Discover, AmEx tie for tops in customer satisfaction
J.D. Power survey says cardholders are happier
By Fred O. Williams | Published: August 28, 2014
Credit card issuers are getting better at keeping customers happy, but some are succeeding more than others, according to the J.D. Power 2014 U.S. Credit Card Satisfaction Study, released Thursday.
American Express, the perennial leader in Power's ranking, shares the top satisfaction score for the first time since the survey started in 2007. Discover climbed a spot from last year to tie AmEx with a score of 819, on a scale of 1,000.
"It's a tie this year, but AmEx and Discover get there in different ways," said Jim Miller, J.D. Power senior director of banking services.
AmEx has a head start on satisfaction because of its relatively affluent customer base. Its more exclusive business model means that its customers -- sorry, members -- collect lucrative rewards, often pay their entire balance monthly, and hardly ever get dinged with a late fee. Discover has a broader customer base, but gets top scores in some important service categories, such as live phone contact.
Discover was in striking distance of the top spot last year, with a satisfaction score of 812 to AmEx's 816. Discover's ad campaigns stress service, which might boost perceptions of the company, Miller said. But its industry-leading scores for live phone help suggest that the company is walking the walk.
"I suspect the advertising helps, but when a customer calls in, they have an experience that lives up to the ad," he said.
The consumer analytics company polled nearly 20,000 people about their attitudes toward their cards and 10 large card issuers. Questions in the survey focus on six service areas: interaction, card terms, billing and payment, rewards, benefits and services, and problem resolution.
Nearly all the issuers on the list garnered higher scores than last year, and some besides Discover climbed in the rankings. Bank of America rose one slot to seventh place, edging past Capital One, while Citi climbed a notch to ninth place, bumping GE Capital Retail Bank down a level. GE Capital, the store card giant, was the only issuer to see a lower satisfaction score, falling to 739 from last year's 742.
For the 2014 survey, which was conducted from September 2013 through May 2014, cardholders were dealing with heightened fears of data breaches and fraudulent use of their cards. But they seemed to take those problems in stride. In fact, one surprise finding was that getting hit by fraud can actually increase your card satisfaction.
"For those customers contacted about fraud, their satisfaction was higher than the average customer," Miller said. Card issuers got especially high marks for issuing a new card. "The perception from customers is, they're looking out for my best interest -- particularly if the issuer finds out before you're aware of it."
Being informed of a breach, however, did not give cardholders warm and fuzzy feelings. Warnings to keep an eye on your account because a security breach might affect you left customers with below-average satisfaction. "If the issuer just tells me there's a security breach, you're a little more unsettled, you don't know exactly what to do," Miller said.
Only 11 percent of respondents said they had a problem with their card, with unauthorized use or fraud being the most common issue. A larger proportion -- 18 percent -- said they were contacted about fraud, and 7 percent about a data breach. That indicates that many people who were warned about fraud did not consider it a complaint, Miller said.
The average cardholder satisfaction score was 778 on the 1,000-point scale, up from 767 in 2013. In 2007 when the survey began, the average card satisfaction score was 658.
But in a market where reward offers are hotly competitive, satisfaction doesn't necessarily mean loyalty. Ten percent of cardholders said they switched their primary card, up from 8 percent in last year's survey. Close to half of those switching said the reason was a better rewards program.
"You could be satisfied with your existing card -- but if something better comes along, you're going to jump on it," Miller said.
Richer rewards programs may be one factor behind the 18 percent rise in overall satisfaction since 2007, Miller said.
Card issuers are also getting faster at solving customer problems, J.D. Power said. In 2007, 11 percent of those surveyed said they had a problem with their card, the same fraction as today. But the time to get those problems resolved has shrunk to four days from about 10 days. Consequently, issuers' average score for problem resolution has made a big leap, from 535 in 2007 to 740 today.
"The way we interact with issuers today -- so many customers are online, on mobile, they get service alerts -- it's much easier to do," Miller said.
Heightened consumer protection could also be boosting cardholder satisfaction. The Credit CARD Act of 2009 has restricted interest rate hikes and over-limit fees, formerly major friction points with issuers. And the newly formed Consumer Financial Protection Bureau's enforcement efforts have battled expensive card add-on products such as credit protection. Since 2010, the CFPB has taken complaints about credit cards and forwarded them to issuers, providing an outlet for gripes to be resolved within a certain time period.
An improving economy can share some of the credit for rising satisfaction, too. The only year the average score went down was 2009, during the Great Recession. Since then, the upward trend for cardholder happiness has moved in the same direction as the improving job market and rosier consumer confidence.
The J.D. Power survey came out the same week as new data
from TransUnion showing that late payments on cards hit a new low. Only 1.16
percent of cardholders were in delinquency, the credit bureau said, the
lowest rate in at least seven years.
"Basically, the economy is doing better," said Toni Guitart, director of research and consulting. "There are more jobs, better jobs, longer hours -- people are able to make those payments."See related: CFPB: Credit card complaints decline in 2013
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