NEW YORK (MainStreet) — Credit cards got a lot more attractive during the course of 2011 as issuers revamped old offerings, tied high sign-on bonuses to existing cards and introduced products with unconventional rewards.
The reasoning behind the beefed up offerings is simple.
“Issuers are trying to woo back the customers they lost to the recession,” Beverly Harzog, an expert with Credit.com, says.
It also helps consumers (or hinders them, depending on their personal spending habits and credit score) that the uber-popular debit card got a bit more expensive this year, thanks to the Federal Reserve’s 21-cent cap on swipe fees.
As the new year approaches, the strategy appears to be working. A recent report from Javelin Strategy and Research found that consumers spend an average of $82.10 per online transaction when using a credit card compared to $58.29 when using a debit card, and the company predicts that the use of credit cards to buy online will climb by 63% from 2011 to 2016 while debit card use should grow by only 2%.
Credit experts also agree that lucrative sign-on bonuses and competitive rewards deals will continue to proliferate despite the fact that consumers are already moving back to credit. But not all cards are created equal. To give you an idea on the types of cards qualify as competitive, MainStreet asked experts which ones they thought were among the more notable additions to the marketplace in 2011.
Capital One Cash Credit Card
Capital One (Stock Quote: COF) launched a slew of quality credit cards this year, but the Cash card that launched in August is what Tim Chen, CEO of credit card ranking site Nerd Wallet, calls “hands down” the best new card of 2011.
The card carries a fairly standard rewards program – 1% cash back on all purchases – but also gives customers an extra 50% of all the cash back they have earned at the end of year (which actually works out to a 1.5% return). It also helps that the card currently has a $100 dollar sign-on bonus for which customers only need to spend $500 during the first three months to qualify.
The card also carries no annual fee and a 0% introductory APR that lasts until September 2012. After that, the APR jumps to between 12.9% and 20.9%, depending on the cardholder’s creditworthiness.
“With the added benefit of no foreign transaction fees, this card is a no-brainer,” Chen says.
The American Express Blue Cash Cards
Back in April, American Express (Stock Quote: AXP) restructured its flagship Blue Cash card, introducing two new cards tailored to two different audiences. (Chen explains that it also streamlined the Blue Cash rewards program to eliminate some confusing qualifiers.)