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Innovations and Payment Systems

Credit card trends to watch for in 2020

Experts predict higher fees and lower bonus structures, but the consumer credit market will remain strong

Summary

This year you’ll likely experience new card updates and an uptick in “true identity” cards, but psych yourself up for increased card fees and new, less-generous bonus structures. Read on to find out what else credit card experts believe is in store for 2020.

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This year you’ll likely experience new card updates and an uptick in “true identity” cards, but psych yourself up for increased card fees and new, less-generous bonus structures.

Each year, CreditCards.com turns to the experts to see what changes they think will be in store for credit card holders.

Read what the industry pros have to say now and prepare for whatever might affect you this year.

The consumer credit market will remain strong

Paul Siegfried, TransUnion senior vice president of credit cards, predicts the consumer credit market will remain strong in 2020.

In the credit card sector, he expects consumer balances to continue an upward trajectory through the end of the year.

Siegfried also said account originations will have sustained growth – albeit at a slower rate – and that the growth will come predominantly from the non-prime risk tiers.

TransUnion said in its Q3 2019 Industry Insights Report the average card balance per borrower increased from $5,580 to $5,668 year-over-year in the third quarter of last year. Overall card balances have grown for 26 quarters straight to reach $807 billion.

Additionally, there were 16.6 million new bank-issued credit cards in the market in Q3 2019, a 5.2% increase year over year, TransUnion noted.

“We anticipate that the credit card market will be well-positioned from both a performance and growth standpoint as card issuers balance risk across their portfolios,” Siegfried added.

See related: TransUnion can prequalify you for a credit card via text

Credit card fees might creep up

Ted Rossman, industry expert at CreditCards.com, said card issuers were cautious in 2019 amid fears of a potential recession. This resulted in fewer notable card launches and some tightening of lending standards, in both approvals and credit limits.

“I think the same sense of caution will prevail in 2020, especially leading up to the election, because issuers are reluctant to take too much risk right now,” Rossman said.

Rossman also expects higher credit card fees in 2020 to compensate for the Fed’s recent interest rate cuts, many of which will be geared toward the riskiest borrowers.

For instance, we’re already seeing balance transfer and cash advance fees on the rise from issuers.

According to a CreditCards.com’s 2019 Credit Card Fee Survey, although a lot of cards offer temporary fee promotions for balance transfers (typically from 0% to 3%), more than 25% of issuers now charge a much higher, standard 5% fee.

And the survey also revealed that at least eight cards increased cash advance fees to a maximum of 5% since the summer of 2019.

Those with higher credit scores won’t be immune to fee increases, either, according to Rossman.

Chase Sapphire Reserve raising its annual fee from $450 to $550 affected the premium crowd, and American Express touted on a recent earnings call that 70% of its cardholders pay annual fees, which the company views as steady income.

Brandon Neth, credit card and travel rewards expert at the personal finance website FinanceBuzz, said he’s sure consumers will see an increase in fees in 2020. He hopes to see a shift in what card issuers offer regarding perks, earning rewards, redemptions or something similar.

“They’ve been fairly stagnant for a few years now,” Neth noted.

See related: Is there such a thing as a free credit card? Maybe – here are your options

Card issuers might change bonus structures

Patrick Beckman, contributing finance editor for the website RAVE Reviews, predicted that banks will likely continue to change sign-up bonus structures from, say, requiring you to spend a set amount of money in three months to implementing higher spending amounts over longer periods of time, which will help them retain customers over longer periods of time

For example, Chase’s Southwest Rapid Rewards Plus Credit Card, Southwest Rapid Rewards Premier Credit Card and Southwest Rapid Rewards Priority Credit Card typically have sign-up bonuses that require spending $1,000 in the first three months to earn 40,000 Rapid Rewards points.

However, you can now earn a second-tier sign-up bonus on any one of these cards by spending $5,000 in the first six months — and earn an additional 35,000 Rapid Rewards points. (This offer has since expired.)

Banks are now incentivizing spending larger amounts of money on credit cards with some extra bonus points, Beckman said.

Joseph Polakovic, owner and CEO of Castle West Financial, predicts issuers will extend promotional 0% balance transfer offers to retain customers.

Rossman said consumers are also likely to experience issuers shifting from giant sign-up bonuses to cards offering ongoing value.

That’s more profitable for card issuers because they’re wary of card churners — those who open credit cards solely for their sign-up bonuses and benefits  — and want to create lasting relationships with their customers.

Issuers are doing this through higher incentives on habitual spending (such as dining, transit and streaming services), and also with ongoing credits for services such as ride-shares and restaurants (the Chase Sapphire Reserve and The Platinum Card® from American Express are among the best examples).

“They want their cards to be at the top of your wallet and will reward you for continued loyalty,” Rossman explained.

And Miguel A. Suro, a Miami attorney and personal finance writer at The Rich Miser, predicted that 3% to 5% will become the cash back standard among retail cards.

Two examples that already offer 5% cash back are the Amazon Prime Rewards Visa Signature Card (5% back at Amazon and Whole Foods) and the Target RedCard (5% back at Target).

As consumers have more shopping choices than ever and it’s easy to get 1.5% to 2% back with general credit cards such as the Chase Freedom Unlimited and the Citi® Double Cash Card (1% when you buy, plus 1% as you pay), it’s become necessary for retailers to offer more to lure customers to their store cards, he added.

Suro also said rewards credit cards – especially travel cards – will continue to become more nuanced and, perhaps, less generous.

For example, the Citi Prestige used to have a huge unlimited benefit that would give you the fourth night free at virtually any hotel, but now it’s limited it to two uses per year.

And those practices result in less income for issuers from swipe fees and interest charges, which will likely lead them to get stingier with perks, Suro pointed out.

“So, while consumers may have a lot of choices in cards, they’ll have to do more research to find the best one for them, especially if there’s an annual fee involved,” Suro said.

Contactless cards will continue to gain popularity

Linda Kirkpatrick, president of U.S. Issuers at Mastercard, said contactless cards will be even more prevalent in 2020.

“Most of our cards come with chips embedded in them now,” Kirkpatrick said. “Contactless-enabled cards will have the ability to be more than a payment card – for those who live in New York City, Miami, Boston and Portland, contactless cards can be their ticket to tap and ride the subway or metro.”

According to TSYS Payment Solutions’ 2018 Consumer Payment Study, “Many merchants have now enabled the contactless feature and more add the capability every day.”

And the study noted that 50% of transactions at merchants are made by contactless payment-enabled terminals, according to the U.S. Payments Forum.

In addition, 55% of respondents who said they owned contactless cards also said they had made a purchase using the “tap” feature.

See related: Busted – 12 myths about contactless cards

More issuers might offer personal finance apps

Logan Allec, CPA, personal finance expert and owner of the personal finance blog Money Done Right, said that with the skyrocketing popularity of personal finance applications like Mint and Wally, many credit card companies could be following suit in 2020 and offering similar features.

For example, the Apple Card provides users with money management software, he noted.

See related:  8 things you must know about credit card debt

More card updates could be in the works

Beckman of RAVE Reviews predicted that many credit cards will get updates – like the American Express® Green Card did in 2019.

And with the updates to many cards, Beckman expects consumers to see new types of perks.

“You can already see some of this happening with the Chase Sapphire Reserve now offering DoorDash credit and the American Express Green Card offering a statement credit toward CLEAR membership and LoungeBuddy statement credits,” he said.

See related:  Best credit cards for expedited airport security screening

Digital-first card experiences are on the rise

Rossman from CreditCards.com believes technology and credit cards will be increasingly intertwined in 2020.

“I’m intrigued by the Venmo Card that’s rumored to launch sometime in 2020,” he said. “Apple Card was the most notable launch of 2019, and the Venmo Card should play in the same spaces, such as mobile payments, peer-to-peer payments and a digital-first experience that caters to young adults.”

Traditional issuers such as Amex and Capital One are doing some of this, too.

For example, for years Amex has let you start using a newly approved card immediately via your phone or online, and Capital One is pushing the digital experience with its Walmart co-branded card, such as offering higher rewards when cardholders use Walmart Pay and encouraging them to apply via an app.

More cards will use biometrics for enhanced security

Mastercard’s Kirkpatrick said that biometric cards – those that combine chip technology with fingerprint scanning to securely verify the cardholder’s identity for in-store purposes – will be more prevalent in 2020.

Mastercard introduced these cards in 2017 to enable consumers to pay without ever handing over their cards to a clerk.

The cardholder simply places their finger on the embedded sensor and either dips or taps the card as normal — and if the biometrics match, the transaction is approved.

See related: Biometric cards will use fingerprints, voice, face as ID

Co-branded cards will gain more traction

Allec from Money Done Right said that as brand loyalty diversifies toward newer businesses such as Uber and Venmo, issuers may join forces with popular brands to create credit cards that are more attractive to consumers.

“With so many different rewards credit cards available, it’s difficult to stand out, but issuing co-branded cards may give consumers a long-term incentive to choose one credit card over another,” Allec said.

‘True identity’ payment cards will make a splash

Kirkpatrick reported that for many in the LGBTQIA+ community, the name on their credit, debit or prepaid card has not reflected their true identities.

As a result, for the transgender and nonbinary communities in particular, the cards in their pockets can misrepresent who they really are when shopping and going about daily life.

To enable these customers to show their true identities, Mastercard has provided credit, debit and prepaid cards that are printed with the cardholder’s chosen name instead of their birth certificate name – without the person having to change their name legally.

“BMO Harris and Superbia Credit Union will be the first issuers to implement the True Name feature for their card offerings, enabling people to use their true name on their eligible credit, debit and prepaid cards – without the requirement of a legal name change,” Kirkpatrick said.

Make your own future

The more you know about credit cards and debt, the more likely you are to stay financially healthy, regardless of shifts that occur in the economy. Whatever happens this year, it’s important to stay informed so you can make the best choices for your financial future.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: October 21st, 2020
Business
13.91%
Airline
15.50%
Cash Back
15.85%
Reward
15.75%
Student
16.12%

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