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For credit card companies, little stands in the way of success in online delivery and customer experience. In fact, four major trends are in the cards for the coming months. Some of them could significantly and positively benefit consumers, but others are less promising.
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The Internet seems to have changed just about every area of daily living, whether it’s grocery shopping, delivering the news, or working from home. Finance is an area that has seen significant improvement in recent years. Moreover, there doesn’t seem to be any slow-down on the horizon.
Banks and non-traditional lenders have gotten into a bit of a stand-off over small business loan processing. However, for credit card companies, little stands in the way of success in online delivery and customer experience. In fact, four major trends are in the cards for the coming months. Some of them could significantly and positively benefit consumers, but others are less promising.
Below Average Credit Becomes a Problem
Unfortunately, for consumers who do not have a good credit score, a gloomy forecast looms. As 2019 continues to reveal slower portfolio growth, credit card companies will experience rising interest rates and higher delinquency rates.
The amount of debt that borrowers owe to the bank should also begin to taper. This is because cardholders and those with outstanding balances will limit their card usage in order to save money on interest rates.
However, it’s not just credit cards that will experience this downturn.
Experts predict that banks will also see a decrease in their portfolios, whether personal loans, mortgages, bank-issued credit cards, or business loans.
A rise in interest rates would be an initial reason to put the brakes on loan applications, as consumers won’t be able to afford the cost of borrowing money. However, lenders will also become choosier about who they lend to. To this end, they may create more stringent lending requirements. In short, they will make it more difficult for people to apply and get approval.
Lenders want more certainty about getting a return on their investment. This means it might be harder to get a credit card without decent credit. Even if you can get the card, you might pay a higher initial interest rate.
Credit Card Companies Become Friendlier
Over the next few months, credit card companies will spend more time focusing on what consumers want. Just as food delivery services have taken the nation by storm, credit card companies are going to streamline how and when customers get what they want.
Moreover, the consumer perception of value is changing. Many think that a simple, convenient, and more personalized experience is the ticket to a positive consumer relationship.
Therefore, companies will seek to become more personal with their consumers. Also, they will look into the benefits and digital options that make their services more relevant and easier to use. These strategies have been shown to be successful in winning customer loyalty. Moreover, credit card companies are ready to implement these strategies in their business plans.
For example, mobile payment has been around for a while. However, it has not been embraced as enthusiastically as lenders hoped. But continual updates and new features make it more attractive to more users. In time, consumers could begin using their mobile devices for purchases more than they use their plastic cards.
Lenders Become Pushier
Several well-known credit card companies currently offer perks and rewards as a way to encourage consumers to use their cards more often. This is a trend that will continue to grow in the near future.
Credit card companies such as Chase and Visa try to encourage more usage from their consumers by making it easier for consumers to complete transactions. Additionally, they ramp up the card-linked offers and sign-up bonuses that have higher initial spending requirements. The goal is to convince the consumer to spend more in order to get more.
This is not a new strategy. However, many card companies will revisit the approach for a new batch of signers. To sweeten the deal, companies could start to offer a larger statement credit after initial usage criteria are met.
Paying with Credit Cards Will Cost More
Going forward, the rates for card transactions will continue to climb, as merchants continue to grapple with the interchange fees. Some merchants will factor the cost of the processing fees into the purchase price of their goods or services. However, adding surcharges are other ways for the merchants to recoup any money they have spent on the swipe fees.
When merchants surcharge, they generally assume everyone will pay with cash for their goods or services. When someone comes in with a credit card payment, the merchant adds a fee. This is generally subject to the individual rules of the credit cards, and there is often a cap on that figure.
On the other hand, a cash discount is where merchants assume the opposite. They price their goods assuming everyone will pay with a credit card. Then they offer a discount to those who pay with cash. The cash discount is usually equal to the processing fee.
If the trend continues, consumers will end up paying more if they want to use their card for their purchases. However, some states prohibit charging more for credit card transactions as well as adding fees to those paying with debit cards.
As a consumer, knowing about these trends will help you make more informed decisions about your credit card use. Always keep in mind the long-term effect on your credit score with any decisions involving lenders or borrowing money.