It was only last week that this blogger accused credit card companies of operating within an oligopoly. He was arguing that, partly because the barriers to entry into the credit card market are so high, card issuers have no reason to compete against each other over fundamentals. Instead, they vie for market share mostly around introductory offers and credit card rewards programs.

Credit card companies do compete

Well, maybe things are changing, because Citi’s new product, the Citi Simplicity® Card, really does seem different. And it’s well-named: it may be the most simple, transparent and predictable card out there. Here are a couple of headline features:

• No late fees – ever
• No penalty rates – ever

Wow. Nobody was expecting that. And there’s more:

• A 0-percent introductory APR for 18 months on balance transfers and purchases. There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
• No annual fee.
• You have access to a real, live human being at a call center without the traditional long wait.

Credit card rewards enhanced for small businesses

The day after Citi’s new card was unveiled, Chase announced that it was upgrading the credit card rewards it offers to small businesses that use its Ink Cash Business Card product. A press release from the issuer promises that the new benefits will be made available to existing cardholders “in the near future.”

In brief (so read the small print before you apply), the new deal gives:

• 5 percent cash back on the first $25,000 a year you spend on office supplies and telecommunication and cable services
• 2 percent cash back on the first $25,000 a year you spend on fuel and lodging
• 1 percent cash back on all other purchases with no spending limits

The same deal is available on the Chase Ink Classic card, but for that product read “points per dollar” instead of “percent cash back” in the above list. Neither of these credit cards has expiration dates on the cash back or points you build up, nor annual or over-limit fees.

Credit cards getting better?

So does this all this mean that credit cards are getting better overall? It’s too early to make that call, but we may be seeing signs that hot competition is driving credit card companies to create more consumer-friendly products. And, if that’s the outcome, your blogger has absolutely no problems with being proved wrong.

Published 07/27/11 (Modified 01/30/24)