Credit Cards 2012: What's Next for Personal Credit?
If you're like me, you're seeing more credit card offers lately. My mailbox is stuffed with them; not a day goes by that two or three card offers aren't included with the post delivery.
It looks as though 2012 is going to be another year full of opportunities to open new lines of credit. The credit market is slowly recovering and -- especially if you have good credit -- issuers are ready to start lending again.
Card Hub recently released its predictions for credit in 2012, and some of the expectations are:
- More credit will become available: This is one of the big ones. Consumers aren't the only ones suffering from "frugal fatigue." Plenty of credit card issuers are ready to loosen their lending requirements and let a little more money flow. However, the best deals are still likely to be reserved for those with excellent credit.
- Credit scores will improve: Card Hub CEO Odysseas Papadimitriou believes that improvements in employment should allow more people to pay their bills on time. This should have an overall positive impact on credit scores as missed payments become less common. Improved credit scores should further encourage a loosening of credit.
- Debit cards are about to be less attractive: The use of prepaid cards and credit cards is expected to rise. Attempts to charge fees related to debit card use will probably be renewed. As a result, it is likely that more people will gravitate toward credit cards.
What Should You Do About Your Debt?
Personally, I think 2012 will offer you a chance to pay off some of your debt. With credit loosening, you should be able to more effectively accomplish balance transfers. On top of that, interest rates are expected to remain low. The Federal Reserve has said that it does not plan to raise rates before the end of 2013, so that means that credit should be relatively cheap.
If you have a chance to pay down high interest debt with the help of consolidation or balance transfers, 2012 might be just the year. The coming year might also be a good time to refinance your mortgage loan, while mortgage rates are near record lows.
Now is also a good time to get some good deals on new debt. If you have been considering making a major purchase, such as a car or a house, the coming year is likely to provide you with low prices and low interest rates.
Consider the opportunity to borrow smart. Be warned, though: Just because rates are low is not an excuse to make unplanned purchases. Borrow as little as you can. Some still believe that another recession is around the corner. If that is the case, you won't want to be saddled with debt. Instead, look for ways to prepare your finances for an upcoming recession.
