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The Credit Card Trends of 2011

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What can you expect from the credit card industry in 2011?

Just a few of the trends predicted for the credit card industry for the upcoming year include: tighter credit card regulations, plenty of new credit card offers, and loads of rewards programs and balance transfer offers.

It’s all about the Prime Credit Card Customers

If your mailbox is stuffed with credit card offers as of late, you know you must have good credit. Those consumers with excellent credit scores are being tracked down by credit card companies. Although the credit card industry is still in its recovery stage, it has begun loosening the reins on credit card offers. However, don’t expect to receive credit card offers unless you have the credit score to back it up. In short, creditors and banks are vying for the business of prime credit card consumers, and they are pulling out all the stops in terms of rewards to get their business.

Rewards Programs Soar

Which brings us to rewards programs…If you have great credit, expect many of the credit cards you receive to come with attractive rewards programs. The bottom line is that credit card regulations and interest rates remain fairly high, so it is up to the credit card companies to lure consumers in with another catch; and that is rewards programs. Because there are so many credit card rewards programs floating around out there, take the time to find a rewards program that best fits your lifestyle. You’re sure to find one!

Balance Transfer Offers on the Rise

In addition to attractive rewards programs, most creditors want the best consumers to transfer their balances to their cards, so along come attractive balance transfer offers. Although you may still get a low, promotional interest rate on a balance transfer offer, expect the promotional period to be much shorter than you’re accustomed. In particular, you can expect promotional periods of about three to six months instead of the usual 12 months. It pays to note, however, that great balance transfer offers do still exist, so take the time and find one that best fits your needs and your budget. Again, if you have the good credit score to back it up, it is now quite easy to find competitive credit card offers!

Credit Card Offers Streaming into Mailboxes

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Things are looking quite a bit different than last year at this time. In particular, you may be surprised to find your mailbox full of credit card offers. According to market research company, Synovate, credit card mailings have nearly doubled to 2.7 billion over the past year.

An Uptick in Credit Card Offers

If you have a strong credit score, it is almost certain that you have seen things pick up regarding credit card offers, especially over the last, few months. However, don’t think that just anyone is receiving credit card offers. In fact, only those prime customers are getting all the attention from creditors.

One of the main reasons creditors are no longer happy to go after subprime customers is that the new credit card regulations enforced by Congress over the last year have greatly limited how much creditors can profit from subprime customers.

Fees Limited, Costs Become more Transparent

For examples, most late fees are now limited to $25, and creditors can’t raise interest rates without warning. In addition, creditors must be much more transparent about the cost of finances charges and carrying a balance, which therefore encourages many consumers to pay back their debt in a more reasonable amount of time.

Although the credit card legislation has helped consumers, credit card customers with less-than-stellar credit are being left out of credit card mailings. Instead, it is the prime customers who are getting loads of credit card offers, and some of them are quite attractive. Expect to see competitive interest rates, low balance transfer rates and plenty of rewards offers.

Prime Customers Reign Supreme

Because prime customers – and wealthy customers – remain very profitable and pose little risk to creditors, they are being courted with loads of new credit card offers. In short, creditors are cutting their closes and are instead concentrating on those customers who mean big business for the credit card industry.

If you are lucky enough to fall into this category, take the time to review your options regarding a new credit card, as many creditors are offering very attractive terms, conditions and rewards.

Reasons Why You Should Not let Your Credit Card Become Inactive

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There are many changes taking place in the credit card industry; most of which are in your favor. However, there are a number of new regulations taking place, courtesy of the credit card companies, that may not be in your favor.

One of the most important new rules to consider is that not using your credit card can cost you. Most consumers were always under the assumption that having a credit card and using it only for emergency purposes was the best way to go. However, credit card companies are now changing up the rules and either charging you an inactivity fee or canceling your credit card if you don’t use it enough.

This may prove to be quite confusing, especially for consumers who were told to never cancel their credit card accounts in fear of lowering their credit score. Now, financial advisers are recommending canceling credit cards that you no longer want to use or need, as you could be facing inactivity fees if you keep these inactive accounts open,

Inactivity fees are no doubt a ploy by credit card companies to get you to start using that credit card that has been taking up room in your wallet. After a year of recession woes and credit card regulations, creditors are now finding new ways to once again encourage their credit card customers to start spending on their credit cards.

What you can do to avoid inactivity fees:

• Make a point to charge a purchase at least every six months. This will prevent the credit card company from charging you an inactivity fee. Check your card’s terms and conditions regarding inactivity fees for specific details.
• If you are charged an inactivity fee on a credit card you no longer want or need, cancel the card and ask that the inactivity fee be removed.
• If you are considering a large purchase in the near future, don’t cancel the credit card, as this could lower your FICO score. Instead, simply make a purchase or two – and pay them off before interest can accrue.