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The credit card market is highly competitive and constantly evolving. Lately, that means new cards that give consumers more choice. As this trend continues into 2022, credit card shoppers will need to know what to look for. What does a good credit card look like these days?
Annual fees, sign-up bonuses, rewards rates and 0% interest offers have long been bedrock standards for evaluating and comparing cards. And they still are.
But recently some issuers have begun offering niche cards with rewards specially tailored to people who are into cryptocurrency, wine or video games. Others are letting cardholders choose which categories pay the richest rewards.
Here are four newer, broader or more useful features to keep an eye on when shopping for a credit card in 2022.
1. Customized rewards
Credit cards have for a long time provided multiple ways to redeem rewards — cash back, statement credits, merchandise, gift cards, and point transfers to airlines or hotels.
But card issuers have traditionally dictated how you earn rewards in the first place. Your card would earn 3 points per dollar at gas stations, for example. If you don't spend much on gas, the card doesn't do much for you.
That’s changing as more cards allow you to customize rewards to your spending. With these cards, you can control which categories earn the richest rewards. For example, if dining out is your thing, you would choose restaurants as your bonus category.
Overall, customized rewards are a win for consumers, especially if the card automatically adjusts the bonus category to match your spending. But some have a notable downside: You have to actively and regularly choose your bonus categories, which means trying to anticipate where you'll spend the most money. That’s more effort than some consumers are willing to exert.
Additionally, because bonus rewards can be so lucrative, many are capped. For example, you might earn 5% cash back in a high-spending category, but that rate might apply to only $500 per month in spending before dropping down to 1%.
2. Buy now, pay later
More retailers have been offering customers the ability to pay for purchases in a series of fixed payments, sometimes without interest. These installment plans, managed by third-party services like Affirm, Afterpay and Klarna, provide an alternative to using credit cards.
Credit card companies are fighting back by introducing similar programs or by promoting plans they're already offering.
The idea of paying over time without paying interest, like layaway, isn't new, even for credit cards. If you pay off your credit card in full every month, credit cards have long allowed you to “buy now, pay later,” because you have a built-in grace period of several weeks before having to pay your credit card bill.
Now, credit cards are aggressively promoting programs like those offered at retailers, although most charge some interest. Programs come with names such as My Chase Plan, Citi Flex Pay and American Express Plan It.
3. Flexible credit lines
It’s nice to have a big credit line on a card. But historically, a credit card wasn’t a good option for getting quick cash because the only way to do so was through an expensive cash advance.
Now, credit card issuers are offering more innovative and affordable ways to tap your card’s credit line for a low-hassle short-term installment loan. Examples are My Chase Loan and Citi Flex Loan, available on a variety of cards from those issuers.
Typically, you'll have a set amount of time to repay the money in fixed monthly payments, similar to an auto loan. Interest is built into those payments, potentially at a lower rate than your credit card’s usual interest rate.
Unlike a traditional personal loan, you don’t have to qualify because you’ve already been approved for the credit line. That means there’s no formal loan application, no additional account to manage and no hard credit inquiry.
4. Balance transfer offers
As the pandemic took hold in 2020, balance transfer offers became really hard to find. Now, they're back. Card issuers are widely offering interest-free periods for transferring debt to your credit card from elsewhere — usually from a card with higher interest.
A good balance transfer offer essentially says, “Move your debt from another card, and we won’t charge you interest for a year or more.” Ideally, the money you save on interest can go toward paying down that debt more quickly. The average APR on credit card accounts that were charged interest topped 17% in 2021, according to the Federal Reserve, so a long 0% period could translate to hundreds or even thousands of dollars saved in interest.
You typically need good to excellent credit to qualify for a balance transfer card, meaning a FICO score of at least 690.