Credit card trends for 2022

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Already, we’ve seen a shift in spending and credit card offers over the past few months.

Balance transfer cards have made a comeback after disappearing during the pandemic, an influx of daily rewards categories has brought increased value to essential purchases like groceries and gas, and new card options like of crypto rewards have entered the market.

But experts predict continued changes in how Americans use credit cards this year, including how and where we spend, more flexible payment options and growing ways to access credit.

There are still many things in store for the coming year. Here’s what the experts are predicting for credit cardholders through 2022 and beyond, and how you can prepare for it.

Travel rewards and benefits

As travel ceased due to pandemic shutdowns and restrictions, many issuers responded by switching from travel rewards to daily spend bonuses, even among the most premium travel credit cards.

Benoit Wilson
Benoit WilsonCourtesy of Benet Wilson

But as restrictions lift and more people start to travel again, look for issuers to launch higher rewards and special offers for travelers, like the coveted 100,000 point welcome bonus, says Benoit Wilson, editor of The Points Guy (which is owned by Red Ventures, like NextAdvisor). Huge bonuses like this can help you save on everything from booking your next trip to flight upgrades or free nights at a luxury resort.

“We’ve been in this pandemic for three years and a lot of people haven’t travelled. They are ready to go,” Wilson said.

However, she also predicts that cardholders will also want to keep the rewards they have enjoyed on everyday spending during the pandemic. For these cardholders, the best of both worlds may be travel cards that earn points on daily spend that you can redeem for booking and travel benefits.

For example, with the American Express® Gold Card, you will earn 4X the Membership Rewards points at US restaurants and supermarkets (up to $25,000 per calendar year, then 1X thereafter), plus 3X the Membership Rewards points on flights booked with American Express or directly with the airlines. Membership Rewards points are flexible, so you can redeem them for travel booked through Amex, for purchases you make with your card, or transfer them to Amex travel partners.

Flexible Choice Rewards

In addition to the move towards everyday categories over the past few months, there is also a continued move towards flexible and personalized credit card rewards.

“We are seeing more and more offers that allow you to choose your own adventure,” says Ted Rossman, senior industry analyst at CreditCards.com, which, like NextAdvisor, is owned by Red Ventures. As issuers look for new ways to retain cardholders, flexible rewards are a way to ensure you’re always getting the maximum value, even as your spending habits change over time.

Ted Rossman
Ted RossmanCourtesy of Ted Rossman

For example, the Citi Custom Cash℠ card offers 5% cash back on your main qualifying spend category each billing cycle (up to the first $500 spent, then 1%). Eligible categories include gas, groceries, restaurants, some travel, and more.

The flexibility also applies to redemptions. Cash back cards, for example, are usually not limited to cash rewards alone. “Now you can redeem for cash back, statement credits, or travel,” says Rossman. “So I think we’ll continue to see that kind of diversification.”

However, before applying for a new card, determine which one will earn you the highest rewards based on your spending and preferences. Look at your budget over the past few months and think about which rewards and redemption options best suit your spending habits.

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As with all of our credit card reviewsour analysis is not influenced by any advertising partnership or relationship.

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New options Buy now, pay later

Buy now, pay later services are already a popular payment option for online shoppers, although they can also be risky. even transunion recently announced plans to allow users to opt in to reporting BNPL payments on their credit profiles. Therefore, you can use BNPL plans to build credit in the same way as with traditional credit cards or installment loans, if you pay on time.

This year, BNPL options are also expected to extend to in-person purchases, via Buy Now, Pay Later credit cards. Like the services that already exist, you can use a BNPL credit card to make interest-free installment payments on any purchase.

Jason Steel
Jason SteelCourtesy of Jason Steele

BNPL plans can be attractive to consumers who fear accumulating interest. Just knowing there’s a finish line when your purchase is paid for in full after four interest-free payments can make some users more comfortable, says Jason Steelcredit card writer and industry expert.

But just as some experts say BNPL can make overspending or impulse buying more tempting, the same warning can apply to credit cards that incorporate buy-it-now, pay-later plans. Even though installment plans are interest-free, you may incur late fees if you miss a payment, and overdue activity may also be reported to credit bureaus.

Some credit card issuers already offer similar installment plan options, such as American Express’ Pay It, Plan It, and Chase’s My Chase Plan. “It’s not going to put credit cards out of business, certainly anytime soon. But I think it reduces the market share to some extent,” says Rossman.

More credit opportunities

In recent months, demand for credit cards has rebounded – with a more than 10% increase in card applications between October 2020 and October 2021, according to a recent Federal Reserve Bank of New York Access to Credit Survey. And at the same time, issuers and other institutions are making credit more accessible than ever.

“I think banks are becoming more aware of the Gen Z demographic that has been largely outside of the traditional credit system. [and] looking to join,” says Rossman.

Alternative methods of building credit are helping people access credit and use cards that offer rewards and benefits, such as the “no annual fee” Visa Petal 1 credit card and the Tomo card. And credit-scoring alternatives, like Experian Boost, UltraFICO Scores, and TransUnion’s eCredable Lift, can help you build your credit by flagging on-time payments to streaming services, utility providers, and other monthly bills.

Economic factors can lead to increased cardholder debt

In addition to the rising cost of daily consumer goods due to record inflation, the average credit card holder already has an average of $5,525 in credit card debt according to Experian’s 2021 Credit Status Report — and those sales could increase this year.

Rod Griffin
Rod GriffinCourtesy of Rod Griffin

“When COVID started, we saw people pull out of credit cards and balances went down,” says Rod Griffin, senior director of public education and advocacy for Experian. “We saw a reduction in how people used the cards. Now that we’re coming out of the pandemic, I think there’s really been a desire for people to feel like they’re back to normal.

The end of stimulus payments, increased Child Tax Credit payments and increased unemployment benefits could contribute to increased credit take-up in the coming months, Rossman adds, all compounded by the rise of inflation.

To offset rising costs and debt, the experts we spoke to recommend budgeting and following good credit habits, like only charging what you can afford to repay in full each month. . If you’re already paying off your debts, consider a balance transfer card with a 0% introductory offer.

It’s also important to find ways to save where possible. If you’re considering getting a new credit card, see if you qualify for the lowest interest rate possible, Griffin says. And in addition to rewards that work with your spending, look for cards that don’t have a lot of fees to save money while building your credit and earning rewards.

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