in 2021?
Well, we will likely see some of the same COVID-era trends continue into the new year. But there might be a curveball or two as well. Let’s take a look at my five predictions — and how they’ll affect you.
Related: How I Swipe: TPG reporter Chris Dong
Personalization is the future, with targeted bonuses and perks
Let’s get this out there first: Rewards cards aren’t going anywhere.
While travel will remain heavily impacted by the pandemic in the months (and likely, years) to come, issuers and loyalty programs will continue to invest in credit cards. Rewards cards are an effective means for card companies and airline and hotel programs to acquire new customers — and to keep them for the long haul. Loyalty has lasting implications — if done correctly.
However, we may see more targeted welcome offers and sign-up bonuses in 2021 and beyond. Banks are continuing to invest in artificial intelligence and algorithms, so two things will likely happen from this: more targeted offers and perks on an individual level, and fewer approvals for people who aren’t considered high-value customers.
To that latter point, banks are getting better at discouraging credit card churning. With Amex’s once-per-lifetime welcome bonus rules and Chase’s 5/24 rule, applying solely for a card’s sign-up bonus and sock-drawering it thereafter is already increasingly difficult. Expect more of this in 2021. If you’re applying for a new card, be strategic.
Limited-time pandemic benefits to continue
While a vaccine will be distributed worldwide in 2021, we’ll still feel the impacts of the pandemic for much of the year ahead. The International Air Transport Association says airlines won’t fully recover from the coronavirus pandemic until 2024. Every major card issuer announced pandemic-related benefits for cardholders in 2020. Those perks, while they may evolve, will almost certainly have to continue even after Dec. 31, 2020.
For instance, back in May, Amex was one of the first issuers to announce new perks for select travel cards including The Platinum Card® from American Express and The Business Platinum Card® from American Express.
The limited-time credits (on streaming services, wireless services, etc.) were intended to mitigate the inability to use premium travel benefits on these cards during the pandemic. However, these perks ended on Dec. 31, 2020.
As the pandemic rages on through at least the first part of 2021, Amex — along with other issuers — will have to continue engaging with existing cardholders by providing relevant and useful benefits. What happens if issuers don’t do this? Expect more travel card downgrades and cancellations to occur.
Non-travel redemption opportunities to evolve
While 2020 was soul-crushing for those who love to travel, we did see an interesting development in the credit card rewards space: more non-travel redemption opportunities. With many people staying closer to home — and sitting on a glut of points and miles — issuers revealed new ways to redeem. In 2021, I expect to see this to continue to evolve with more issuers hopping onboard.
In fact, our 2020 TPG Awards winner for the most innovative credit card benefit went to Chase for its Pay Yourself Back program. From the early months of the pandemic, Chase expanded how you could redeem Ultimate Rewards points for its Sapphire card lineup. Best of all, the redemption rate was fixed at the exact same level it would be to redeem for travel through the Ultimate Rewards travel portal.
Currently, Pay Yourself Back for the Chase Sapphire Reserve (1.5 cents per point) and Chase Sapphire Preferred Card (1.25 cents per point) can be used to offset purchases made at grocery stores, home improvement stores and dining establishments through Sept. 30, 2021. However, I wouldn’t be surprised to see this benefit become permanent.
Meanwhile, other issuers have plenty of catching up to do on this front. Take Amex, for instance. You’ll only receive 0.6 cents per point when redeeming Membership Rewards points for eligible charges. And even for purchases through Amex Travel, you can’t get more than 1 cent per point in value when using Membership Rewards (the exception being The Business Platinum Card from American Express).
Of course, many will say the value in all of the cards mentioned above is in their transfer partners. And indeed, travel partners are the reason why TPG pegs Membership Rewards points and Ultimate Rewards points at 2 cents apiece. However, we live in a new reality where flexibility is key and redeeming points for travel may not be a current priority.
In 2021, I expect more fanfare from issuers about non-travel redemptions, especially in the first half of the year.
Travel offers start off the year — but they may not last
Everyone wants to travel, we get it. But the realities of the pandemic have forced many of us to stay closer to home throughout 2020. However, as we get into the new year, there will be an increased sense of eagerness, and even urgency, for travel to commence once again.
And card issuers and loyalty programs will lead the charge in pushing that restart button.
First half of 2021
From transfer bonuses to exclusive offers to cardholders, we’ll likely see more deals in early 2021 to redeem points and miles for hotel stays and flights. With a clean slate in the new year, issuers and travel companies will aggressively pursue travelers in the hopes of a muted pandemic as vaccinations continue.
Second half of 2021
However, at the same time, I also think many of these offers may dry up later in 2021. With a hopeful slowdown in caseloads later in the year — and pent-up demand for travel — there isn’t any incentive to provide deals to people that will make bookings.
Later in 2021 is also a period when we should be wary of potential devaluations to credit card rewards and travel loyalty programs. The potential implication? If you’re using your points and miles for travel, use them when you’re comfortable traveling again — and don’t hoard them.
More card perks tied to specific brands
2020 showed that cobranded partnerships are here to stay — and for better or worse, they will be here for the long haul.
Amex is the card issuer that comes to mind when it comes to specific (and sometimes, inflexible) benefits that are tied to brands. For instance, the Amex Platinum has an annual Uber credit of up to $200 (for use in the U.S.) and a biannual Saks Fifth Avenue credit of up to $100 per calendar year. Enrollment required.
And in recent months, we’ve seen even more issuer tie-ups with companies. Amex and Chase are going head-to-head in the at-home fitness space to provide benefits to premium cardholders by partnering with Equinox and Peloton, respectively.
We’ll continue to see these partnerships in 2021 and beyond. In fact, it was recently announced that the American Express® Gold Card would get a new benefit starting in early 2021 — up to $120 annually ($10 per month) in Uber Cash (applicable to Uber Eats orders and Rids in the U.S.). Cardmembers must add the card to the Uber app to receive the Uber Cash benefit.
Issuers want to be the top card in your wallet. But an increasing number of brand-specific perks may not help their case, especially if you typically don’t spend with that company. Hopefully, we’ll see card companies build more flexibility into the product, even when linking up with certain brands.
Featured image by 279Photo Studio/Shutterstock
Welcome to The Points Guy!
WELCOME OFFER: 100,000 Points Terms Apply.
TPG'S BONUS VALUATION*: $2,000
CARD HIGHLIGHTS: Delta Sky Club and Centurion lounge access, up to $200 annual airline fee credit and up to $200 in Uber Cash annually (only for use in the U.S.) (Enrollment required for select benefits)
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 100,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.
- Plus, earn 10x points on eligible purchases on the Card at restaurants worldwide and when you Shop Small in the U.S., on up to $25,000 in combined purchases, during your first 6 months of Card Membership.
- Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year.
- Earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
- $200 Hotel Credit: Get $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®.
- $240 Digital Entertainment Credit: Get up to $20 in statement credits each month when you pay for eligible purchases with the Platinum Card® at your choice of one or more of the following providers: Peacock, Audible, SiriusXM, and The New York Times. Enrollment required.
- New! American Express has expanded The Centurion® Network to include 40+ Centurion Lounge and Studio locations worldwide. Now there are even more places your Platinum Card® can get you complimentary entry and exclusive perks.
- $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year in baggage fees and more at one qualifying airline.
- $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status available to Basic Card Member only.
- $300 Equinox Credit: Get up to $25 back each month on select Equinox memberships. Enrollment required.
- $179 CLEAR® Credit: Use your Card and get up to $179 back per year on your CLEAR® membership.
- $695 Annual Fee.
- Terms Apply.
- See Rates & Fees