Worldwide financial markets are irrationally challenged, with central banking systems having to adopt unprecedented measures to ensure liquidity, and with daily occurrences of huge bankruptcies, bailouts, consolidations and mergers.

What does this mean for the credit card industry and for you?  While it’s hard to pinpoint exact time lines and finite issues, there are trends that are easily spotted:

Fewer large players, and many small ones:  consolidation and bankruptcies means that a handful of issuers will control the vast majority of the market.  And at the same time, in the long run, wholesale brandable credit card services will be available for other companies who can market credit cards to niche markets while having the wholesaler do all the heavy lifting.

High interest rates and very low interest rates. The credit card market will be more layered than segmented, with some credit card offerings targeting individuals with excellent credit, and the remainder of the offerings targeting individuals with poor or no credit.  For those of you with good, but not excellent credit, it will become more and more difficult to find a very low interest credit card offering, and you will have to settle for a card with an ‘average’ interest rate.

Lower credit limits. Gone are the days when your credit card will continuously increase your credit limit, whether you needed it or not.  Individuals will probably be required to open a new account if they want to tap into higher credit lines.

Consolidation of product offerings. Some credit card issuers are currently offering hundreds of credit cards flavors, with different perks, looks, and different features.  In order to cut costs and manage the credit card portfolio more efficiently, credit card issuers will start discontinuing perks and features and consolidating products into a few standard offerings.

Longer waits on the phone for customer service.  In order to cut costs, and facing a higher concentration of customers, the ratio of operators to customers will decrease, therefore expect longer waits on the phone, and more stressed customer service representatives on the line.

Higher fees and more creative fees.  Interest income is no longer enough for credit card companies to produce profits, therefore the present trend of more ‘creative’ fees, and higher fees will only continue.  Make sure you read the fine print in all the correspondence with your credit card issuers, and avoid being late on any payment at all cost.  A good idea is to use your credit card issuer’s web site to schedule an automatic electronic payment from your checking account; you can always make additional payments or increase the payment amount in your quest to pay off your balance.
If you are following our advice to use one card for your daily purchases, paying off the balance in full every month, you can schedule to have your credit card company withdraw the full balance every month from your checking account.  Make sure to continue to monitor your credit card operations, balances, and statement to catch mistakes on time.
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Photo Credits: Jeff Kubina (cc)