Posted by William Charles on January 10, 2018
Misc

Published on January 10th, 2018 | by William Charles

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Predictions For 2018: Savings Hit 2% APY, 2%+ Cashback Cards Will Disappear, Negative Companion Pass Changes & More

Every year I like to make a list of predictions for the upcoming year, we are getting into the swing of things for January so I thought it was a good time to finalize my predictions for 2018. You can see the predictions I and other sites made for 2017 here. You can also see a rating of my predictions and other sites predictions for 2017 here.

Other Sites Predictions

Below is a list of other sites that have made predictions for 2018 in this space. If you’re a blogger and have made some predictions, let us know in the comments so I can add it here. This list is oldest to newest.

My Predictions

Best Basic Savings Rates Will Hit 2% APY

This one should be fairly self explanatory but I think the best savings account with no requirements will be over 2% APY at years end. This doesn’t take into account rewards accounts that are already at up to 5%.  The current highest rate is 1.65% but that requires a $50,000 balance. The highest without a balance requirement is 1.6% so I’m predicting an extra 0.4%, although I think that would be on the lower side of the movement we see. This might make things like balance transfers and 0% introductory APR offers more attractive as well.

2%+ Credit Cards Will Be A Thing Of The Past

Believe it or not I wrote this before the USAA Limitless and JCB cards were discontinued. But I don’t think offering 2%+ cash back on all purchases is sustainable long term (when I say this I’m talking about cards that earn 2.01% cash back or more, not cards that earn at the 2% level). Because those two are already out, my prediction is really that the Alliant 3%/2.5% card will be no more. The card was launched in March and I think they will see a lot of cardholders cancel after the first year, the cardholders that keep the card will be big spenders that are unprofitable for Alliant causing them to rethink this strategy. I’d say the card will likely be changed by June or July.

Southwest Will Announced Negative Changes To Companion Pass For 2019

I think the companion pass is just too valuable for Southwest to keep offering, especially when you can effectively get it with two credit card applications. The pass will only get more valuable when Southwest adds service to Hawaii. My guess would be that the amount of points required will increase, credit card sign up bonus points won’t count or some other negative change will occur. I think 2018 will just see an announcement made that qualification for the pass will change for the 2019 year.

Mobile Wallets Will Dominate

In 2017 we saw some promotions for mobile wallets like Samsung Pay and more recently Chase Pay. This area is just getting warmed up, expect to see all of these companies spend a significant amount to try and grab market share as spend on mobile wallets skyrockets. I made a similar prediction last year, but this year it’s really going to kick up a notch.

Final Thoughts

I’d love for readers to tell me what their thoughts of my predictions are in the comments. I’d also love to read your own predictions for 2018.



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Abey
Abey

Bitcoin will reach $50,000 🤪

JoeHx

That would be nice. I feel like this is the year of the alts. Not that I’ve “invested” any money in any of this speculative stuff…

Danny
Danny

More like $800,000 per coin.

Ry5
Ry5

Ethereum will reach $10,000. Although I don’t know that I would be able to hodl past $5,000…..

Vic
Vic

Given the trend of the first two weeks of 2018, I do feel the same way. Some said that the price of ETH exhibit the characteristics of being de-coupled from BTC, which is a good thing.

Max
Max

The bubble bursts and this commodity is worth nothing. It’s not even classified as a currency since it’s a terrible currency, with miners being able to hike up transaction fees. And as a commodity, you can’t burn it and power stuff, and you can’t make stuff from it, and it isn’t shiny.

Worship and Fear the Great God Luck for any penny earned in its rampant speculation.

Joe B
Joe B

XRB has no miners, is instant and free. BTC is a dinosaur.

Ferris
Ferris

The elite have already decided Bitcoin is not the chosen one. It will likely never surpass 20,000, ever. There are a few other coins being targeted.

Chucks
Chucks

Not with the core team crippling blocks and trying to turn bitcoin into a banking network while censoring all dissent. Bitcoin Cash or something else will take over

Steven
Steven

The one card that I think will continue to offer 2%+ returns on non-bonus spending would be the BofA Premium Rewards card — they very cleverly made it so that the high level returns only apply for people who keep substantial balances with the bank (or Merrill Lynch) – which reduces the costs for them in two ways – 1) they’re making money on those people in other ways and 2) they limit the number of people who can get the higher payout rates.

perfectviking
perfectviking

Exactly this. I think we’ll see more banks go to this tiered earning structure like BofA. It encourages stickiness and may reduce customer churn.

Fork
Fork

> They’re making money on those people in other ways
I dunno… those 100 free trades a month isn’t making them much money either

Jason
Jason

My predictions for 2018: Paypal will shut down.

Ron
Ron

Agree!!

Abe
Abe

PayPal will not shut down. Synchrony Bank already agreed to acquire their credit card portfolio which will free a chunk of their funds for more cashflow, they’ll focus more on mobile payments.

bbug1
bbug1

Couldn’t predictions of negative changes pave the way for those changes to be adopted? A card issuer, for example, could get an idea it hasn’t already had or, if it has, decide to implement it because it is already expected.

Rudi Pittman
Rudi Pittman

No one mentions the citi bank doublecash card where it pays 1% and then a 2nd 1% when you pay it off. That’s my fallback card when I can’t get it into another rotating category however I guess I’d then fall back to my quicksilver 1.5% card which hasn’t seen much use in a while. The citi card is also really valuable since all warranty’s for items purchased fully by it are automatically extended for a full 24 months irregardless of how long the manufacturer’s warranty is. (ie a 90 day and a 1 year warranty item both will get a full 24 months added).

wesz
wesz

I just got an email from citi bank promoting their 2% cash back on their doublecash card

Ewejay
Ewejay

The prediction in this article is regarding 2+ %. There are multiple 2% cards available so I doubt unbonused spend will drop below that (DC, Fidelity, PenFed, PSECU, whatever FNBO is calling their card this month, plus the AF “travel” ones like Venture and Arrival+, etc.).

Rudi Pittman
Rudi Pittman

Thanks for the clarification cause where I come from 2+ means including 2 and up where >2% means greater than 2%.

JustinW
JustinW

There are actually a few cards that give 2% cash back with no annual fee. Citi has one, Penfed has one with a direct deposit, Blispay, Paypal. Not to mention ones that give 2% with an annual fee of some sort. I think the prediction is more of we’re not going to see new greater than 2% cards coming to market, and the one that is here the Allliant will likely be discontinued. I’d agree based on USAA pulling the plug on their product before even going nationwide with it.

The transaction fees that banks get paid are right around 2-3% so anything greater than 2% cashback to the consumer doesn’t leave much room for a card to be profitable.

Rudi Pittman
Rudi Pittman

We may see more of the “temporary jumps” as just recently the capital one quicksilver which normally pays 1.5% offered me one quarter of “double cashback” to encourage use of the card.

David
David

PenFed Power Cash Visa Signature Card

• Sign up bonus: spend $1,500 within 90 days get $100 statement credit

• 1.5% cash back on everything

• 2% cash back on everything for all PenFed Honors Advantage members (this can be easily achieved by maintaining $500 in your checking account)

• Redemption starts at $5 or spend $250

• Cash back expires in 5 years

• APR 9.74% to 17.99%

• No annual fees

• No foreign transaction fees

I think this card is better….

Rudi Pittman
Rudi Pittman

Citi Doublecash still beats this one. Flat 2% (1% when you purchase and 1% when you pay) which is credited right then so nothing expires. No annual fee. No need for money in a checking account. The exception may be for folks who churn cards for the signup fee’s. I personally don’t do this..my goal is just to have the credit card companies pay ME to use their card so all cards auto pay full balance at the end of the month. This also means I only need a credit limit large enough to handle 1 month. (if you are keeping balances on the cards paying higher interest rates you might as well not have a cashback reward)

David
David

However the aforementioned credit cards have a foreign transaction fee.

The PenFed credit union power cash visa signature credit card is great traveling credit card to be used for non-traveling category expenses.

After 6 years using the PenFed credit union power cash visa signature credit card the $500 pays for itself rather than paying for the $95 annual fee of most travel credit cards i.e. Chase sapphire preferred credit card.

Charlie
Charlie

You don’t have to keep $500 in a PenFed account to earn the 2% on Power Cash Rewards. All you need is a PenFed Access America checking account. I use my PenFed checking account as my primary checking account, and I run the balance down to zero at the end of each month, and I get the 2%.

David
David

I know that, just don’t want to hassle with the direct deposit changes with my employer

Abe
Abe

Really hope the Southwest prediction falls I’m hitting on getting my pass 😢😢

Justin
Justin

I agree on the SW CP front. I wonder how many people legitimately earn the pass. And those who do probably don’t earn it until the second half of the year and then have 18 months or less to use it. The easiest fix would be not allowing SW pts to count towards the CP, but not sure if Chase would be happy with the huge inevitable drop off in apps.

Brad

I’ve been expecting those negative SW CP changes for 4-5 years now and they never actually happen.

Parts Unknown
Parts Unknown

Revenue based redemptions. Most all airlines have switched to revenue based mileage earning, it only follows that eventually the redemption process aligns with that. So if you’ve earned 70,000 miles, instead of booking that premium one way international first/business seat for free you’ll be getting $700 off airfare, or something similar.

WR
WR

Please no, but sadly I think things will eventually come to that, at which point this game is effectively dead for me. I just hope it will be several years before a significant number of airlines do this.

Lrdx
Lrdx

That’s Delta SkyMiles right now.

Blue
Blue

I’d actually prefer that. I rather fly economy when and where I want to go, as opposed to scheduling my life around business class tickets. That’s what great about Southwest, you can get on any flight without having to book 9 months in advance.

scott
scott

Interesting prediction about the SW Companion Pass. I thought by now those types of negative changes would already have taken place. Especially when they started flying to the Caribbean and Latin America. But not only has nothing changed, things have gotten easier. SW was practically giving passes away to those in California recently and many flights to the Caribbean are very cheap, at least from FLL. So they must have a reason for making this so easy.

Scott
Scott

I would predict more of the credit card promotions like AMEX where you get bonus money back for shopping at a specific retailer.

Jamie
Jamie

Mobile wallets will dominate?
I predict that in January 2019, you will once again declare it the year that mobile wallets take-off (“this time I really mean it”).

Tyler
Tyler

Great article! I am hoping in particular that your prediction about the Companion Pass is not correct as I have grown accustomed to this perk! One thing that gives me pause is the recent offer in California for the companion pass. What are your thoughts on this? How can this possibly make financial sense for SW? Thanks!

esdot
esdot

This could make financial sense for SW. (1) When flight loads are between 80-85%, providing a free seat often does not cost anything as most costs per flight are fixed. So SW is giving away something consumers all find valuable, while it doesn’t necessarily cost SW anything. (2) While SW doesn’t incur costs, CP does impose costs to (or reduce revenue for) its competitors. SW is in a known battle for CA and is trying to curb Alaska/Virgin’s strategy to grow market share in CA. Both SW and AS have increased route frequency and launched new routes in CA, which to the first point lowers flight loads. The targeted CP promotion to Californians suggests CP provides competitive advantages. (3) CP permits SW to charge higher fares. I just did a random search for a LAX-SFO round trip. AS is $79; SW is $114. CP holders fly SW, but how much did SW really lose? Focusing on the two hypothetical passengers alone, SW either has $114 in revenue or AS has $158 in revenue. Considering the entire plane, SW may even have generated more revenue since non-CP holding but loyal SW passengers routinely pay the premium. (4) SW benefits from years of building a reputation as a low-cost alternative, regardless of whether that remains true. Those loyalists often don’t even price compare now. CP essentially guarantees brand loyalty, as it creates further economic irrationality at times. As an example CP holders are more likely to fly more than they would have. And SW is assured that those flights will be on SW metal. (5) All that said, SW did make CP more difficult to obtain last year by eliminating CPs through Marriott travel packages, so I’m pretty sure they know exactly what they’re doing with CP.

Tyler
Tyler

Good comments! Thanks for the insight! So do you believe that the companion pass will get still harder to obtain in 2018?

5150
5150

>2+% cards such as Alliant going away…..Makes me wonder didn’t these “smart” Bankers know this when they started it and got it approved? How did they argue it would succeed? What was their business plan?

Lrdx
Lrdx

I don’t think 2+% cards will go away; but they might be moving to a relationship-based eligibility / redemption, like BofA cards. I think Alliant will be just restricting the card.

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