Trends in credit cards for 2018: Who benefits the most?
Owning a credit card in 2018 may become more lucrative, says BBVA Compass Head of Payments Jon Groch.
According to Groch, rewards - or more precisely, the proliferation of them - is one of the biggest trends for credit cards in 2018. Other trends, he says, underscore the same emphasis on the consumer, as well as strategies to differentiate and distinguish individual cards and credit card issuers from one another.
“There’s a battle among issuers to attract customers to use their cards,” Groch said. “For providers, it’s about top of wallet consideration, or how you get your card to be preferred among customers who average three plastics each. Most often in these situations, the consumer benefits, because it shifts emphasis from what issuers can get to what consumers’ needs and preferences are.”
Groch: There’s a battle among issuers to attract customers to use their cards
Below is BBVA Compass’ breakdown of what Groch says are three prevailing trends for credit cards in 2018 and the winners in each.
Trend: Rewards. Lots and lots of rewards.
At one point, says Groch, consumers got one percent of their total transaction in rewards points or cash back from most card issuers. Then issuers started to tack on bonus categories, which gradually gave way to an industry average of 1.5 percent back on transactions, all in effort to be the card of choice for consumers. And the rewards battle shows no sign of slowing down anytime soon, says Groch, especially as issuers begin to turn to mass market households to compete.
Winner: Consumers
Trend: Mobile Self Service
More and more issuers are looking toward digital in order to provide a mix of convenience for customers and growth in purchase volume. The main idea is to use mobile functionality to let consumers know what and where they might be able to redeem in real time, and an up-to-date look at their rewards balance. Groch says that while the rationale for these updates may be to continue driving top of wallet consideration, consumers are the ultimate beneficiary from an ease and convenience standpoint.
Winner: Consumers
Trend: Help Managing Credit
Some issuers are differentiating themselves from the pack by recognizing a need to help consumers manage their credit lines and offer flexible financing options. These issuers - of which there are presently only a few - have put programs in place that allow consumers to manage their credit lines in different ways. One of those ways is splitting purchases into monthly payments, much like getting an installment loan inside a credit card. The benefits of these consumer-friendly plans are typically lower interest rates on purchases and an incentive to pay the charge off sooner. Issuers typically make a monthly fee each month there is an outstanding balance, rather than charging interest.
Winner: Consumers and Issuers
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