Amex voted top card issuer
Brand tops US customer satisfaction survey for fourth consecutive year
American Express has been voted the credit card issuer with the highest level of customer satisfaction for the fourth year in a row.
The J.D. Power and Associates 2010 US Credit Card Satisfaction Study found that Amex ranked highest with a score of 769 and performs well across all six factors that drive satisfaction. Discover Card follows with a score of 757 and performs particularly well in the interaction factor.
U.S. Bank ranks third with a score of 727. The common denominators of performance among the highest-ranked issuers are exceptional rewards and benefits offerings; superior service experiences across phone and online channels; and a focus on reducing problems and resolving those that do occur with minimum time and effort for customers.
Amex, Discover Card and U.S. Bank were rated as above average, while HSBC, Citi Cards and Capital One were given below average ratings by customers.
Overall customer satisfaction with credit cards has rebounded from a three-year low in 2009, but professed loyalty continues to slip as skepticism that card issuers are focused on customers’ best interests remains, according to the J.D. Power and Associates 2010 U.S. Credit Card Satisfaction Study.
Overall credit card satisfaction in 2010 averages 714 on a 1,000-point scale, up 9 points from 705 in 2009. However, customers who say they “definitely will not switch” primary cards in the next 12 months continues to decline, averaging 22 percent in 2010, down from 25 percent in 2009 and 30 percent in 2008. While customers perceive card issuers as “financially stable” and even “reliable,” they are significantly less likely to view them as “customer driven.”
“Despite massive efforts by the credit card industry during the past year to educate customers about credit card terms as a part of the CARD Act, customers’ grasp of those terms continues to be elusive,” said Michael Beird, director of banking services at J.D. Power . “Sixteen percent of card customers report that they did not receive CARD Act disclosures. Among those who did, only two-thirds state that the disclosures improved their understanding of how the act affects their individual circumstances. Furthermore, only one-third of cardholders say they ‘completely’ understand their credit card terms.”
According to the J.D. Power Web Intelligence Division, online consumer conversations about credit cards indicate that many of those consumers perceive their relationships with credit card companies as an ongoing game of “cat and mouse,” with each side trying to outsmart the other. Social media discussions regarding credit cards also indicate that many consumers view even CARD Act disclosures with cynicism.
The study, now in its fourth year, measures customer satisfaction with credit cards by examining six key factors: interaction; credit card terms; billing and payment process; benefits and services; rewards; and problem resolution. The increase in overall satisfaction from 2009 is driven primarily by improvements in satisfaction with credit card terms and billing and payment process. The largest increase in satisfaction with credit card terms is among revolvers, or customers who typically carry account balances from month to month. In contrast, satisfaction among transactors, or customers who always or usually pay their entire credit card balance each month, has declined slightly, compared with 2009.
“It appears that revolvers are expressing a perception that ‘it could have been worse,'” said Beird. “Although 29 percent of revolvers report experiencing a rate increase in 2010, compared with 24 percent in 2009, the increase was less obvious than among transactors – 21 percent of transactors report a rate increase in 2010, compared with just 13 percent in 2009. In addition, revolvers, who tend to be more sensitive to fees and rates, are significantly more likely to say that CARD Act disclosures improved their understanding of their credit card terms.”
The 2010 U.S. Credit Card Satisfaction Study is based on responses from more than 8,500 credit card customers. The study was fielded in May and June 2010.
While the credit card industry has suffered from significant account attrition and in some cases decreased spend per card since the recession, rewards programs continue to be integral to the market’s success, according to Rewards Cards in the U.S., 3rd Edition by market research publisher Packaged Facts. Rewards remain a cornerstone of American Express and Discover, while among some of the biggest card issuers in the country, Visa- and MasterCard-branded rewards programs are either being refreshed or are being brought to market for the first time.
“The recession has brought tremendous upheaval to the industry, which has worked aggressively to counteract the financial consequences of the Credit CARD Act and the close of an era where loose credit was the norm,” says Don Montuori, publisher of Packaged Facts. “We don’t believe the trend toward significant account attrition has played itself out yet. But we ultimately predict that though the number of credit cards in force will continue to decline into 2011, rewards will selectively play a more important role than ever before.”
The degree to which cardholders are rewarded is an important issue facing the industry. The answer will be driven more and more precisely and selectively by the return that cardholders generate for card players based on how much cardholders spend, where they use their cards, and whether they are willing to pay for better rewards. It’s a quandary that is already being addressed by the marketplace, but will also continue to shape the industry in the future as reward programs become less egalitarian with larger returns in percentage terms dictated by cardholder behavior. The “losers” in the rewards game will be lower spending and higher risk cardholders, whom the market has already deemed marginal returns on investment, comments Montuori.
One countermeasure to the recession has been a move “upstream” by positioning rewards-driven programs to more affluent, more creditworthy customers who promise returns in the form of increased transactions per card and increased usage at points of sale where cash and checks still hold sway. Based on such efforts, Packaged Facts forecasts the percentage of rewards-based credit cards will grow incrementally from 76% of all general-purpose credit cards in 2009 to 77% in 2010 before reaching 82% in 2013.
Though affluent consumers are perhaps the most obvious targets of the post-recession credit card industry, younger consumers who have jobs are also attractive prospects. Millennials are currently avid debit card users, but as they enter what historically are peak credit-using years it’s unknown whether they will migrate to credit cards. As a result, some credit card players are introducing products that provide a needed link to younger debit-driven consumers and position their charge cards as debit alternatives. For instance, American Express recently introduced the ZYNC Card, which functions as a pay-in-full charge card that allows cardholders to select bundles of rewards and benefits called “Packs” that are tailored to specific lifestyle interests and spending habits in categories such as music, fashion, food, travel and more.