Ten Credit Card Predictions for 2011

Expect APR increases and lower delinquencies.

January 04, 2011
KEYWORDS cards , issuers , lending
/ PRINT / ShareShare / Text Size +

The past three years have been volatile for credit card issuers and users given the recession, consumer deleveraging, and new Credit Card Accountability, Responsibility, and Disclosure (CARD) Act regulations.

Next year will have smaller, more subdued changes as credit card issuers find ways to manage risks, add new accounts, and increase revenue, while cardholders continue to pay down their balances and possibly use alternative forms of payment, according to Bill Hardekopf, CEO of LowCards.com.

He makes these credit card predictions for 2011:

1. APR increases

A significant number of restrictions have been placed on issuers during the past two years, which has had a dramatic effect on their revenue. Due to the CARD Act, issuers can’t increase the annual percentage rate (APR) on accounts during their first year unless there are some unique circumstances.

Therefore, issuers have increased the APR on new accounts. The average advertised APR of all credit cards issued in the U.S. before the CARD Act went into effect was 11.64%. In December it was 13.8%.

2. Delinquencies will continue to fall

Many delinquent accounts have been written off since their peak in the first quarter of 2009. According to TransUnion, 1.21% of all credit cards were 90 days or more past due at that ime.

The company expects card delinquencies to fall to 0.75% by the end of 2010 and 0.67% by the end of 2011.

3. More offers in the mail

Issuers will increase the number of solicitations, especially for people with excellent credit.

During the second quarter of 2010, U.S. households received 640.3 million credit card offers, an 83% increase over the 349.1 million offers mailed during the same period in 2009. Chase, the largest mailer, quadrupled its mailings during this time, and Citibank nearly tripled its mailings.

Synovate estimates that lenders will have sent about 2.5 billion credit card offers by the end of 2010. While this is much lower than the six billion offers sent in 2005, the peak year, it’s a significant increase that’s expected to continue.

Next: Lending standards will loosen slowly

Credit card debt

Laura Wolf
January 10, 2011 4:15 am
Credit card debt will start to rise: I agree that. And it is because once consumers can obtain credit again, they will overspend again.
Unfortunately that is human nature. I think some people should only be getting secured cards and be prevented from taking out new finance.

Flag Comment as Offensive

Post a comment to this story


What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive