This has been a very fluid few years for the credit card industry. First came the financial collapse of 2008, followed by credit card reform legislation (i.e. the Credit CARD Act) in 2009. Moreover, with the economy’s stabilisation, people have moved away from credit cards and toward debit cards and other methods of payment in order to minimize debt.
In response, there have been several emerging trends in credit card offers as card issuers adapt to the changing marketplace:
1. Perks Beyond Points
It used to be that the point of having a travel rewards credit card was to earn miles or points. But as banks compete ever more fiercely for high spending business travellers, cardholders have begun to take loyalty points and miles for granted.
In response to this change, banks are offering more non-mileage perks. For example, United replaced their old Mileage Plus card with their new Chase United Mileage Plus Explorer credit card. While the old card just offered miles and little else, the new version is full of perks like priority boarding and bag fee waivers. Other airline reward cards are also following this trend and feature lounge access and companion certificates, among other benefits.
2. Faux Mileage Cards
Capital One offers “miles” with their Venture Rewards and Venture One cards as if they are an airline. The same is true of the Discover Miles card. These banks do not have any cards that are co-branded with an actual carrier, so they feel they must market some sort of “miles” benefit to travellers who still expect them.
Typically, these “miles” are worth one cent each towards travel expenses. Thus, when you hear about “miles,” do your homework and figure out exactly what they represent and how much value they offer.
3. High Annual Fees That Are Justified
The Delta Gold SkyMiles Card from American Express has a $99 annual fee and comes with a $99 companion certificate. Their Platinum SkyMiles Card has a $150 annual fee, but its companion certificate is free. Since $150 is less than $198, the card with the higher annual fee is clearly the better deal, especially when you consider its added perks.
The same is true of the Southwest Airlines Rapid Rewards Cards, where the Premier version has a higher annual fee that is justified by its renewal bonus. The lesson here is to always examine the benefits as well as the cost and not to simply select the card with the lower annual fee.
4. Super Sign-up Bonuses
The last few years have been a bonanza for rewards card sign-up bonuses, such as 100,000 miles from British Airways Visa, a $1,000 statement credit from Capital One’s Venture Rewards card, and two free airline tickets from the Southwest Airlines Chase Visa. Although these offers have expired, patient rewards card users are sure to discover more in the next few months.
5. Interest Rate Ranges
For those of you who carry a balance each month, shopping for a low interest credit card can be a challenge. Most cards have an APR equal to the prime rate plus an additional percentage which varies depending on the applicant’s credit worthiness.
While offering a rate in accordance with your credit score is not entirely unfair, disclosing only a vague range can be misleading. After all, what is to stop a company from offering an absurdly low APR that is only given to those with perfect credit just for marketing purposes?
Hard economic times have left banks fleeing risk and chasing consumers with high credit scores. This trend was further reinforced by the CARD Act of 2009, which restricted the ability of banks to collect high interest and fees via their traditional tricks and traps.
In this new environment, consumers that stay abreast of the latest credit card trends have the best chance of benefiting from them. On the other hand, those that don’t closely examine the details may fall into any new tricks and traps that credit card companies come up with.