By Sarah Lassner, NerdWallet
Last year was a year of dramatic presidential elections and economic conditions that looked good on paper, but didn’t feel that way to many Americans. Here’s what your credit cards and debt will look like in 2024.
Interest rates have started to drop, but credit card APRs still haven’t kept up. The Federal Reserve lowered interest rates three times toward the end of 2024, but it took several months for the average credit card interest rate to follow suit and drop slightly below the average rate. record height. Debts and arrears have increased, but the situation may be stabilizing. According to NerdWallet’s 2024 U.S. Household Credit Card Debt Survey, revolving credit card debt increased by just 1.5% from September 2023 to September 2024. However, when looking at the same period last year, debt levels increased by 15%. Credit card delinquency rates rose steadily from the second half of 2021, but leveled off slightly from the third to fourth quarters of 2024. Attempts to transform certain industries have stalled. The Credit Card Competition Act, first introduced in 2022 but still hotly debated in 2024, would indirectly lower credit card swipe fees merchants pay by increasing the choice of payment processing networks. The purpose is to But opponents argue the savings are unlikely to be passed on to shoppers and point out that history suggests the plan could also harm credit card rewards programs. In any case, the bill has not made any meaningful progress in Congress. Separately, an effort by the Consumer Financial Protection Bureau (CFPB) to cap credit card late fees in 2024 stalled after a federal judge blocked the new rules.
So we are a quarter of the way into the 21st century. Here’s what could have an unexpected impact on your credit card in 2025.
1. New presidential administration
The second Trump administration was born. Although this news appears to be more political than financial, decisions made in Washington could impact banks, financial technology companies, and, of course, consumers.
One thing that remains unclear at this point is the fate of the CFPB, as the new government efficiency ministry, co-led by businessmen Elon Musk and Vivek Ramaswamy, takes aim at federal spending deemed wasteful. Musk is calling for the abolishment of the CFPB, which was originally created to enforce federal consumer financial laws.
But if the CFPB’s future is at risk, it will be abolished with a bang. Since December, the CFPB has been busy:
Issued a notice to law enforcement agencies specifying “bait-and-switch” practices in credit card rewards programs that may violate federal law. Finalized rules to exclude medical debt from credit reports. The company sued Experian, alleging that the credit reporting agency failed to properly investigate the consumer’s dispute, resulting in incorrect information being included on credit reports.
“In my view, the CFPB has done a lot of things in the last year, all of which are helping consumers,” said Adam Rust, director of financial services at the Consumer Federation of America. “Any deregulatory changes in Washington would put all of that at risk.”
Potential deregulation in the banking industry, which essentially loosens some of the rules banks must follow, could have both positive and negative implications for consumers. This could make credit more accessible to people with a wider range of credit scores and potentially open up new technological advances in the industry. However, some consumer protections may be limited (or eliminated).
2. Post-pandemic stagnation
For many Americans who have developed some degree of immunity through vaccination or past infections, COVID-19 is just one seasonal respiratory virus to be aware of, but not necessarily one to fear. . Our spending habits also seem to reflect the ups and downs of the past five years. First, we stayed home and cut back on spending. Afterwards, we returned to the scene and racked up debts for revenge. Currently, we are approaching moderate achievement.
“We expect 2025 to be stable,” said Michele Ranelli, vice president and head of U.S. research and consulting at TransUnion. According to TransUnion’s 2025 Consumer Credit Forecast, credit card balances and delinquency rates are expected to continue to increase, but at a lower rate than in 2022 and 2023.
Ranelli said TransUnion expects inflation to fall from 2.9% in December 2024 to 2.26% by the end of the year. Of course, this depends on many factors, including whether the Fed adjusts interest rates again in 2025.
3. Large-scale credit card merger
Capital One announced its intention to acquire Discover in February 2024, making it the nation’s largest credit card issuer. Capital One expects the acquisition could occur early this year.
Capital One will continue to offer Discover-branded cards, but the bank’s biggest draw is Discover’s payments network, even if it’s smaller than Visa, Mastercard and American Express. The plan is to expand the Discover payment network, which will likely make Visa and Mastercard sweat a little. In theory, this could lower interchange fees for merchants, which in turn could lead to lower prices for consumers, but there is no guarantee.
One detail that frequent travelers are concerned about is Discover’s international acceptance rate, which isn’t as robust as Visa or Mastercard. If Capital One’s card joins the Discover payment network, will it lose its top status for frequent international travelers?
Michael Hirshfield, CEO and founder of Acru Savings, a B2B payments and loyalty platform, says this is something to worry about, as the entire merger process could take years at this point. It is okay to remove it from the list. FDIC insured digital wallet. “You have existing deals with partners that are time-limited. I don’t think consumers in 2025 will start to see these changes.”
4. Embrace artificial intelligence
Artificial intelligence will eventually appear in everything, but it’s still much more than a way for college students to get their next research paper done faster (you think you’re being smart, but professors can’t tell) Masu). Credit card issuers are increasingly leveraging AI to evaluate credit card applications faster, prevent fraud, and target marketing campaigns to consumers.
Additionally, it will help you resolve the issue without putting your card on hold.
“With an industry-wide focus on chatbots and AI in search to help consumers resolve issues faster, We look forward to continued improvements to the app,” he said in an email.
5. Continuing love of rewards
Since 2019, median income has not kept up with major expenses such as housing, food, and transportation. Consumers are looking for great deals, and credit card rewards programs remain a popular way to get them. “Rewards have become very important to consumers and a way to offset the cost of what they buy,” says Beth Robertson, managing director at financial services information firm Keynova Group.
And it’s not just redeemable points and miles, but also score discounts. “One thing we know is that it’s already happening: A card’s value proposition is much more than just a rewards program,” says a director of research and insights at Competiscan, a company that tracks and analyzes direct marketing activities. says Jessica Duncan, assistant vice president. “It’s an experience and a great deal.”
Still, the appeal of cheap travel remains strong. “People look at their compensation and value it. For many people, it’s like a layaway plan for a vacation,” Rust says. But he advises against fixating on miles for too long. “There’s no point in putting it in the bank because you can’t earn interest on it.”
Duncan said travel and premium cards will continue to be revamped, potentially offering more interesting benefits and higher fees. She cited several cards from American Express as examples of products that are changing and targeting younger generations.
“They don’t want to be your grandfather’s business card anymore,” she said.
Sara Rathner writes for NerdWallet. Email: srathner@nerdwallet.com.
The article 5 Credit Card Trends to Watch in 2025 originally appeared on NerdWallet.
First published: January 21, 2025 at 2:19pm EST
