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Study: credit card satisfaction up

By Leslie McFadden · Bankrate.com
Thursday, August 19, 2010
Posted: 12 pm ET

Customer satisfaction with credit cards has rebounded this year from a three-year low in 2009, according to a new study from J.D. Power and Associates. Overall credit card satisfaction with the top 10 issuers averaged 714 on a 1,000-point scale for 2010, up 9 points from 705 last year. The study, in its fourth year, measures customer satisfaction by looking at six main factors - - interaction; credit card terms; billing and payment process; benefits and services; rewards; and problem resolution.

Despite the uptick in overall satisfaction, fewer cardholders declared that they "definitely will not switch" primary cards in the next 12 months. "So, they're more satisfied, but they're thinking they may go elsewhere," says Michael Beird, director of banking services at J.D. Power and Associates.

American Express leads the pack

Four card issuers beat the industry average of 714. For the fourth consecutive year of the study, American Express ranked highest in customer satisfaction, followed by Discover, U.S. Bank and Wells Fargo, respectively. Chase, Barclays Bank, Bank of America and Capital One ranked in the middle of the pack, while Citi and HSBC garnered the lowest consumer ratings for satisfaction.

What are the issuers of highly satisfied customers doing right? For one thing, they're doing a good job of making customers aware of available benefits and services, according to Beird.

"Satisfaction goes up if I'm aware that I'm getting more from my card," he says. "That's a very prominent trait of certainly of American Express, also of Discover, that customers can cite more benefits and services for being a cardholder for them than for others."

Customer interaction also proves key to satisfaction. For example, having a user-friendly website where customers can easily find information. "They're making it easy for customers to find out about their accounts. And when need be, they're making it easy to get a hold of live agent," says Beird.

Some issuers did a better job than others when it came to informing customers about the Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act. About 16 percent of consumers say they didn't receive disclosures about the CARD Act, which was rolled out in stages through 2009 and 2010. For those who did receive notices, just two-thirds said the disclosures improved their understanding of what the law meant for them.

Beird says that "American Express, Discover and even Bank of America did a good job of getting out ahead of the game" by using multiple channels to explain the new rules.

Overall, consumers reported fewer problems and issues. The problem incidence rate declined 4 percentage points since the 2009 study to 14 percent.

Those in debt more satisfied

Satisfaction actually increased this year among "revolvers," or people who carry a balance on their card, but remained flat for "transactors" that typically pay their balances in full each month. The reason could have a lot to do with the CARD Act, which among other changes, requires 45 days advance notice before most rate increases and increases to certain fees take effect. New rules for credit card disclosures that took effect in July 2010 also make billing statements and agreements easier to read and understand.

In the press release for the study, Beird explained that revolvers, who tend to be "more sensitive" to interest rates and fees, are "significantly more likely to say that CARD Act disclosures improved their understanding of their credit card terms." Revolvers also may have felt that their changes in terms could have been worse, he added.

Do you agree with the findings? Share your thoughts in the comments section.

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1 Comment
Debra James
August 19, 2010 at 5:44 pm

Sadly, although many credit card users may complain about the interest rates charged on their cards, or lower credit availability, they must enjoy wallowing in debt. Otherwise, when they received the notices from their card issuers that their rates would increase or their limits were decreased they would have chosen to opt-out, close the account, and pay off the existing balance as quickly as possible.

However, we cardholders have a strong emotional connection to our pieces of plastic, and will fight a mighty battle before handing them over. Some of the more popular statements I've heard for keeping the cards are: 1) "I need it just in case of an emergency." Well, if your available balance has been lowered to the same amount as your outstanding balance, then that card will do little for you in an emergency, except for when you hand it over during a stick-up.; 2) "I will lose all of the points/rewards that I've accumulated." If your interest rate has been jacked up sky high, you may need to reconsider just how much you are paying for those point/rewards. For example, if your interest rate was 11%, but now it's 23%, and it will be years before you can pay off the outstanding balance, the extra money spent in interest at the new rate would probably negate any of the loyalty program's benefits. You'd do better to pay the lower interest rate, thus removing the debt quicker, saving the money you would have paid had you kept the card active, and paying cash for your next plane ticket with a debit card (I say this because the cheapest tickets have to be bought online, which require plastic).; 3) "My credit has gotten so bad, I probably won't be able to get another credit card." HELLLOOOO?! That's a hint and a half that you probably don't need a credit card right now, and should re-visit getting one only when you have your financial house in order. This means paying off your existing debt, having enough money in savings to withstand 6-12 months of unemployment, and being able to control your spending and payment habits so that when you use a credit card, you can pay it off when the bill comes, and do so.; 4) "The banks are just greedy So-and-Sos, and how do they expect me to pay off my card if they keep raising my interest rate?" Yes, you are correct, the bank's are greedy; that's the American way. Your interest rate was probably hiked up, because after the bank did a risk analysis on your account, they determined that it was to their financial benefit. If you close the account, and pay off the balance, that's cool with them; they get their money sooner. If you have a good payment history and keep the card open, and take longer to pay of the balance, then that's cool, too. Now you've let them know that you've got a plastic jones, and you will do just about anything to keep the feeling going on. Don't be surprised to see more hikes, because they want to test how far they can go, before you break up with them.

Overall, the CARD Act been beneficial to most personal credit card users. I think it will be a jolt of reality to many people when they see the new statements that show how long it will take to pay off a balance and the interest paid with just minimum payments. The rules for issuing credit and allowing outstanding balances have changed, and consumers have the power to choose whether to play the new game, or take their ball and go home.