4 Credit Card Trends for 2022

I've been spending some time gazing into my credit card crystal ball, and I've noticed a few trends on the horizon. And don't worry -- they're actually positive trends!

Before the COVID-19 pandemic hit in early 2020, the economy was doing well. But the pandemic ushered in shutdowns and unemployment during 2021. However, the Bureau of Labor Statistics reported that unemployment was only 4.2% at the end of November 2021. This marks an improvement over November 2020, when the rate was 6.7%.

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.

-- Credit card issuers will embrace buy now, pay later options.

Credit Card Offers Will Increase and Expand to the Subprime Market

Card issuers have recently been sending a lot of credit card offers to consumers. And some cardholders have reported getting credit limit increases without even asking, which sounds awfully nice of issuers. But before you send a thank-you note to your credit card company, be aware that the motives of the card companies aren't exactly altruistic.

They see consumers venturing into stores and spending again, and they want your business. Every time you make a purchase, the credit company gets a transaction fee. Plus, if you carry a balance, they get to charge you interest.

In 2020, due to the pandemic, credit was tight, which means it was difficult to get approved for a credit card or to get a credit limit increase. For those who have subprime credit, it was difficult to get through the pandemic without access to credit.

[Read: Best Cash Back Credit Cards.]

Credit Card Offers Will Increase and Expand to the Subprime Market

But according to a 2022 forecast from TransUnion, the market for the subprime population will open up again in 2022. During the height of the pandemic, credit card issuers were having financial issues and weren't willing to take on risky customers.

Even though credit will loosen, maintaining a high credit score will still be essential. A new credit card or a higher limit gives you more available credit. This can lower your credit utilization ratio, which is the amount of credit you've used compared with the amount you have available. The lower your ratio, the higher your credit score. So, think of increased access to credit as a safety net.

Consumer Credit Card Debt Will Increase

The most recent totals from the Federal Reserve show that consumer revolving debt, which is primarily credit card balances, increased at an annual rate of 7.8% in October 2021. Total revolving debt was $1.011 trillion in September 2021 and went up to $1.017 trillion in October 2021.

During the early days of the pandemic, Americans did a great job saving money and paying down debt. The uncertainty of both the economy and their job status motivated consumers to build an emergency fund and pay down debt.

Your personal savings rate is the amount you save compared with your disposable personal income. During 2021, the personal savings rate started slowing down. At the end of October 2020, savings had slowed to 13.6%, but that was still higher than average. To compare, in October 2021, the savings rate was just 7.3%.

If you're still trying to get out of debt, you're in luck if you have a good credit score Balance transfer credit cards are on their way back, and using one of these cards is a great way to get rid of debt.

Balance Transfer Credit Cards Will Make a Comeback

During the second half of this year, it's become easier to get approved for a balance transfer credit card. Earlier this year, credit card issuers had offered hardship programs to many Americans who couldn't pay their bills due to the impact of the pandemic, so the issuers limited their risk in other areas. The issuers cut back on balance transfer offers and implemented lower credit limits.

But now I'm seeing some really good offers, and they should get even better next year. If you accumulated credit card debt during the pandemic and you still have very good credit, a balance transfer card is a golden opportunity. You can pay down debt during the 0% annual percentage rate introductory period without paying interest.

Right now, these introductory periods last from about 12 to 21 months. Do keep in mind, though, that most of the issuers charge a balance transfer fee, which ranges from 3% to 5% of the total amount transferred.

But for those who don't have good credit scores, another option is a debt consolidation loan to get rid of debt. Either way, 2022 will be a year focused on debt reduction.

Credit Cards Issuers Will Embrace Buy Now, Pay Later Options

Buy now, pay later options are also referred to as BNPL. With BNPL, one of the most common options allows you to pay off purchases in four installments.

One of the disadvantages of BNPL has been that the companies who started this new way of paying weren't reporting payment history to the credit bureaus. Recently, Equifax announced that it would begin accommodating payment history from the companies who extend these offers. Equifax says that it is creating a new industry code to enable credit reporting from companies like Klarna and Affirm. But next, the BNPL industry has to agree to report your history.

This certainly could help those with limited credit who are trying to build a good credit score. About 75% of those who use BNPL plans are Gen Z or millennials, according to Insider Intelligence. But there are significant downsides if you don't make timely payments. Your payment history can help your credit, but if you don't pay as agreed, it can also hurt your credit.

Given the popularity of BNPL options, many major credit card issuers have implemented payment options, for example, American Express' Pay It Plan It option. The advantage is that you don't have to put a lump-sum purchase on your credit card. And some of these offers are interest free if you make your payments on time. This business is taking off, and I expect to see more companies in this space as well as more issuers offering competing flexible payment plans. Keep in mind that BNPL plans aren't all the same. So read the terms carefully.

The most important thing is to stick to your budget and don't use BNPL to get something you can't afford. But like with credit cards, there's a disconnect between making a purchase and actually making the payment. This could result in many consumers paying interest and fees on BNPL plans.