Consumer credit card satisfaction rates drop
Higher rates and fees are major contributors to a decline in satisfaction among credit card holders, according to a new study by J.D. Power and Associates.
American Express had the highest cardholder satisfaction levels for the third consecutive year in the US-based survey followed by Discover Card and National City.
The rate and fee increases are responsible for dropping credit card satisfaction to a three-year low, the 2009 Credit Card Satisfaction Study found.
The survey measures customer satisfaction with credit cards and reports the results in a 1,000-point index format, showing that satisfaction with fees and rates drops to 603 points — down 37 points from 2008 — contributing considerably to the decrease in overall satisfaction.
Nearly 20% of customers reported experiencing an increase in their interest rate since 2008, almost double the 10% who said the same in 2008. According to the study, the largest decline in satisfaction with fees and rates is among revolvers who carry a balance from month to month with a drop of 53 index points from 2008.
Nearly a quarter of revolvers report an increase in their interest rate from 2008. In addition, late payment fees, which have the greatest negative impact on satisfaction, were incurred by 14 percent of customers, compared with 11 percent in 2008.
“Overall satisfaction declines 86 index points when a customer incurs a late fee,” said Michael Beird, director of banking services at J.D. Power. “Issues with fees also contribute to the high incidence of problems and complaints in 2009, with 18% of customers reporting problems, compared with 10% in 2008.”
The survey measures customer satisfaction with credit cards by examining six factors: interaction, fees and rates, billing and payment process, rewards, benefits and services, and problem resolution.
Overall satisfaction
The study found that overall credit card customer satisfaction decreases to 703 on a 1,000-point scale — the lowest level since the study’s inception in 2007. Overall satisfaction among credit card customers remains the lowest across the financial services industries in which J.D. Power and Associates conducts research, including insurance, banking and investment services.
Other major findings from the study include:
• Proactive and clear communication is key to improving satisfaction among credit card customers. For example, when an interest rate change occurs, satisfaction scores are 97 index points higher when customers say they were notified ahead of time by the credit card issuer, compared with when customers say they were not notified in advance.
• American Express ranks highest among credit card issuers for a third consecutive year with an index score of 762. American Express performs particularly well in the rewards, benefits and services, and billing and payment process factors. Discover Card (751) and National City (740) follow American Express in the rankings.
• Effective communication with cardholders that reinforces the value of being a customer is a key best practice common among the high-performing credit card issuers. For example, 82% of cardholders with American Express are aware of the benefits and services associated with their card, compared with an industry average of 70%. American Express customers also report having access to an average of approximately five benefits and services, compared with the industry average of less than three. This awareness is an important contributor to the high level of satisfaction with rewards and benefits among American Express customers (757), compared with an industry average of 690.
• Another differentiator of high performers is the importance of customer interaction. Discover Card, for example, performs particularly well in customer interaction through its Web site, automated phone service and customer service representatives. Discover Card also has a low percentage of Web site inaccessibility (13%) and an average wait time of only 3.3 minutes to speak with a customer service representative.
The survey is based on responses from more than 9,000 credit card users during May and June 2009.