Credit Card Customers Frequently Lack Understanding of the Terms, Benefits and Rewards Associated with Their Cards
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American Express Ranks Highest in Customer Satisfaction for a Seventh Consecutive Year
WESTLAKE VILLAGE, Calif.: 22 August 2013 — Although credit card satisfaction continues to improve, a large percentage of customers indicate they do not fully understand their card's terms, benefits and rewards program, according to the J.D. Power 2013 U.S. Credit Card Satisfaction StudySM released today.
The study, now in its seventh year, measures customer satisfaction with credit cards by examining six key factors: interaction; credit card terms; billing and payment; rewards; benefits and services; and problem resolution.
The study finds that customer awareness of earning and redeeming rewards with their credit card has declined year over year, with 59 percent of customers saying they "completely" understand how to earn rewards in 2013, compared with 66 percent in 2012. Furthermore, 33 percent of customers indicate they are unaware of the benefits associated with their card.
"Customers who use their card's benefits spend an average of $400 more per month on their card, compared with those who are aware of benefits but do not use them, so clearly this is an area of importance to card issuers," said Jim Miller, senior director of banking services at J.D. Power. "While most customers change cards for a better rewards program, they often don't fully understand the rewards offered with their current card. There is a clear opportunity for issuers to better communicate rewards programs and benefits to not only keep customers loyal, but also to attract new customers."
Fewer than one-half (47%) of credit card customers say they "completely" understand their credit card terms. Among these customers, 73 percent indicate a lack of clarity regarding interest rates, and 31 percent lack an understanding of late payment fees.
Despite low customer understanding of card benefits and terms, credit card satisfaction has improved for a fourth consecutive year. Overall satisfaction averages 767 on a 1,000-point scale, which is a 14-point improvement from 2012. The study also finds a lower incidence of interest rate increases, compared with 2012 (5% vs. 6%, respectively).
"The fact that the economy is improving and consumers generally feel better about their personal financial situations is certainly helping to improve satisfaction with credit card issuers, especially considering there was such instability in the industry just a few years ago," said Miller.
When surveyed about their financial outlook compared to a year ago, 27 percent of credit card customers indicate they are better off in 2013, up from 23 percent in 2012 and 20 percent in 2011. Conversely, 17 percent indicate they are worse off, down from 23 percent in 2012 and 29 percent in 2011.
The study also finds that the percentage of credit card customers indicating they use mobile apps or text alerts to interact with their issuer has increased slightly from 2012 (5% vs. 4%, respectively), driven primarily by increased usage among customers in the Gen X and Gen Y segments. Notably, credit card customers have been significantly slower to adopt mobile technology as an interaction method, compared with retail banking customers1 (5% vs. 19%, respectively). The slower adoption of mobile app technology among credit card customers may be related to a lack of desired functionality currently offered by credit card issuers. Mobile app features that provide the greatest lifts in satisfaction include viewing card benefits and features, redeeming rewards and receiving special promotions/offers. However, these offerings are currently available to less than one-fourth of credit card customers.
American Express ranks highest in credit card customer satisfaction for a seventh consecutive year. American Express achieves a score of 816 and performs particularly well in rewards; benefits and services; and billing and payment. Discover follows with a score of 812, performing well in credit card terms; interaction; and problem resolution. Chase ranks third at 783.
J.D. Power offers the following tips to consumers who want to get the most out of their credit card:
- Understand your card's benefits. Most credit cards offer at least one benefit, such as travel insurance coverage, purchase protection and fraud protection. Customer satisfaction increases significantly when customers are aware of the benefits that come with their card. Make it a point to find out what benefits your card offers and how to make the most of them.
- Choose a card that offers rewards you can use. Most credit cards offer rewards programs in the form of points, which are accumulated by using the card, cash back or rebates. You can benefit the most from a rewards program that gives you discounts or rebates from a retailer or supplier with whom you frequently transact business. However, these cards may also require an annual fee. Make sure the rewards you accumulate justify the fees you incur to carry the card.
- Take advantage of services offered online. Familiarize yourself with your card issuer's website. Not only can you quickly access such basic information as card balances and payment information, but you can also find information about benefits and rewards associated with your card and how to redeem them. Many credit card companies also offer mobile apps that offer special promotions to cardholders.
The 2013 Credit Card Satisfaction Study includes responses from more than 14,000 credit card customers and was fielded from May through June 2013.
1 J.D. Power 2013 U.S. Retail Banking Satisfaction Study
About J.D. Power
J.D. Power is a global marketing information services company providing performance improvement, social media and customer satisfaction insights and solutions. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. Headquartered in Westlake Village, Calif., J.D. Power has offices in North America, Europe and Asia Pacific. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power is a business unit of McGraw-Hill Financial.
About McGraw Hill Financial
McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com.
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