Americans have been satisfied with their credit cards for four straight years, even if they don't understand them all that well, according to a new study released Thursday.
Overall satisfaction with credit cards rose 14 points to 767 on a 1,000-point scale, according to the J.D. Power 2013 U.S. Credit Card Satisfaction Study. That marked the highest level since the study started in 2006.
"I think we can attribute much of the overall satisfaction to the CARD Act," says Ruth Susswein, deputy director of national priorities at consumer advocacy group Consumer Action. "There are fewer tricks and traps and consumers are seeing some real savings."
The CARD Act, short for the Credit Card Accountability, Responsibility and Disclosure Act was signed in 2009 and went into effect in 2010. It banned many egregious billing practices, capped fees and limited interest rate hikes. It also required disclosures that made clear to consumers if their credit card terms were changing and how costly the minimum payment can be over the long term.
American Express took home the highest ranking in customer satisfaction for the seventh year in a row. Discover and Chase followed at second and third, respectively. The three were the only issuers that outpaced the industry average.
The companies with the lowest satisfaction grades were GE Capital Retail Bank (No. 9), Citi (No. 10) and HSBC (No. 11).
Despite the high marks, many cardholders remain confused about their rewards, card benefits and terms. Fewer cardholders this year reported they "completely" understood how to earn rewards on their cards (59 percent in 2013 versus 66 percent in 2012). And one-third said they were unaware of their card's benefits.
Just less than half of credit card holders (47 percent) reported they "completely" understood their credit card terms. Among them, almost three-quarters said they aren't clear about interest rates, while 31 percent don't understand late payment fees.
"That means issuers, educators and consumer advocates have to do a better job," Susswein says. "That's not something to be proud of for any of us."
The study also noted that consumer use of mobile apps or text alerts with their issuers slightly increased this year from 2012 (5 percent versus 4 percent), but remains decidedly nonmainstream.
Overall, credit card holders are feeling better about their financial outlook versus a year ago. Twenty-seven percent reported being better off this year, up from 23 percent in 2012 and only 20 percent in 2011. Only 17 percent said they are worse off, down from 23 percent last year and 29 percent in 2011.
The study surveyed more than 14,000 credit card holders from May through June of this year.
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