The COVID-19 pandemic’s impact on financial health has been just as if not more concerning to many customers as its effects on literal health. Many individuals, families, and businesses have struggled financially over the last 5-6 months, and unfortunately, it’s looking like these struggles will reverberate across the credit and loan repayment world in big—and unprecedented—ways.
While it’s true that government assistance has somewhat helped some customers bide their time, many financial institutions still anticipate that the Coronavirus has created long-term problems when it comes to credit payments and paying back loans. This is especially true for credit, which many customers have had to rely on to tide them over until they can return to work or find a new job.
The point here is that the pandemic has fundamentally changed why customers seek out credit cards. It used to be that customers typically considered the perks when it came to choosing a credit card: travel rewards, hotel rewards, club access, and the like.
Now, though, customers are less concerned with fun perks for tomorrow than benefits that can fit their needs right now. Today. The result has been a shift in customer taste toward credit cards that offer:
- Cashback rewards for groceries, gasoline, utilities, and other necessities
- Cards that offer discounts on or savings for necessity shopping
- Consumer rewards that can be spent immediately
Though it can be said that customers are also less interested in travel perks because of the pandemic’s effect on vacationing and airlines, the primary reason that they’re shifting toward credit cards that offer cashback and immediate reward perks remains because of the aforementioned economic woes that this crisis has brought with it. This brings us back to the long-term credit payment problems I mentioned earlier, and what card providers can expect customers to want for the foreseeable future.
For a start, and perhaps to no one’s great surprise, customers are currently gravitating toward the cards that offer the most generous forgiveness for missed payments and deferrals. The COVID-19 pandemic has afforded many customers almost no flexibility in that area, which has many of them on the lookout for perks like this.
Similarly, customers are looking for cards that are forgiving when it comes to late payments, as well as that have low minimum payment requirements and interest rates. To many customers, especially individuals who have been laid off, these benefits are a must because they afford a great deal of flexibility at less cost. As we mentioned earlier, these perks have become far more attractive than travel or leisure benefits in a remarkably short time.
Finally, customers have also become far more attracted to credit cards that do not punish or inhibit frequent balance transfers. The pandemic has forced many customers to move their money around in order for lower interest rates, promotional interest rates, etc., and so transfers like these have become much more common recently. A card that can accommodate that need will be a winner among pandemic-era customers.
In short, COVID-19 has had a far-reaching, perhaps permanent, effect on credit and how customers see it. Customers have become less concerned with the extravagance that some credit cards can provide and more interested in cards that can help tide them over until a new job arrives or the day-to-day challenges of living amid a pandemic subside. The financial brands and card lenders that can adapt to this shift will set themselves up for short- and long-term advantages over their competitors, and for the opportunity to provide a meaningful, difference-making experience for customers.
Want to learn more about how COVID-19 has perhaps forever changed financial services and what they mean to customers? Check out my recent article on how financial services can thrive, not just survive, during and after the pandemic here.