Credit card predictions for 2021

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Rough year, 2020. Even the best credit cards and cardholders have taken something of a hit.

But we anticipate lots of credit card goodies for 2021, which we’ll go into here. First, a snapshot of the playing field in 2020.

A look back to 2020 and credit cards

Potential cardholders felt the impact of the economic uncertainty with a tightening of approval standards by card issuers. On the plus side, card debt and delinquencies were down.

How did cardholders fare in 2020?

With the uncertainty and job losses of 2020, lenders became more risk-averse, notes our industry analyst, Ted Rossman.

In Q2, 72 percent of credit card issuers tightened their approval standards and 0 percent eased them, according to The Federal Reserve. In Q3, 31 percent tightened and just 4 percent eased. A similar trend played out with respect to existing cardholders’ credit limits.

“A couple pleasant surprises this year were that credit card debt and delinquencies both fell,” says Rossman. “Credit card debt has been down dramatically (down 11 percent from February through October, according to the Fed). Explanations include government stimulus and consumers spending less and making debt payoff a priority.”

How did card offers change in 2020?

On the plus side, card issuers offered richer sign-up bonuses, new categories, even revamped cards in the last year. On the other hand, there was a retreat from balance transfer offers and balance transfer fees. Whether COVID-19 related or not, there were gobs of changes in the 2020 credit card landscape, including:

  • Capital One Venture Rewards Credit Card and Chase Sapphire Preferred Card both saw elevated sign-up bonuses come and go.
  • Blue Cash Preferred Card from American Express and Blue Cash Everyday Card from American Express both experienced boosted welcome offers.
  • All American Express cards offered an extended window in their welcome offers.
  • Capital One, Chase and American Express all stripped their balance transfer offers from several of their cards. Notably, Discover and Wells Fargo did not, although Discover removed Discover it® Balance Transfer.
  • BankAmericard® credit card, Chase Slate and Citi Rewards+ Student left the market and have yet to return, with the exception of BankAmericard.
  • American Express has added Pay Over Time to cards.
  • Myriad changes designed to benefit the changing shopping dynamic have taken place, notably the changes to Chase Freedom cards.
  • We’ve collected a running list of COVID-inspired limited time offers and promotions.

What will you see in 2021 in the way of credit cards?

Now for the fun stuff. What can you expect from credit cards in the next year? From travel and airline cards to cash back offers, we’ve put our predictions all in one place for you.

Travel cards in 2021

Rossman predicts a snapback in travel once there’s widespread vaccine availability. “When that happens, we could also see a raft of new sign-up and spending incentives. We’re not there yet, but once consumers get more comfortable traveling and spending, and once card issuers feel better about taking on new customers, it could be a strong buyer’s market,” he says.

A travel card to watch: Capital One Venture Rewards Credit Card

Hotel and airline credit cards in 2021

We anticipate hotel cards will feature free stays and on-property credits to encourage travel spending. “Airline cards may have a few tricks up their sleeves, too, although they’re the most likely to stand pat with their existing perks,” Rossman says.

“After an early pop of grocery incentives last spring, these mostly focused on the core value proposition of air travel. This should be more feasible in 2021, and existing credits for free checked bags and points towards free flights and elite status will be more top of mind, especially once we hit the second half of the year.”

An airline card to watch: American Airlines AAdvantage MileUp℠ Card

Cash back cards in 2021

Expect a continued move toward cash back and everyday spending categories. “Even before the pandemic, we found that most people liked the simplicity and universal appeal of cash back,” Rossman notes.

We predict rewards to continue their shift toward everyday categories, such as groceries, dining — including sit-down, takeout and food delivery — and streaming. “Card issuers love sticky, set-it-and-forget it kinds of categories. I think there’s room to do more of this with categories such as cell phone bills and online shopping,” Rossman predicts.

“Partnerships involving premium access to services such as Uber, Lyft, DoorDash, Instacart and Peloton represent opportunities for cardholders and issuers alike. Cardholders like getting extras, and issuers can use these incentives to encourage loyalty.”

A cash back card to watch: Blue Cash Preferred® Card from American Express

Balance transfer offers in 2021

Balance transfer cards took a hit in 2020, with a number of offers being removed from the marketplace.

Mintel Comperemedia reported that card issuers sent 42 percent fewer direct mail advertisements for 0% balance transfer cards in the first three quarters of 2020 when compared with the same period in 2019.

“Card issuers were worried enough that their existing customers wouldn’t pay them back; taking on new customers with existing debt wasn’t particularly appealing,” says Rossman. “This will hopefully turn around in the second half of 2021, assuming we have a widespread vaccine and a better economy/job market.”

He predicts the balance transfer market will improve at a slower pace than other types of credit cards. “By definition, this is an audience with debt, and card issuers will be more concerned about extending this type of credit for a while yet to come.”

A balance transfer card to watch: Citi® Diamond Preferred® Card

Annual fees and no foreign transaction fees in 2021

Annual fees will continue to be offset by perks such as premium food delivery or rideshare membership as well as credits for streaming, cell phone bills, food delivery/takeout, exercise classes and so on.

“I think we’ll see less outright discounting of annual fees in 2021, but rather, marketing that ties the fee to these benefits along with ongoing rewards on key categories,” Rossman says.

Meanwhile, in recent years, foreign transaction fees have been falling steadily; in 2020, just 42 of the 100 popular cards that we surveyed charged foreign transaction fees, down from 77 in 2015.

“The good news for travelers is that it’s easier than ever to find a card that’s foreign transaction fee-free. With pent-up demand for travel, it’s a good combination,” says Rossman.

A no foreign transaction fee card to watch: Citi Premier® Card

Sign-up bonuses in 2021

In early to mid-2021, enticing sign-up bonuses will pop up, although approval standards will remain tight, and issuers will be looking for the most creditworthy and affluent applicants.

“We saw some of this in late 2020,” Rossman says. “I think the bonuses will become more widely available and less restrictive in the second half of the year. In early 2021, the best offers will probably be reserved for those with high credit scores and high incomes.”

A sign-up bonus card to watch: Southwest Rapid Rewards® Plus Credit Card

The information about the Bank Americard credit card and American Airlines AAdvantage MileUp Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.