Good Gets Better: 10 Financial Predictions for 2014

Dec. 17, 2013 — -- intro: While 2013 was a solid year in personal finance, this coming year promises to be even better. As 2014 nears, look forward to expanded benefits, greater perks and an increasing effort by banks to educate consumers. Read on for NerdWallet's 2014 financial predictions.

quicklist:title: Non-traditional partnerships will increase text:Last year, more and more credit cards began offering perks beyond the typical one-time bonus and access to a card's online rewards mall. Certain American Express cards added a free year of Amazon Prime as part of the signup bonus; select Barclays and Discover cards offer free FICO score monitoring. Keep an eye out for more cards to try out such partnerships, perhaps switching between offers as they look for a good fit.

quicklist:title: Top perks become more widely availabletext: During the financial crisis, banks courted low-risk, big-spending consumers and were wary about lending to those with less-than-perfect credit. Now banks are again looking to serve a wider base of potential borrowers. Expect to see the same perks that banks used to woo the prime customers to become available to more people and at a lower cost. For example, the revamped GM Credit Card from Capital One is a World Elite MasterCard, with benefits like free upgrades to business class on some airlines and travel insurance. It also has no annual fee. Similarly, the no annual fee Barclaycard Arrival World MasterCard comes with exclusive events and concierge service, and isn't limited only to big spenders.

quicklist:title: Credit scoring will improvetext: Increasingly, consumers and lenders are realizing that the traditional FICO score may not be the best indicator of creditworthiness. As anyone with no credit knows, the current scoring system often leaves people who haven't taken out lines of credit in the lurch – even if they're otherwise perfectly able and willing to pay their bills. In 2013, TransUnion joined Experian in accounting for on-time rent payments when possible to better gauge whether someone should have a high credit rating. Look for credit rating agencies to expand the criteria in their formulas to be friendlier to people with no credit.

quicklist:title: 0 percent interest will be around for longer, and on more cardstext: The average length of a promotional 0 percent APR period rose from eight months in 2010 to 11 months in December, as banks shook off the financial crisis and began to court people with existing credit card debt. In 2014, 0 percent periods will lengthen and be available on more cards, as banks try to poach each other's interest-paying customers.

quicklist:title: Alternative lending won't be so alternative text: Small businesses have faced strict lending standards ever since the recession: because banks often ask for years of financial statements, recently launched companies have trouble getting loans. New startups have stepped in to match up potential borrowers with lenders willing to overlook history in favor of other measures of creditworthiness. Kabbage, for example, looks at small business' shipping records and even social media, while On Deck Capital looks at suppliers' records. With the prevalence of big data and a clear market need, look for startups like this to proliferate and become more mainstream.