Three decades ago, a credit card was used only to put off paying your debts for a short while. You could not use your card at department stores, grocery stores, and the doctor’s office. And you didn’t get a lot of rewards (from points) for using your credit card.

But nowadays, the trend has changed because the average American has four or five credit cards at his disposal. Hundreds of reward schemes compete for your money, and you can use the card to buy anything from fruits to appliances. So, what is the future of credit card usage? Industry experts foresee the following trends in the foreseeable future:

Interest Rates will Increase

A significant number of credit cards have variable rates, and these rates are on the rise. In the next few years, credit card issuers will pass the rate hikes from the Federal Reserve. Regulators also have forced card issuers to make higher minimum payment structures. In the last several years, the minimum payment was so low that it might take years before the debt is fully paid if the borrower only pays the required amount.

Low Rates Might Continue But with a Catch

Higher interest rates might make low-rate offers unattractive for banks because of lower revenue, but you can expect that banks will keep this up because of competition. Credit card issuers will definitely become more creative in generating profit. For example, the limit on balance transfer fees for the lower-rate product lines was removed. So, even if the $2.50 balance transfer doesn’t seem like much, it can add up when you transfer $10,000 or more.

Good Deals will be Created and Stopped

Credit card issuers strive to create spectacular offers that will grab the attention of consumers. However, they will be appalled when the consumers exploit these offers in ways they never thought possible. Case to point, think of MBNA’s gas rebate offer; it offers 5% cash rebate for gas purchases. The gas rebate card was actually a general purpose card, but the consumers didn’t use the card for anything other than gas. As you can expect, the offer has since been trimmed.

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