A Few Personal Financial Predictions for 2012

There may be some interesting changes in store for consumers regarding the credit card industry come 2012. Prepaid cards are expected to replace credit a debit cards to a large extent in 2012. Throughout 2011, nearly $460 billion was loaded onto prepaid cards. That amount is expected to rise to $685 billion by 2016. Also it is anticipated that consumer credit scores will rise as well and more consumers will have an opportunity to obtain credit.

Americans will likely see a big push towards credit cards and prepaid cards, as lenders attempt to guide them away from using debit cards. This is because of the Federal Reserve cap instated upon debit card interchange fees, limiting the amount they are able to collect from merchants per debit card transaction. This, in turn, caused most banks to entirely eliminate any rewards programs offered that were attached to debit card use. This alone will cause a fair number of consumers to lay off using their debit cards to pay for purchases in favor of pulling out a credit card that will enable them to earn perks for each purchase. In an effort to cultivate increased credit card usage, lenders will offer more attractive cards. Also, prepaid cards will begin to function as substitute checking accounts for many.

More credit should be available overall to a greater portion of consumers. As credit card companies ease up even further on their underwriting standards with the improving economy, more people will find themselves able to obtain an unsecured credit card that may have had a hard time doing so right on the heels of the Great Recession.

Additionally, there is expected to be a rise overall in consumer credit scores. November saw a 32-month low in the country`s unemployment rate and the average jobless rate throughout 2011 is much better than it was in 2010. This means that an increasing amount of Americans have been able to meet their financial obligations, which has been made apparent with the steadily decreasing delinquency rates reported by credit card issuers. That will ultimately lead to a rise is credit scores throughout 2012. As more households pay their credit card debts and other loans on time, they will have more positive entries added onto their credit report leading to a bump in their score. Those increases should be quite evident all during 2012.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.