4 Credit Card Trends for 2022
We’re still contending with inflation, and I don’t think it’s going away anytime soon. But in spite of that, I still see four positive trends for you and your credit cards in 2022: credit card offers will increase and expand to the subprime market; consumer credit card debt will increase; balance transfer credit cards will make a comeback; and credit card issuers will embrace buy now, pay later options. [Yahoo News]
Consumer spending during the Christmas season led to a spike in overall credit card balances
Holiday Shopping Fuels the Return of Credit Card Debt
Holiday shopping returned with a vengeance this year. But going into credit card debt is one gift you can’t return. In the fourth quarter, fueled by the return of holiday plans, consumers charged billions more on their credit cards. By the end of the year, Americans are now on track to end up with $70 billion more in credit card debt and the average household’s card balance is now $8,006, according to WalletHub. Balances are expected to continue to rise in 2022, ending the first quarter as much as 10% higher than a year ago, as more consumers apply for credit and increase their spending, according to a forecast by TransUnion. Usually, card balances decline in the first months of the year as borrowers pay off their holiday spending. [CNBC]
Buy Now, Pay Later: The New Buzz-Builder and Conversion Driver for Small Business
Consumers’ reasons for seeking out BNPL plans for holiday purchases varied. Forty-two percent of those interested in the spending method said that doing so would allow them to treat a loved one to gifts that would otherwise be out of reach. Another 33% said they were facing pandemic-related financial uncertainty and appreciated the flexibility of BNPL, though they expected their outlooks to improve in the new year. Consumers have grown increasingly interested in BNPL plans in the past 21 months, but the 2021 holiday shopping season pushed this interest to new heights. Recent research found that 21% of adults planned to use BNPL options to make purchases during the holidays, with interest especially high among millennials and those earning more than $100,000 annually. Businesses that offer these spending plans can also see significant boosts, as consumers who use BNPL report spending 30% more on their purchases than those who lack access to them. [PYMNTS]
Despite Supply Issues and Omicron, Holiday Sales Rise 8.5%
Holiday sales rose at the fastest pace in 17 years, even as shoppers grappled with higher prices, product shortages and a raging new Covid-19 variant in the last few weeks of the season. Mastercard Spending Pulse, which tracks all kinds of payments including cash and debit cards, reported Sunday that holiday sales had risen 8.5% from a year earlier. Mastercard SpendingPulse had expected a 7.4% increase. Holiday sales were up 10.7% compared with the pre-pandemic 2019 holiday period. [Associated Press]
MORE FOR YOU
Self-Gifting and Gift Cards to Power Post-Christmas Sales
This holiday season has been characterized by shortages and shipping delays caused by global supply chain disruption as a result of the pandemic. Due in part, no doubt, to the stresses involved in getting the right gift at the right time, gift card sales were up in 2021. With many delays to couriers and the postal service, it’s not surprising that digital gift card sales were also up, accounting for 30% of gift card sales as opposed to 20% in 2020. These additional sales of gift cards are a golden opportunity for retailers to grow their post-holiday sales, as 87% of gift card recipients said they are somewhat and very likely to spend more than the value of their gift cards on redemption. [Forbes]
Visa Partners With 60 Crypto Platforms to Let Consumers Spend Digital Currency at 80 Million Merchants
Visa’s head of crypto, Cuy Sheffield, has revealed that the payments giant has partnered with about 60 leading crypto platforms to launch card programs that make it easy for consumers to convert and spend digital currency at 80 million merchant locations worldwide. “The number of people cross-functionally at Visa working on crypto in some capacity is now in the hundreds, up from just a handful of employees. And we’ve more than doubled our number of partnerships with crypto platforms in the last 18 months,” said Sheffield. [Bitcoin.com]
Bitcoin-Owning Senator Lummis to Propose Crypto Overhaul Bill Next Year
Wyoming Republican Senator Cynthia Lummis, one of the crypto industry’s staunchest supporters in Congress, is planning to introduce a comprehensive bill next year that would cover everything from how digital assets are taxed and categorized to consumer protections. The bill would be one of the first attempts at establishing comprehensive rules of the road for the growing industry. The bill, if enacted, would provide regulators with clear guidance on which assets belong to different asset classes, offer protections for consumers, regulate stablecoins, and create a new organization under the joint jurisdiction of the Commodity Futures Trading Commission and the Securities and Exchange Commission to oversee the digital asset market. [Bloomberg]
Credit Sesame Combines a Prepaid Debit Card with Virtual Credit Card to Safely Build Credit Scores
Credit Sesame’s new Credit Builder lets users build a credit score through purchases on a Credit Sesame prepaid debit card by pairing it with a virtual credit card. Users can set the amount they want to allocate toward building credit and Credit Sesame’s computers calculate the debit expenditures to match that amount and reports it to the credit bureaus through the virtual credit card. Credit Sesame is aiming at people who don’t have good credit scores, or perhaps any credit score at all: the credit invisible. That amounts to about 44 million Americans. [Forbes]
2022 is When Biometric Payment Cards Will Go Mainstream
An increasing number of pilots and now commercial rollouts of biometric payment cards, plus the development of standards all point to the secure and contactless payment method going mainstream as soon as 2022, according to a new report by the Smart Payment Association. The pandemic has been an accelerator for contactless payments. In the UK, contactless payments account for around 57% of all in store payments or 72% of card payments, with Computer Weekly putting the figure at 88.6% of card payments in 2020. FPC found that 62% of consumers would switch banks in order to get a biometric card (rising to 70% among frequent contactless card users), and 42% are willing to pay an average of $10.70 extra a year for a biometric card (rising to 74% among frequent mobile pay users). [Biometric Update]
