Rising interest rates, a cash back card boom, a CFPB shake-up and new co-branded cards marked 2017.
As we look ahead to a new year filled with resolutions we’re definitely going to keep (improve our credit scores, pay off our credit card debt), it’s also time to look back on the credit card stories that shaped 2017 and will have ripple effects well into the new year.
Equifax data breach
No story in the credit realm came close to the news in September that an Equifax data breach exposed the personal information of 145.5 million.
In the weeks that followed, millions scrambled to see if they were among those affected but many were met with a downed Equifax site and an overloaded annualcreditreport.com. One in four Americans checked their credit after the breach, and for good reason. Among personal information hackers seized in the breach were 200,000 credit card numbers.
The former CEO testified that consumers need more control over their credit files, and Congress has proposed reforms for all credit bureaus. Expect the effects of the massive data hack to linger well into 2018.
Cash back was king
If 2016 was the year of the credit card rewards arms race, 2017 was the year that cash back became king.
After the heated-up competition over luxurious rewards card sign-up bonuses started to cool a bit, cash back cards emerged dominant in 2017.
New cash back cards with tiered rewards tailored to appeal to millennials who shop online, use rideshare apps and rely more on mobile wallets. The year opened with the launch of the Amazon Prime Rewards Visa offering 5 percent cash back on Amazon purchases, and the Uber Visa card rolled out in November offering an unheard-of 4 percent on restaurants.
The best cash back cards were simple to use and offered more than 1 percent cash back on all purchases, our Cash Back Credit Cards Survey found. Another big trend: Cash back cards became more generous with rewards.
And who doesn’t love cash back? A J.D. Power survey found more Americans were happy with their credit cards in 2017, because of the cash back perks.
As for the flashy sign-up bonuses of elite cards like the Sapphire Reserve? In late August, the first Sapphire Reserve cardholders were weighing whether to keep the card as the $450 annual fee came due. One year after the card’s launch, millennials said they were keeping the Sapphire Reserve.
Federal Reserve raised rates
The Federal Reserve raised interest rates three times in 2017, and unless you pay your balance off each month, your credit card bill also rose.
Depending on your credit card, higher APRS hit often within the same month as the Fed hikes. As a result, the national average APR at the end of 2017 was nearly an entire point higher than it was when 2016 ended.
Cardholders tried to offset the hikes by sticking to their budgets and paying off as much debt as possible. Meanwhile, banks were tightening credit card loan standards in anticipation of more defaults, the Federal Reserve found.
It’s hard to keep track of who oversees the Consumer Financial Protection Bureau these days.
The little-known consumer watchdog agency started 2017 arguing it had a constitutional right to exist. The agency later sued the country’s largest debt settlement company.
But the biggest court battle occurred in November, when the bureau’s chief resigned. President Donald Trump’s pick to lead the organization promised striking changes to the agency, but the former chief’s second in command challenged the president’s choice in court while they both tried to start the top job on the same day.
For now, Trump’s appointee is in charge, but the court battle is expected to leak into 2018.
Co-branded credit cards change issuers
One of the biggest co-branded credit cards, the Costco card, changed issuers (Costco card switches from American Express to Citi) in 2016, and the effects reverberated throughout 2017.
This was the first full year that cardholders took their Citi Costco cards for a spin and the reception was positive. After the official transfer date in June 2016, Citi Costco cardholders earned 2 percent back on Costco purchases in the form of an annual certificate and adapted to a plethora of other changes from the old American Express Costco card.
In efforts to drum up business to replace the Costco card, American Express took over as the exclusive issuer of Hilton credit cards. AmEx shook up the Hilton cards, which were formerly issued by Citi, by offering up to 100,000 points for a limited time. AmEx shows no signs of slowing down in 2018, when all cards will be phased over to the American Express portfolio.