7 credit predictions for 2013

An expert foresees many positive developments for consumers on the personal finance front.

What does 2013 have in store for our wallets? Well, assuming that the doomsday preppers are wrong and Dec. 31 comes and goes without incident, we can certainly make a few educated guesses about some of the new year’s most-pressing personal finance issues.

Image: Crystal ball (© Blend Images/SuperStock)

It’s always smart to get a head start on responsible money management, after all, so let me grab my crystal ball look into the future.

The fiscal cliff will be anticlimactic.

The issue foremost in the minds of consumers and financial professionals, not to mention political junkies, is what will happen with the fiscal cliff. Will we hit rock-bottom or somehow avoid the fall and keep rolling like the bus in “Speed”? The latter option is more likely for the simple reason that no one wants to see the country’s economy pushed into a deep, prolonged recession, no matter what their political leanings may be.

That’s not to say Washington will strike a deal by the Dec. 31 deadline or that a lasting resolution will come anytime soon, but you can bet they’ll work out something, even if it applies retroactively or simply postpones a real decision. That’s why the fiscal cliff mess won’t affect your wallet much in 2013, aside from some initial uncertainty on the stock market.

Credit card sign-up offers will remain strong.

The post-recession credit card market has been marked by extremely attractive sign-up deals targeted at the roughly 50% of people who have excellent credit. You can currently get a rewards bonus worth up to $500, 0% on new purchases for up to 18 months, or a free balance-transfer credit card that has the potential to save you up to $1,000 in interest and fees. Don’t despair if this is the first you’ve heard of such deals — you’ll have plenty of time to take advantage of one in 2013.

While low-interest introductory periods probably won’t get any longer, they shouldn’t regress much, and rewards bounties will continue to be worth hundreds of dollars.

Mobile wallets won’t catch on.

We heard a lot about mobile wallets in 2012, with a number of different groups announcing product launches and rumors swirling about when Apple and Android will roll out compatible smartphones. You can expect the talk to continue in 2013, but not much else.

The market is simply too fragmented, there are still too many security concerns, and the requisite infrastructure is not yet in place for merchants to accept smartphone-based payments. Besides, it’s frustrating enough now to have your cell battery run out. Are we really ready to also be left walletless?

Secured credit cards and prepaid cards will experience a boom.

The Credit CARD Act and the Durbin Amendment serve as the impetus for the rise of secured credit cards and prepaid cards, respectively. The former made unsecured credit cards for people with bad credit unprofitable by capping the first-year fees that issuers can assess in order to curtail the practice of charging folks up to $200 for as little as $50 in available credit. The latter capped debit card swipe fees, thereby costing banks $8.4 billion in annual revenue and forcing them to explore unregulated alternatives, such as prepaid cards.

Both card segments experienced increased popularity in 2012, but we can expect that trend to be exacerbated in 2013 as people become more familiar with them and more issuers enter each space.

Check-cashing stores will be in dire straits.

Check-cashing stores have long followed a niche business model, able to turn a profit despite consumer contempt for their borderline-predatory fees because they were the only check-cashing option available to unbanked consumers. The introduction of big-bank prepaid cards that allow people to directly load checks by taking pictures with their cellphone or visiting an ATM has changed that dynamic.   

Such cards are far cheaper than check-cashing stores, so you can expect the traditional check-cashing industry to suffer and many stores to go out of business as prepaid cards become less of an unknown quantity to consumers.

Personal finance will become more consumer-friendly.

In a way, it’s remarkable how much more transparent the credit card industry is today compared with just a few years ago. Thanks to the CARD Act and the Consumer Financial Protection Bureau, bait-and-switch pricing, unfair payment allocation, double-cycle billing, predatory fees and unscrupulous customer service practices are all much less of a concern these days.

We’ll be singing somewhat of the same tune for different segments of the personal finance industry this time next year, as the CFPB is currently supervising credit bureaus and debt collectors and will likely set its sights next on prepaid cards and checking accounts. We can therefore look forward to more accurate credit reports, a debt collection market that’s less reminiscent of the Wild West, better prepaid card disclosures, and more consumer-friendly methods of resolving disputes with banks, just to name a few changes.

Credit availability will rise.

Finally, with the economic recovery expected to continue and unemployment set to fall, it will be even easier to get credit in 2013 than it was in 2012. That’s actually a bittersweet development because we’re currently on pace to incur $43.5 billion in credit card debt for 2012, and additional credit could be a harbinger of a more-pronounced buildup next year.

That’s why we must place an emphasis on budgeting and spending only what we can afford to pay back in 2013. If we don’t, the financial outlook for 2014 could be decidedly more ominous.

What do you think? Whether you agree or disagree with our outlook for next year, tell us why in the comments below so we can ring in the new year with a little healthy debate.

Odysseas Papadimitriou

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