Bank on it: Credit card offers, incentives pick up as 2011 nears

CHICAGO -- Jackie Grutsch McKinney, an associate English professor at Ball State University in Muncie, Ind., said her son got his first credit card offer Dec. 6, and he's only 5 years old.

CHICAGO -- Jackie Grutsch McKinney, an associate English professor at Ball State University in Muncie, Ind., said her son got his first credit card offer Dec. 6, and he's only 5 years old.

She finds four or five credit card offers each day in her mailbox.

"We already have a couple of cards, and we're not looking for more," said McKinney, who interprets the upswing in offers to mean the economy must be on the mend.

As the year ends, consumers will have received 2.25 billion credit card solicitations, a 62 percent increase from 2009, estimates Synovate Mail Monitor, which tracks credit card solicitations.

In September, David Nelms, chief executive of Discover Financial Services, said marketing at his credit card company had returned "to pre-crisis levels. And we expect to maintain those more normal levels of marketing in the future."


Early 2010 was filled with doom and gloom, and there was buzz about higher rates and fewer perks, said Curtis Arnold, founder of, a credit card comparison Web site. But "as the year progressed and credit card offers began reappearing in consumer mailboxes, so have attractive new reward programs," Arnold said.

Here's what to expect with card offers in the new year:

CASH-BACK OFFERS: Issuers have already started making existing cash-back products more robust, Arnold said.

Cash-back cards will continue to return to levels we saw prior to the credit crunch and to new federal rules governing credit card fees and practices, he said. "In some cases, we'll see the movement happen pretty rapidly."

Chase Freedom Visa, for example, offers $100 cash back after a cardholder spends $799 on purchases within the first three months of opening an account, he said.

Discover is offering a 5 percent cash-back bonus on up to $300 in purchases in certain spending categories. Also, until Dec. 31, cardholders can get an additional 2 percent cash back on up to $1,000 in online purchases. "We'll continue to offer ways that card members can maximize their rewards as we look to 2011," spokeswoman Laura Gingiss said.

TRAVEL CARDS:'s Arnold said issuers will add more offers to attract consumers with high credit scores.

"We've seen a few really aggressive sign-up bonus offers in the past couple of months," Arnold said. "So bonus offers will likely become quite alluring in 2011."


He cites a United Mileage Plus Select Visa Card in which a consumer can earn 30,000 bonus miles and a $50 United travel certificate after spending $250 with a new card. That's enough for a round-trip ticket anywhere in the continental United States, Arnold said.

Bill Hardekopf, chief executive of, said cash-back and travel offers will become more enticing, but some card members will be charged annual fees if they don't use them enough.

"A lot of the reward cards don't have those annual fees right now," he said.

LOW-INTEREST CARDS: With some experts predicting that the prime rate will increase next year, many consumers might be anxious about credit card interest rates.

But "issuers will stay competitive in this area, and we won't see any major interest rates changes," Arnold said. "Some issuers will reverse course and lower rates in 2011."

Odysseas Papadimitriou, CEO of, expects credit card issuers to keep their already low rates in place longer.

"For example, an issuer might offer a 5 percent annual percentage rate for three years," he said.

But Srini Venkateswaran, partner at consulting firm Booz & Co., said rates are likely to be flat at best and could edge up.


"We expect credit card prime rates to have a flat outlook for 2011, with the potential to increase in late 2011 as the economy shows more signs of recovery," he said. Senior Financial Analyst Greg McBride predicts: "Credit card rates will continue to inch higher, but issuers will still offer zero percent balance transfer and single-digit rates on purchases for their best consumers."

LOW INTRODUCTORY RATES: Issuers have been adding better introductory rates, Arnold said.

"We should continue to see this trend, but I doubt we start seeing the low- or no-fee offers we were accustomed to not so long ago," he said.

But Papadimitriou said there are already offers that are better than or on par with pre-Great Recession offers. He cites a recent Citibank offer of a zero annual percentage rate for 24 months for balance transfers with a 3 percent transfer fee.

Or a lender might offer a credit card with a 5 percent annual percentage rate for three years with no balance-transfer fee.

With new federal regulations in effect, "credit card companies now know the rules of the game and they can appropriately position their products," Papadimitriou said.'s Hardekopf agrees that among the biggest surprises for 2010 is how issuers have enhanced balance transfer offers.


Besides Citi's "very attractive deal," Discover More offers a zero APR for 12 months with a balance transfer, and six months on purchases, Hardekopf said. A Capital One Platinum Prestige has zero APR on purchases and balance transfers for the next year.

"Those are good deals," Hardekopf said.

But generally "what consumers have to watch out for is those infamous balance transfer fees," which are charged upfront, Hardekopf said.

"Several years ago there weren't any balance-transfer fees. Then they went to $50 or $75. Then they increased to 3 percent" of the amount transferred, he said.

Issuers will continue to adopt 4 percent and even 5 percent transaction fees for cash advances and balance transfers,'s McBride said.

DELINQUENCIES DROP: TransUnion said it expects credit card delinquency rates -- the ratio of bank-card borrowers 90 days or more delinquent on one or more of their credit cards -- to decline from a projected 0.75 percent delinquency rate at the end of 2010 to 0.67 percent at the end of 2011.

What To Read Next
Get Local