While 2024 gave many credit card holders the opportunity to earn incredible rewards or raise money for big travel plans, they also faced rising debt and an ever-changing interest rate environment.
As we approach 2025, there is still uncertainty about what the future will bring: new policies could impact the current state of card fees and rewards programs, interest rates will continue to change, and the value of benefits is constantly evolving.
Here are a few trends and predictions we’ll be looking for in the coming year.
Since the Federal Reserve began lowering its target federal funds rate range earlier this year, we’ve already seen a number of credit card interest rates drop. Of course, rates have not yet been reduced enough to ease the burden on cardholders with high-interest credit card debt.
In the new year, experts expect the Fed to cut rates further, but we’ll have to wait and see how quickly they do that and how low rates will go.
Related: How does the Fed affect your credit card interest rate?
At the 2024 Yahoo Finance Invest conference in November, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the Fed “will have to wait and see what the data says” to determine its 2025 interest rate decisions. Recently, some expert forecasts say that the frequency of interest rate cuts may slow down in 2025.
If the Fed cuts rates even further, you’ll likely see credit card interest rates continue to fall as well. But that doesn’t mean you’ll see a significant difference in your APR. The average credit card interest rate is still over 21%. Even if the Fed’s target interest rate range drops by a full percentage point or more, don’t wait to start paying down your balance. That won’t make a significant difference in your APR, and if you wait, you could get even higher interest rates. rising debts.
Learn about the best balance transfer credit cards that can help you pay off your debt now.
Even as interest rates fall, credit card debt and delinquencies are increasing. The New York Federal Reserve’s latest report on Household Debt and Credit shows that Americans have $1.17 trillion in outstanding credit card balances, up 8.1% from a year ago. While credit card delinquencies have improved somewhat, 8.8% of U.S. card balances still became delinquent (or more than 30 days late) in the third quarter of 2024.
“Looking ahead to 2025, this upward trend in credit card balances could continue,” Barry Coleman, vice president of program management and education for the National Foundation for Credit Counseling, said in an email to Yahoo Finance.
TransUnion’s 2025 consumer credit forecast also indicates that balances and delinquencies are increasing, but at a slower pace.
The credit bureau expects credit card balances to rise 4.4% year-over-year by the end of 2025 (up from 18.5% in 2022 and 12.6% in 2023). The number of delinquencies is also expected to increase much more slowly in 2024 and 2025 than in 2022 or 2023.
The exact trajectory of credit card debt will depend on changing economic conditions, Coleman says, such as changes in interest rates and consumers’ spending habits. “However, a moderation in inflation could reduce dependence on credit cards to cover daily household expenses. In addition, credit utilization may remain high as credit card issuers show no significant signs of tightening credit standards.”
A number of travel programs have already announced changes that will impact cardholders from 2025 onwards.
The first is cardholder access to Delta SkyClubs. As of February 1, 2025, the following limits apply to certain American Express cardholders:
Alaska Airlines is also changing its loyalty program. The airline’s revamped rewards program is getting several updates, from new milestone rewards as you work toward elite status, to the ability to earn elite qualifying miles on award flights with Alaska and its partners.
In addition, cardholders receive an extra boost. In addition to the miles you earn for spending with the Alaska Airlines Visa® Credit Card, starting January 1, you’ll also earn one elite qualifying mile for every $3 in purchases (up to 30,000 EQMs per calendar year). 2025.
If you are a Capital One cardholder, you may have limited access to Capital One Lounges in 2025. Starting January 1, you will no longer have free access to Capital One Lounges with a Capital One Venture Rewards Credit Card or Capital One Spark Miles for Business Card. However, you can still pay $45 for access to Capital One Lounges instead of the standard rate of $90.
Find the right map for your travels in 2025: The best travel credit cards
Cardholders still face the risk of having their identities stolen and new accounts created in their names – and that risk won’t go anywhere in 2025. If you fall victim to account fraud, it can not only cost you money but also negatively impact your credit score. in danger. Data breaches can still leave you vulnerable to identity theft. When your username and password for a site are leaked, fraudsters can use your information to create new accounts in your name.
“These risks are real and will continue into 2025 and beyond,” said Eva Velasquez, president and CEO of the Identity Theft Resource Center.
And the risk isn’t just online. While mobile wallets and contactless payments have made point-of-sale transactions much more secure, you should always stay aware of your surroundings and protect access to your card information.
“We’re also starting to hear more about what I call sort of traditional tactics, or old-school tactics that are making a comeback,” Velasquez said. “It’s things like the theft of physical cards, either by taking them out of your wallet or even taking them out of the mail, just stealing mail, that still happens.”
Read more: 6 tips to prevent credit card fraud and scams
Even if cardholders may get a little break from high interest rates, they will still face fees in the new year.
Interchange fees are a hot topic among banks and merchants who accept credit card payments. These “swipe fees” are paid by merchants to credit card networks to process each card transaction.
Credit card networks – the largest in the US are Visa and Mastercard, although American Express and Discover are also major networks – tend to update these charges regularly. While fees charged by card networks don’t always directly affect you as a cardholder, they can cost you if merchants increase purchase prices as a result. On the other hand, these fees can be used by issuers to offset the cost of rewards and benefits.
The Credit Card Competition Act, which was first introduced by Congress in 2022, could impact swipe fees in the future. It would require credit card issuers to allow transactions over at least two networks (and only one of them could be Visa or Mastercard). There has been little movement on the bill this year and no vote on it – although it was the subject of a recent Senate Judiciary Committee hearing in November 2024.
Related: Credit Card Fees Explained – 8 Types You Need to Know About
We wouldn’t be surprised if we see higher annual costs in the coming year as well. There’s no guarantee that annual rate increases are on the horizon, but as the cost of providing rewards and benefits for issuers and their partners rises, so can your annual compensation.
We already saw rising annual fees in 2024. For example, one of the most notable was the fee for the American Express® Gold Card, which increased from $250 to $325 (see rates and fees) – while also adding several new benefits to enable smart to help cardholders offset costs.
Related: Is the Amex Gold Card Still Worth It? Look what’s changed.
Also look for more premium credit cards, especially among the co-branded travel cards. Alaska Airlines, for example, has teased a new premium credit card option that is expected to launch next summer.
And as recently as November, Delta Air Lines president Glen Hauenstein hinted at possible future premium card options within the airline’s partnership with Amex: “…okay, we have the Reserve card, but is there even a better card? So that’s where we put our thinking hats on. Never stay satisfied.”
Read more: Best airline credit cards
2024 saw some major shakeups at major banks and travel companies, such as the proposed acquisition of Discover by Capital One and the merger between Alaska Airlines and Hawaiian Airlines. We haven’t seen the immediate impact of these deals yet, but they could become clearer to cardholders in the new year.
For example, adding Capital One cardholders to Discover’s payment network could make a huge difference in the size of the network compared to the other major US competitors (Visa, Mastercard and American Express). However, the deal between the two banks is still in the regulatory process and has not yet been finalized.
So far, Capital One says it will continue to offer Discover credit cards. However, post-acquisition there is always a chance for new card offers as well as other features and benefits on existing cards.
Read more: How Capital One’s acquisition of Discover could affect you
Alaska Airlines and Hawaiian Airlines are not credit card companies, but they both have loyalty programs and co-branded credit cards for customers. The loyalty programs will eventually merge, although the airlines say more details will be announced in mid-2025. Cardholder benefits (free checked bags, companion fees, etc.) only apply to the airline you opened the card with. In the meantime, you can transfer miles at a 1:1 ratio between programs and get an instant status match (or potentially higher status if you combine Elite-qualifying miles earned between programs).
And there are always opportunities for more business moves. Reports earlier this year pointed to JP Morgan Chase in talks with Apple about acquiring Goldman Sachs’ credit card, for example.
This article was edited by Alicia Hahn
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