The introduction of the first universal credit card in the 1950s marked the beginning of a new era in the financial sector. But since the release on the market of the original Diners’ Club over 70 years ago, credit cards have developed significantly. And, today, new technologies have fuelled the development of new features.
But how are advances in Fintech changing credit cards? And what should you be looking for in your next credit card issuer? Below, you’ll find a comprehensive overview to guide you in your buying decision-making process.
First Things First: What Are Your New Options if You Have Poor Credit?
Credit cards are powerful credit-building tools and can give you access to a wide range of financial products and services.
However, the most recent financial crises, including the 2008 crash and the pandemic-induced recession, have caused a shift in the consumer behavior of younger users, causing them to rely more and more on debit rather than credit cards. In turn, this trend has resulted in lower credit scores for younger generations.
Luckily, neo and challenger banks have expanded the credit-building opportunities for young users by making the best unsecured credit cards for poor credit more accessible to this audience. What’s more, these credit cards can assist consumers who are struggling to access financial products such as personal loans and mortgages due to a scarred FICO score.
Credit Cards in The Fintech Age: What To Expect
It is undeniable that technology is leaving its mark on all industries, and the financial sector isn’t an exception. But how are developments in Fintech changing credit cards as we know them today?
Here are just some of the rising trends worth keeping an eye on.
The Rise of Virtual Credit Cards
Most new fintech solutions are released with the goal of helping consumers gain more control over their finances. For example, new mobile banking apps offer features such as budgeting and international transfer tools.
However, fintech is also helping institutions and merchants by making e-payments more efficient and secure. For example, virtual credit cards can streamline the eCommerce shopping experience, reduce running costs, and help users track their cash flow.
Buy Now Pay Later Services at POS
In a race to make the checkout experience as stress-free and seamless as possible, companies and institutions are now offering Buy Now, Pay Later, and POS financing services.
These services are becoming more accessible and widespread thanks to the availability of proprietary cards created by fintech players such as Klarna and Afterpay, which offer incorporated features such as Pay in 4. What’s more, these financing solutions are interest-free, easy to track, not impactful on credit, and rewards-earning.
Single Interfaces To Manage Multiple Credit Cards
According to recent statistics, users in the US have an average of 3.23 credit cards per person.
The wide range of cards users acquire might give them access to more specific and convenient benefits, perks, and rewards. For example, having a travel credit card can help frequent flyers accumulate air miles and points.
On the other hand, tracking spending and balances on multiple cards might not be so easy, and can lead to late payments and unnecessary fees. Thanks to Fintech platforms, users can now use a single platform or app to manage all of their cards, thus benefiting from a comprehensive snapshot of their finances.
Different, Better Rewards
Credit card rewards have always been inherently connected to current consumer trends.
For example, the first Diners’ Club contributed to its own reputation as a status symbol by being accepted at luxury and exclusive establishments. What’s more, during the pandemic, credit cards switched from offering rewards such as travel points to providing consumers with more useful perks, such as points to redeem at supermarkets and gas stations.
New Fintech solutions and technologies have also influenced the world of credit card rewards and, today, you might be able to access unprecedented perks, including cryptocurrency.
Alternative Digital Payments Methods
While credit cards are still considered to be the most common form of payment method, new digital solutions are quickly gaining popularity. Fintech tools – including IoT devices and mobile payment apps – are contributing to making payments easier, safer, and more convenient.
Rising technologies such as digital wallets and peer-to-peer digital payment platforms are also supporting the digital transformation of the financial industry.
New, Fintech-Powered Credit Card Features: What To Look For in Your Next Credit Card
Fintech solutions are promoting the development of emerging financial niches, including Banking-as-a-Service (BaaS) and Banking-as-a-Platform (BaaP).
But while these sectors are developing at an unprecedented rate, most consumers, especially those looking to build their credit score, are looking for credit cards that allow them to cut costs, budget, and gain control over their finances.
Some of the fintech-powered features you should be looking for in your next credit card include:
- 24/7 customer service and support
- A direct line of communication with human customer support experts
- Budgeting features and “savings” spaces
- High accessibility of data such as statements and statistics
- Financial protection, especially for large and foreign transactions
- Proprietary mobile banking apps associated with your card that allow you to control your finances at the touch of a finger
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