As the calendar changes from 2012 to 2014, credit card companies are already looking forward to many of the changes the new year will bring consumers. Credit card companies are prepared to make 2014 one of the most exciting years in credit lending since the credit card industry went mainstream in the 1980s.
Here are some of the exciting offerings from credit card firms in 2014.
New Security Measures
Both Visa and MasterCard, the leaders in debit and credit card processing, are phasing out magnetic strip credit cards in the United States. Instead, they will begin using the European-style chip-and-PIN device.
Chip-and-PIN style credit cards are fitted with an embedded chip. The card readers are programmed to recognize the chips as being authentic or invalid. The card will be active following the entry of a PIN number, similar to debit cards.
These products have been used throughout Europe for years and have proven safer from many common scams and frauds in the United States. Companies are upgrading their card readers to handle the new offerings from Visa and MasterCard.
More Secured Credit Cards
The CARD Act of 2009 placed limits on certain fees and rates companies could charge those high-risk borrowers. For credit cards, no company can charge more than 25 percent of the credit limit as a usage fee.
To combat this, secured credit cards have become more popular. These secured credit cards are issued with collateral paid first. These cards offer a line of credit based on an amount and secured by the user. For example, a $250 credit card will require a $250 deposit before the card is issued. This protects the bank from default.
These cards are becoming more popular as a way to prevent loses from high-risk borrowers. Customers are seeking them out as a way to avoid income requirements and rebuild credit history. More of these cards will become available as lenders cater to the demands of customers.
More Available Credit
Credit card companies have learned the lessons from 2007 and 2008. They have purged billions in bad debts, freed up available credit lines, finalized compliance with the CARD Act, and are ready to begin lending again. This works out wonderfully for the growing number of Americans working part-time or lower wage full time jobs.
These individuals, and their spouses, need available credit for emergencies and other situations traditional lenders won’t provide credit for. Credit card risk managers have learned how to judge risk more accurately and to forecast earnings and losses from prospective customers. For this reason, credit cards are offering more cards to more clients, as well as increasing credit lines for existing customers.
More available credit offers a stimulative effect to the overall economy, allowing the United States to move past the recession into a more prosperous 2014. Credit card firms are excited to begin offering new products and services, new bonuses, and more credit to borrowers than has been available in years past.
Credit Cards Beyond 2014
Credit cards moving into 2014 and beyond are expected to use even more advanced technology to assess risk and prevent fraud. They are looking at ways to prevent and reduce identity theft losses. For consumers, 2014 will be a great year for a credit card.