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J.D. Power: Customer Satisfaction With Credit Cards Falls

Fees and rates drive decline

By James Limbach
ConsumerAffairs.com

September 2, 2009

Driven by a significant decrease in satisfaction with fees and rates, overall credit card customer satisfaction declines to a three-year low, according to the J.D. Power and Associates 2009 Credit Card Satisfaction Study.

The study finds that overall credit card customer satisfaction fell 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.

The study measures customer satisfaction with credit cards by examining six key factors: interaction; fees and rates; billing and payment process; rewards; benefits and services; and problem resolution. Satisfaction with fees and rates drops to 603 points-down 37 points from 2008-contributing considerably to the decrease in overall satisfaction.

Nearly 20 percent of customers report experiencing an increase in their interest rate since 2008, almost double the 10 percent who said the same in 2008. The largest decline in satisfaction with fees and rates is among revolvers-customers who carry a balance from month to month-a drop of 53 index points from 2008.

"These findings raise questions about the effectiveness of the recent implementation of legislation aimed at helping credit card customers," said Michael Beird, director of banking services at J.D. Power and Associates. "It's important to note that 53 percent of customers are unaware of the current APR on their cards, despite the APR being disclosed on their statements every month. Unless issuers do more than simply follow the regulations, customers will likely not be any more satisfied. Communicating and actually connecting with customers with the same intensity used to acquire customers in the first place-rather than just complying with regulations-is critical to customer satisfaction."

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.

But even the top companies come in for their share of criticism.

• Daniel of Arlington, Mass., tells Consumer Affairs.com, "American Express changed my interest rate on a promotional offer. Last year, I transferred a balance to my AMEX. The offer was for a 3 percent up front transfer fee and 1.99 percent until the balance was paid off. Exactly one year later, they increased my interest rate to 12.99 percent. I have never been late, my credit score is the same and there is no reason that they should have changed my rate. I asked for documentation as to how and why they changed my rate and they said that they did not have it."

• Jackson from Rowlett, Texas, is steamed. He writes Consumer Affairs.com, " Just got notices that Amex intends to raise all my rates on three card by approximately three percentage points. This amount nearly a 25% increase in my rates. Never been late, never paid an over the limit fee. Who do I contact? They are doing this in my opinion to up rates before the new laws go into effect next year. Just let me know who the voice of authority is in this regard."

• April from Duncan, Ariz., tells us that Discover Card "changed my due date of payment without notification. Now charging me late fees and higher interest rate after getting things taken of once already. They also raised interest rate to 35 percent without any notification."

To improve overall satisfaction with credit cards issuers, J.D. Power advises consumers to take the following steps:

• Compare the performance of credit card issuers, starting with comparative performance ratings at J.D. Power.

• Make sure you are getting a card with the features and benefits that are important to you and that fit how you plan to use the card. For instance, if you plan to carry a balance on the card, find one with the lowest rates and fees. On the other hand, if you use the card to pay for everything from gas to groceries to vacations and pay off the balances each month, you may want a card with a rich and flexible reward program.

• Educate yourself on the benefits and services available on the card and use them.

• Customers who are both aware and take advantage of card features are more satisfied than those who don't.

• When there's a question about the appropriateness or accuracy of a fee or rate, request that it be waived or adjusted. Issuers are anxious to fix mistakes on their part and are willing to make accommodations for valued customers.

Of course, even the customers who pay regularly and more than the minimum are seeing rate increases and credit line cuts, due to the industry's retrenchment in the wake of the new credit card legislation. So all the credit card shopping in the world may not help.

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