Credit Card Rewards Battle Continues as Customers Seek Better Programs, J.D. Power Finds
Discover Ranks Highest in Overall Customer Satisfaction among Credit Card Issuers
COSTA MESA, Calif.: 16 Aug. 2018 — As credit card customers drive up credit card debt to an all-time high, more of them are switching cards for a better rewards program, according to the J.D. Power 2018 U.S. Credit Card Satisfaction Study.SM The study finds that 47% of credit card customers who switched to a new card within the past 12 months did so for a better rewards program.
“Competition is fierce among credit card issuers to provide ever-richer rewards,” said Jim Miller, Senior Director of the Banking Practice at J.D. Power. “Banks are experiencing record expenses related to the increasing rate of customers redeeming their rewards. To manage profitability, some issuers have eliminated or reduced card benefits. The key for issuers in this highly competitive environment is to make sure they are offering the types of benefits that resonate with current and potential customers. Most customers are aware of only a handful of benefits and use just nearly two of them, so there is room to simplify the benefits offered. It is better to have customers fully understand their benefits rather than provide benefits of which customers aren’t even aware.”
Following are some key findings of the 2018 study:
- Reward value directly linked to satisfaction: The reward amount a customer earns per dollar spent on a credit card is the greatest driver of satisfaction with the rewards program. Overall satisfaction scores among credit card customers with the highest level of satisfaction with amount of rewards earned per dollar spent is 170 points higher (on a 1,000-point scale) than among credit card customers with average satisfaction. Customers with the highest satisfaction are also the least likely to switch card companies.
- More than one-third of credit card customers do not understand rewards programs: Overall satisfaction scores among credit card customers who fully understand how to earn and redeem rewards is 101 points higher than among those who do not fully understand their rewards programs. They also spend an average of $307 more per month than those who do not fully understand their rewards ($1,291 vs. $984, respectively). Despite this, 36% of credit card customers say they do not fully understand the rewards available to them.
- Free credit scores emerge as valuable perk: One of the most popular benefits to emerge in the past few years is a free FICO or credit score. Satisfaction when customers receive a free FICO/credit score with their card is 43 points higher than among those customers who do not.
- Digital channel plays key role: Use of a credit card mobile app is associated with a 25-point increase in customer satisfaction, although just 39% of customers are currently utilizing credit card mobile apps. Among those who do use mobile apps, the most frequently used features are viewing transactions/account information and making payments.
- Older customers more satisfied after transitioning to digital billing: Although younger customers (under age 40) have been quicker to adopt digital billing, the effect of switching from paper to digital billing is most pronounced in the over-40 population. Among customers 40 years old and older, satisfaction increases 23 points when customers switch from a traditional paper bill to digital billing. That differential is just 1 point in the under-40 population.
Credit Card Customer Satisfaction Rankings
Discover ranks highest in customer satisfaction with a score of 836. American Express (830) ranks second and Barclays US (806) ranks third.
The U.S. Credit Card Satisfaction Study, now in its 12th year, measures customer satisfaction with credit card issuers by examining six factors (in descending order of importance): interaction; credit card terms; communication, benefits and services, rewards, and key moments. The study includes responses from 24,018 credit card customers and was fielded from September 2017 through May 2018.
For more information about the 2018 U.S. Credit Card Satisfaction Study, visit http://www.jdpower.com/business/resource/us-credit-card-satisfaction-study.
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. J.D. Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.
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