Each year, CreditCards.com asks the experts to predict what the credit card landscape will be like in the coming year.
Read industry gurusâ forecasts now and see what changes credit card issuers might have in store for 2021.
See related: Best credit cards of 2021
More flexibility in card offers
Steven Dashiell,Â credit cards expert for Finder, expects the exceptional welcome offers and expanded reward opportunities we saw throughout 2020 will continue into 2021.
âThese card adjustments were a response to evolving consumer spending habits during the pandemic and I foresee these spending habits lasting well through 2021,â Dashiell said.
Nishank Khanna, chief financial offer for Clarify Capital, noted that consumers are spending more on essential goods than discretionary items, so credit cards will likely offer more benefits for groceries and home goods.
âWe can expect to continue to see flexibility with card offers, with many card issuers providing cash back options and diverse opportunities for the cardholder to decide how she or he spends rewards,â Khanna said.
This move is especially important for consumers who are exploring the perks they can get as they battle the impact of lockdowns and travel restrictions.
âBuy now, pay laterâ options will be more in demand
Given the current financial climate, consumers have gravitated toward alternative payment methods such as buy now, pay later options, said Imani Francies, a financial expert at USInsuranceAgents.com.
These services allow consumers to make large purchases by paying only a percentage of the total cart amount â they are then expected to make biweekly or bimonthly payments until the entirety of the purchase amount is paid off.
But Francies warned that if this way of paying becomes too addicting, people may start using credit cards to keep up with their payment plans, which could hurt their credit scores and transform the buy now, pay later option into a negative experience.
contactless payment technologies, said Vince Granziani, CEO of IDEX Biometrics.
For example, biometric fingerprint technology allows the user to make touchless payments via a fingerprint stored on a credit card that is safe, secure and unique to that individual.
The global demand for biometric technology in the payments industry is robust and will accelerate as business returns to a new normal in 2021 and beyond, Granziani predicted.
In 2021 and beyond, biometric smart cards will also become increasingly necessary to combat payment fraud. These cards prevent hackers from stealing your PIN or fingerprint data since itâs all stored directly on your card.
Therefore, if anyone were to steal or attempt using your card, they couldnât do it without your fingerprint to activate a transaction, Granziani said.
Biometric cards have multiple uses, capable of holding passports and driverâs licenses Ââ even library cards and travel passes â while holding your payment details all in one place, he added.
See related: Credit card scams in the time of coronavirus
Increased transparency will be the name of the game
Charles Tran, founder ofÂ CreditDonkey, forecast that credit card companies will offer increased transparency in 2021.
Transparency has always been a significant factor in the financial industry and itâs becoming an essential point of focus considering the tough times we are in, so credit cards will have to offer simplicity and utility to stand out.
âThis will include transparency in the reward systems, fewer hidden fees, complimentary credit score monitoring and easier rewards redemption,â Tran added.
See related: 2020 credit card fee survey â What happened to 0% balance transfer offers?
Issuers may get tougher on delinquent debtors
Adem Selita, CEO and co-founder of The Debt Relief Company, sees an unsettling trend happening with regard to cross-collateralization, a method lenders use to secure one type of loan with the collateral from another.
For example, if you bought a car from a credit union and didnât keep up with the payments, the credit union could repossess the car to satisfy your loan.
Selita believes credit card companies will become more aggressive regarding credit card defaults â depending on how the economy unfolds in the intermediate term â and even add features like collateralization to use consumersâ funds to pay their delinquent credit card bills.
In addition, Selita said, an updated law that goes into effect in 2021 will allow debt collectors to contact debtors via social media channels, text and voicemail.
And although they are not allowed to use social media to harass debtors, Selita said it still amounts to âessentially stalking consumers behind on their credit card bills and in default.â
2021 will be a comeback year for credit cards
There will still be some pain in terms of delinquencies and difficulty accessing credit, but 2021 will be a comeback year for credit cards, according to Ted Rossman, industry analyst for CreditCards.com.
The news of an effective COVID vaccine bodes well for a return to travel, dining and other discretionary spending that is so important for credit card companies.
But the improvement won’t be immediate or evenly distributed, Rossman warned.
Unfortunately, many consumers will fall behind on their payments, especially as stimulus and hardship programs wear off.
Many banks are expecting delinquencies to peak around mid-2021, although there’s still a fair amount of uncertainty around that.
This trend should keep a lid on 0% balance transfers and access to credit for people with lower credit scores, but the rebound will mean more competition for people with high credit scores and incomes, Rossman predicted.
âWe’re already seeing some of this with the recent Capital One Venture Rewards Credit Card bonuses, and in 2021 I think we’ll see even hotter competition for the most creditworthy applicants.â he said.
Start your journey to financial freedom
Whatever might happen in the credit card industry in 2021, if you and manage your credit well you will stay financially healthy.
Spend wisely, avoid opening new credit you donât need, manage your existing debt and live within your means, and youâll be on the road to financial freedom.
See related: Overcoming hardships by embracing financial independence