Another research conducted by a credit card comparison site called CardHub discovered that this year, customers will continue to use their credit cards as many of them are finding it difficult to take out loans. The report also showed that Americans have an accumulated $48 billion new credit card debt in 2011 alone – that’s more than 400% the amount customers charged in 2010. The good news is that a majority of outstanding rose only by $4 billion, with most of it coming from payment defaults. The report shows that credit defaults are relatively insignificant and the new debt added last year have a good chance of getting repaid. As such, the increasing demand for credit services is clear indication that the credit industry is on the rebound.

In an interview Greg McBride, financial analyst for a leading credit card website said that many credit card users have been writing off their bad debts in 2009 and 2012 in order to grow their businesses. Because of this, card issuers have denied some applications for credit cards. But as repayment increases, credit card companies are now more willing to expand their reach.

At present, many companies are now offering mobile payment and online ventures. For example, Visa Inc., the world’s largest payment processor has recently offered a digital wallet wherein customers can pay for their online purchases through a user name and password, instead of having to type in their credit card numbers. Through this feature, clients can protect their account, as well as be able to make purchases more conveniently. Visa hopes to develop their V.me service so that customers can make in-store purchases using their cell phones. Such a service is now being offered by MasterCard and MobileLime.

Five Star Equities, owner of CardHub, performs regular analysis of the credit industry in the hope of providing credit card companies information on growth opportunities, and areas with high potential for return. They produce independent researches in order to provide the most up-to-date information about the credit card industry. Five Star Equities has recently made the entire report discussed in this article public, and may be downloaded through their company website.

With the CARD act coming into play, credit card lenders do not have the liberty of increasing the annual percentage rate on the credit cards arbitrarily. They have to mandatorily give customers a 45 day notice to intimate them about the forthcoming changes so they can either be prepared for it or close the card if they are not willing to accept it.

Another stipulation of the act says that the lenders cannot increase the rates without any rhyme or reason. They can increase the interest rates only if the customers have not been making their payments on time or have defaulted many times in the past. Even when the banks do increase the rates in such cases, it has to be only on the fresh expenditure made using the card and not on the existing balance. It is also imperative for credit card issuers to review customers accounts once every six months and reduce the rate of interest if they have been paying their dues consistently on time. Also, if you have multiple cards with the same lender, banks cannot increase the rate of interest on both cards if you have defaulted only on one. Another important stipulation of the CARD Act is that customers cannot be charged an over-the-limit fee if they have not opted for the overdraft facility.

Despite all these changes brought about by the CARD Act, there are a few loopholes that the banks are still exploiting to their benefit because of which this act seems ineffective. This act does not prohibit the lenders from closing the credit card accounts or reducing the credit limit without informing the customer in advance. Also, this act only offers protection for consumer cards and not for small business credit cards.

Any rewards doled out as a bonus for opening up a new bank account, for instance, count as income and may be subjected to taxation. If the value of such rewards total $600 or more, the bank that issued them must mail out 1099 tax form to both the recipient of the rewards and the IRS. Citibank, in fact, has been busy sending 1099-INT forms to eligible checking and savings account customers who earned over 25,000 American Airlines miles over the past year as a bonus through new account recruitment initiatives. Citi reported that each mile has a value of 2.5 cents.

However, rewards earned the “traditional” way, via making purchases with a rewards program credit card, are tax-free. This is because these types of rewards, cash back and others, are categorized by the IRS as a discount on the price of the goods and services purchased – much like a coupon.

“Rewards and airline miles that are provided in connection with a purchase on a credit card are routinely not subject to individual income tax reporting,” said a spokeswoman from Citibank, Emily Collins, in an e-mailed statement, according to one online news source.

The mandatory reporting threshold for the IRS is $600, which is why reward point bonuses have not heretofore often been subjected to taxation. However, as competition amongst credit card issuers grew stiff throughout the past year, lenders were continually upping the ante in their efforts to lure new, creditworthy customers into opening up a credit card account by offering them enticing bonuses simply for signing on.

The IRS is always coming up with new ways to prevent Americans from underreporting their income, which creates what is known as a tax gap. The tax gap is the difference that exists between the amount that is owed and the actual amount that is paid. According to the IRS, 82% of the tax gap is due to taxpayers underreporting their income.

In their efforts to decrease the instances of underreported income, the IRS is introducing a new tax form this year, the 1099-K, which will affect individuals who sell goods or services online and receive credit card payments via PayPal or similar merchant accounts.

If you are a consumer who is looking for a holiday deal, many credit card companies are offering great sign on bonus in order to make our holiday balances a little bit smaller.

Here are some of the best credit cards to use this holiday season.

1. Chase Freedom Rewards Card. Consumers who sign up for this card can take advantage of $200 cash back if they spend $500 within the first three months. This card does charge interest, if you are looking for an interest free credit card, there is another version of the Chase Freedom Rewards Card that gives $100 cash back, and zero percent interest for six months.
2. Citi Dividend Card. Consumers can get $100 cash back when they sign up for this card during the holiday season. This is the perfect card for those looking to pay off their holiday bills over time, as well s those who have high interest rate balances on their cards. The Citi Dividend has zero percent interest for the first 15 months for balance transfers and new purchases. To be eligible for the $100 cash back, consumers must spend a minimum of $500 in the first three months
3. Discover More Card. There is a $150 cash back bonus available for new cardholders. The spending minimum is a little higher than the other cards mentioned, as consumers are required to spend $1,000 in the first three months of having the card. Upon doing this, the customer will be eligible for the $150 in cash back. This card also offers six months of interest free purchases and balance transfers.
4. Citi Diamond Card. For a certain amount of time, the Citi Diamond will be offering $200 in rewards. This is different from the other cards mentioned, as it is not cash back, but rather rewards. The credit card is also zero interest on purchases and balance transfers for the first 18 months.

The holiday season is a time of spending, and if spending needs to be done, its important to consider getting the most for your money by exploring cash back and rewards offers.