5 things credit card pros are talking about right now, and why you should care
What happens when credit card writers, card issuer decision makers and data analysts walk into a room?
They talk about you and your fellow Americans, of course. Or rather, they talk about how an everyday American consumer like you is using — or not using — credit cards. There’s a whole industry of credit card experts whose livelihoods are wrapped up in your credit use.
As credit card reporters for Bankrate, we recently attended the Conference for Credit Cards & Consumer Credit Media, or CardCon for short. We spoke with some of our favorite credit card experts about things like card benefits, credit scores and banking legislation to keep an eye on. And since our job is to help you and others like you in your own credit card journeys, we wanted to participate in today’s conversations about credit cards.
We left with all sorts of tips, trade secrets and advice that can empower you to be a smarter consumer with your everyday purchases — especially the ones you make with credit cards.
Here are five things credit card experts can’t seem to stop talking about right now, and what they mean for you.
1. Credit card issuers are catering to Gen Z
“Catch them young” seems to be the name of the game for credit card companies right now. To an issuer, a cardholder has a lifetime value, and the earlier someone gets a credit card, the bigger that value is. It’s no wonder that CardCon had an entire panel dedicated to reaching Gen Z by working with financial influencers, or “finfluencers.”
“Targeting Gen Z is strategically critical as it encourages credit card issuers to adapt products, branding, and communications to meet this demographic where they are,” said Christopher McFarland, a senior vice president at the online advertising company CJ.
McFarland was one of the speakers at the panel, and he spoke with us in an exclusive interview about this trend.
Gen Z is highly engaged on social media and actively uses these platforms to research and make purchasing decisions, particularly through influencer and affiliate marketing.— Christopher McFarland, Senior Vice President, Growth – Financial Services at CJ Affiliate
Forty-nine percent of Gen Z use social media to seek out financial advice, according to a Bankrate’s 2023 Personal Finances Outlook Survey. These young Americans trust the opinions of others, including influencers, over brands.
Social media also has an impact on their spending habits. Bankrate’s 2023 Social Media Survey found that 60 percent of Gen Z say they have impulsively purchased a product they saw on social media. Trends coupled with “FOMO” (the fear of missing out) can make people feel they need to keep up with the online Joneses to be successful.
All that makes social media websites a perfect place to sell a lifestyle, which is what some card issuers do. American Express, for example, has become a status symbol for Gen Z. The credit card company promotes its card products as something you can’t have a certain lifestyle without. It tailors card benefits to offer experiences and special privileges Amex knows young people want. Social media does the rest, with cardholders talking about their cards as something desirable.
Appearances are deceptive. Remember that social media tends to offer an image rather than reality. While there’s nothing wrong with learning about financial products from your online feed, do your own research.
2. Evolution of credit card benefits
Credit card benefits were another hot topic. Several experts participated in a panel all about what’s going on in the space and how people are using their card perks.
Here are a few themes they touched on.
Your credit card probably comes with a benefits guide. Read it to know what’s available to you. If the language is a bit too jargony, research your card online. Publications like Bankrate have dedicated teams reporting on card products. And if you realize your card doesn’t bring enough value or makes you do too much work, consider switching it.
3. What actually determines who gets approved for a credit card
Nathan Whitney, credit risk strategy senior director at Predictive Analytics Group, uses math to help lenders determine whether or not an applicant should be approved for a credit card.
Increasing the odds [of credit approval] is all about just paying your bills on time and using credit when you need it.— Nathan Whitney, Credit Risk Strategy Senior Director at Predictive Analytics Group
But as it turns out, when you apply for a credit card, there may not be a person behind the curtain. Most credit card applications are reviewed automatically, as Whitney explained on a CardCon panel about what actually determines who gets approved for a credit card.
That’s because of regulations like the Equal Credit Opportunity Act, which cracked down on issuers for discriminating against credit applicants based on things like race, religion and marital status. Whitney says that automatic reviews of applications protects card issuers from legal scrutiny.
But if your credit card application is being reviewed automatically, what factors are considered? The answer is that it depends. Whitney explains that you don’t have one single credit score. Most people know about their FICO score, but your credit score can also be calculated by other organizations like VantageScore or a lender’s internal scoring model.
“There’s no easy answer for being approved all the time,” Whitney tells Bankrate. But the most important factor of most credit scores is paying your bills on time.
Just because you can use a credit card doesn’t necessarily mean you should. If you can’t pay off your balance on time, you probably shouldn’t swipe the card. And if you’re using a high amount of your available credit — raising your credit utilization ratio — that can also negatively affect your credit score.
Some credit-scoring models have also begun to consider alternative data like your utility bill payments. In that case, you’ll want to pay your other bills on time, too.
Paying your credit card bill and other bills on time is the best thing you can do for your credit score to increase your chances of being approved for future credit.
4. How credit-scoring models are trying to help score people with no credit history
Generally, people with no credit can have a harder time getting approved for the best credit cards or things like auto loans and mortgages. That’s because traditional credit-scoring models calculate scores based on what’s in a person’s credit report. But no credit report data means no score, which means lenders can’t tell if someone is creditworthy or not.
Thanks to increased awareness around credit invisibility, some credit-scoring models are trying to help the previously unscorable.
For example, FICO requires you to have an account for at least six months before you can get a credit score. But VantageScore can score you if you have an account that’s only one month old.
Additionally, “There are a few models that allow consumers to link their bank accounts,” says Louis DeNicola, a finance writer who specializes in consumer credit.
The [new] models can consider and score your banking history to generate or adjust scores, which can help people who have limited or no credit history become scorable.— Louis DeNicola, finance writer in consumer credit
DeNicola explains that some credit-scoring models also use alternative data like the customer’s history with paying utility bills and payday loans. And many creditors will create custom scoring methods using their own internal data.
If you’re looking to get approved for credit or a loan but don’t have much data in your credit report, try signing up for a service that looks at your bank account data. You’ll just want to make sure your accounts are funded and in good health.
5. The Credit Card Competition Act
The Credit Card Competition Act (CCCA) has been on the card industry’s mind since it was introduced in June 2023. This Congress bill aims to break up what its backers consider a duopoly of the two biggest payment networks: Visa and Mastercard.
How do they duopolize exactly, you may ask? Every time you use your credit card, the merchant pays credit card processing fees. Portions of the fee go to the card network (Visa, Mastercard, Discover or American Express), the merchant’s bank and sometimes a payment processing company. The rest goes to the card issuer — the bank that issues the card, such as Chase, Bank of America, Citi and others.
Visa and Mastercard set interchange fees for the cards processed on their respective networks. Currently, merchants have no choice but to pay them if they accept Visa or Mastercard.
Under the CCCA, the merchant would be able to choose two different networks to process credit card transactions, potentially saving on the fees. The hope is such a move would help lower card transaction fees and save merchants money. In theory, the merchants then would pass these savings to you — the consumer.
How that would look in practice is up to a rather hot debate.
At the conference, the topic was brought up during the opening keynote address. Andrew Weber, managing director and head of paid acquisition in credit card marketing at Chase, was delivering the address and asked the audience whether they were in favor or against the bill.
“So we got some people in favor in the room,” he then concluded. “It seems like most of the room is pretty solidly opposed.”
This sparked quite a few conversations. We heard some familiar arguments. For instance, card transaction fees fund card rewards, so will those go away under the CCCA? And where’s the guarantee merchants will actually pass the savings to the consumer?
“When Congress passed a law that did a similar thing to debit cards, you know, the promise then by these big merchants was that prices are going to go down,” Nick Simpson, managing director of communications and public affairs at Electronic Payments Coalition, told Bankrate. Electronic Payment Coalition represents the interests of banks, credit unions and payment card networks.
Simpson pointed out that according to a survey done by the Federal Reserve Bank of Richmond, very few merchants (1.2 percent) reduced prices after the regulation was implemented. In fact, more than 1 in 5 merchants (21.6 percent) increased prices.
The new bill has supporters and opposers on both sides of the political aisle. With the presidential election occupying everyone’s attention, there hasn’t been much development. Most recently, on November 19, 2024, the Senate held a hearing aimed at breaking the duopoly. The CCCA’s proponents blasted Visa and Mastercard for making the credit card market anti-competitive while charging high fees. The card networks insisted the current system delivers value to both consumers and businesses, including cybersecurity and fraud protection.
“The debate is as intense as it ever has been,” Weber said during the CardCon address, mentioning the bill is likely to have a significant impact on the rewards program if it does pass. Additionally, there are worries it might make card transactions less safe.
Every credit card right now runs on its own branded network. And that might not sound like a big deal, but what it does is it allows the credit card company a complete line of sight at every purchase that's made. And that's how they can continue to keep the safety and security that we know today.— Nick Simpson, Managing Director of Communications and Public Affairs at Electronic Payments Coalition
The bill aims to allow cards to run on an alternative network — which has never been done before. This monumentally changes the way credit cards are processed.
“It’s a big experiment,” Simpson said. “It’s untested, and it poses a lot of risk for consumers as well as businesses.”
As experts speculate about the potential benefits and dangers of the CCCA, remember that you can make your voice heard, too. Once Congress comes back after the elections, it’s likely that the bill will get another push. Get in touch with your member of Congress if you’re concerned about the issue.
The bottom line
The credit card industry is ever-evolving, and it can be tough to keep up with. Yet what goes on can impact your wallet and the value of your credit cards. From social media trends to credit scoring models to changes in legislation, it’s a good idea to be aware of the new developments.
If you have a question, don’t hesitate to reach out to us at anastaples@bankrate.com and kkelton@redventures.com.
