The volatile financial market fueled by recession has changed the role of the credit card for the average consumer. Many cardholders, in the wake of job loss and higher prices on most household products and energy costs, turned to credit at the start of the recession. But as the recession continued, many consumers found themselves unable to make minimum payments, leaving the credit card industry in a slump. Fewer and fewer credit offers were extended as all banks struggled with massive amounts of bad debt.
Fast forward to 2011. Lenders and consumers have begun to see slow recovery. Cautiously optimistic, lenders have begun issuing new accounts to moderately-reliable candidates in hopes that better times are ahead. Market researcher Andrew Davidson of Mintel Comperemedia stated that consumers received almost 1.2 billion credit card offers during the fall of 2010. Compare that to a mere 391 million offers in 2009. The credit card is making a comeback. However, many banks have made raised their interest rates, according to FreeScore.com analysts, with the average rate skyrocketing from 12.98 to 14.68 percent in the last year.
The unexpected benefit that has resulted from the stiff competition between banks to regain cardholders is the abundance of reward programs. It was predicted by some analysts that credit card rewards programs would dry up as financial woes continued, but the recession has had the opposite effect. Davidson said 8 out of 10 credit card offers include reward programs. The most popular reward programs offer airline miles and cash back.
Banks are also continuing to offer 0 percent introductory rates, which was popular before the recession started in 2007. These offers attract consumers who have been cautious to use credit since the recession. Others see the opening of credit lines as an opportunity to regain their financial status, which may have suffered over the past couple of years. The average household still carries almost ,700 in credit card debt, according to CardWeb.com.
The most popular credit card companies are Visa and MasterCard. The two companies operate in a very similar fashion. Both are accepted worldwide. Both cards are issued by a variety of banks. These banks pay Visa or MasterCard a fee to use their system, but the issuing bank is financially backing the cardholder -- not the Visa or MasterCard company itself. From the consumer's perspective, the two cards are virtually the same.
Discover is the third most popular credit card, as it is accepted more places than American Express. Discover issues its cards through Discover Bank and a few affiliated lenders. So, there is less competition between lenders and, therefore, a slightly higher standard for those applying for the Discover card. Discover gained popularity in its infancy by offering one of the first cash back reward programs.
Thousands of consumers enjoy the perks of American Express, which formerly issued its own cards, similarly to Discover. For years, cardholders were required to pay their balance in full each month. But, the company recently allowed several other lenders to issue American Express cards. Some of those banks now allow consumers to carry a balance. While American Express is not accepted as widely as Visa or MasterCard, cardholders receive exclusive benefits, such as no pre-set spending limit, travel planning assistance, premium travel insurance and hotel perks at Radisson.
When choosing a credit card, a consumer should base their decision on a few factors: interest rate, rewards and acceptance by retailers. World travelers will find that MasterCard is the most widely accepted card; however, Visa is accepted at more locations in the United States. Those who carry a balance will want to search for 0 percent introductory rates. Travelers should look for a reward card that earns airline miles or gasoline.
There is no one card that is ideal for every consumer. But there is one card that is offering some pretty impressive perks -- Black by Visa. Black by Visa offers cardholders a 24-hour concierge service, access to VIP airport lounges, luxurious rewards and gifts.
When it comes to credit cards, one size does not fit all. For further information regarding credit cards and applying for credit cards, please visit MyReviewsNow Online Shopping Store.