What the Credit Card Market has in Store for Your Wallet in 2013
Even if you’re not a personal finance geek, it’s important to take stock of the credit card landscape once in a while. Credit card data can give you a sense of how the economy is doing, what consumers are prioritizing, and which credit cards stand to save you the most money, among myriad other things. So, as many of us embark upon resolutions to save more or improve our finances in 2013, let’s take the pulse of plastic in order to better understand the landscape we’ll be operating in.
State of the Landscape
The first thing you need to understand is that there’s unprecedented value to be had for credit card users with excellent credit. Roughly half of all consumers have such lofty credit standing, and banks are using lucrative rewards bonuses and 0% promotional rates to attract their business. The average rewards bonus is worth about $70 (15% more than last year), and you can expect to avoid interest for just over 10 months (4% longer than last year). The fact that regular rates and ongoing rewards meanwhile remain largely unchanged just goes to show that consumers prize initial perks and high card turnover above ongoing benefits and uniformity.
Lucrative promotional offers are also much needed in light of how much debt we’ve been incurring. Card Hub estimates that U.S. consumers racked up more than $40 billion in credit card debt during the last three months of 2012 and ended the year owing $36.3 billion more than when it began. While these figures obviously reflect the continued economic recovery (it’s hard to rack up credit card debt when banks aren’t lending), it also speaks to our obsession with living beyond our means, and that’s something we clearly need to address in the months to come.
Finally, you can infer a lot from the fact that consumers made roughly 20% fewer APR-related complaints and 50% more credit report complaints to the Consumer Financial Protection Bureau (CFPB) during the fourth quarter of 2012, as compared to Q3. Not only does that underscore the stabilization of interest rates among unsecured credit cards (again, a sign of the economic recovery), but it also speaks to the emphasis the CFPB is placing on improving the credit reporting business.
In order to find the right credit card for your needs, ask yourself this question: How’s my credit standing?Continued on the next page