Learning something new, saving money, and lowering stress are among the 10 most commonly broken New Year's resolutions, according to Time. This need not be the case, however, and you can even get a jump on bringing these annual vows to fruition before the clock strikes midnight on New Year's Eve. How? By considering predictions for U.S. credit in 2012 and using these educated glimpses into the future to improve personal financial performance. The credit industry affects all facets of personal finance and being ahead of the curve when it comes to credit issues could certainly help you save money and thereby lower stress. At the very least, you might learn something new!
Prediction: Lucrative credit card sign-up offers will continue through 2012
What that means for you: You may or may not have heard about credit card companies offering rewards bonuses worth up to $800 and 0% introductory interest rates for as long as 24 months in return for new customers opening cards in 2011. While the exact offers will surely fluctuate, we can expect the general trend to continue in 2012. For people with excellent credit, that means the potential to garner free flights, hundreds of dollars in free money, and heaps of time to pay down debts without the hindrance of interest.
Prediction: More credit will be available
What that means for you: Believe it or not, credit card companies also had tough times during the Great Recession, and that's largely why it became difficult for many consumers to obtain credit. Issuers were forced to become more conservative in their underwriting. But as the economy has improved, we've seen a reversal of this trend, meaning more people will be able to get unsecured credit cards and loans during 2012. If you do indeed get one, just remember to learn from the lessons provided by the financial downturn and only spend within your means!
Prediction: Credit scores will rise
What that means for you: Not only did unemployment reach a 32-month low in November at 8.6%, but the average rate thus far in 2011 (8.99%) is also significantly lower than the 9.6% we saw in 2010. What does that mean? For one, it means that more and more consumers have been able to meet their monthly financial obligations -- also illustrated by the decline in delinquency rates. In addition, it means that credit scores will rise in 2012. You see, as more consumers make on-time credit card and loan payments, they will gradually add positive information to their major credit reports and thereby devalue negative information attributable to the Great Recession, causing their credit scores to subsequently rise. In other words, this is a process and tangible benefits should be seen in earnest during 2012.
Prediction: Expect a prepaid card/credit card push & a debit card downfall
What that means for you: Debit cards were the center of attention in 2011, as the Federal Reserve instituted a cap on the fees banks could charge merchants whenever debit cards are swiped and many banks subsequently eliminated debit card rewards and/or attached new fees to checking accounts. For this reason, we can expect a number of things in 2012: 1) fewer people will use debit cards; 2) credit card rewards will be relatively more attractive; 3) prepaid cards will become more popular as replacement checking accounts. You should therefore prepare for changes to your everyday banking and be on the lookout for the best credit cards and prepaid cards.
Prediction: Don't expect new personal finance legislation
What that means for you: While the CARD Act changed the personal finance landscape for the better, it changed it nonetheless, and that took some getting used to. In 2012, consumers can look forward to the same increased transparency and improved rights, yet fewer adjustments.
Prediction: Sovereign European debt won't cause further damage
What that means for you: Even if you couldn't care less about the goings on in Europe, the interconnected nature of the modern global economy means the continent's debt crisis does affect our finances here in the U.S. Luckily, I foresee the implementation of stop-gap measures that will ensure economic stability in the short-term, rather than default on the national level across the pond. Therefore, the U.S. economic recovery should continue in 2012, and the positive trends we are seeing in our personal finances will not be impeded.
Ultimately, it looks like 2012 is going to be better than 2011. I mean, it hasn't even begun and you've already learned something new about saving money, which hopefully brought down your stress levels!
Odysseas Papadimitriou is the founder and CEO of Card Hub, an online marketplace where you can compare credit cards and prepaid cards as well as sell gift cards for cash.
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