Discover unseats AmEx in card satisfaction rankings
JD Power survey shows card users collecting more rewards
By Fred O. Williams | Published: August 20, 2015
Discover unseated venerable American Express as the leader in credit card customer satisfaction for the first time, according to J.D. Power's 2015 annual survey.
Power's ninth annual survey -- based on 20,000 consumers responding to questions via the Web -- gauges satisfaction with six areas: interaction, card terms, billing and payment, rewards, benefits and services, and problem resolution. Discover ranked first in all six areas, after it tied AmEx in last year's customer service survey. Before that, AmEx's lock on the top spot was unchallenged.
Discover "moved up in rewards, making it easier to redeem rewards," said Jim Miller, Power's senior director of banking services.
For example, "My Amazon account is linked to my Discover card, and on every checkout I have an opportunity to use the rewards," he said. "It's hard to make it easier than that."
The survey found that people's satisfaction with cards was up overall across the top 10 issuers. The average satisfaction score increased to 790 of a possible 1,000, up from 778 in 2014. All 10 of the big card issuers tracked saw their scores increase from last year.
Cardholders are collecting their rewards more often, helping drive up satisfaction, Power found. In the 2015 survey, 53 percent of people had collected rewards in the previous six months, versus 49 percent the year before. And 67 percent of people used card benefits in the past year, up from 57 percent.
Surveys in past years found that people had trouble understanding their rewards and weren't sure how to collect them. "Financially, it's kind of nice if you can offer rewards and nobody redeems them." Miller said. Nice for the company, maybe, but frustrating for cardholders.
Discover took a bold step in making rewards easier to collect, dropping the redemption threshold to zero and paying rewards out even when people cancel their card or make late payments.
As for benefits, several cards now offer free credit scores, a highly visible benefit that Discover pioneered in 2013. The company's popular "Freeze It" button on its mobile app also makes it easy to stop activity on the card instantly if it goes missing.
"They continue to innovate in things customers care about," Miller said.
Started in 1986 as part of Sears, Discover has a very different pedigree than American Express, whose corporate roots extend back to 1850s. Its business and customer base is also very different. While most of Discover's business comes from a few general purpose cash-back cards, AmEx covers a broad spectrum of co-branded retail cards and airline cards as well as several tiers of general purpose cards. "They come at it from completely different directions," Miller said.
Discover credited its customer service workers and its focus on cardholders' needs for the win. "Discover has all of its call centers here in the U.S., and our employees pride themselves on creating the best possible experience for our cardmembers," Chairman and CEO David Nelms said in a statement.
American Express noted that its ranking remained high, without sounding complacent about losing the No. 1 spot. "We'll be reviewing the results from this year's study, as we do every year, to understand how we can continue meeting and exceeding the expectations of our customers," the company said in an emailed statement.
Among other movements on the top 10 list, Capital One moved up to fourth place, from eighth, bumping BarclayCard a notch to fifth place. US Bank fell to eighth, from fifth.
Capital One said its customer feedback shows satisfaction with new digital tools such as its credit score simulator and alerts for recurring charges, among other things. The "second look" alert sends an email if, for example, a cable bill that is usually $100 jumps to $150, helping cardholders keep track of costs they might overlook. In addition, features on the website make it simple to track rewards and to redeem them when checking your account, a company spokeswoman said.
Stronger economy lifting all
In addition to specific company moves, a relatively strong economy is helping to drive up overall satisfaction scores to record levels in several financial service sectors, Miller said, including credit cards. Average card satisfaction of 790 is up from 703 in 2009, during the Great Recession. That is also the year that the Credit CARD Act was signed, which outlawed certain fees and surprise interest rate hikes.
That said, even hawk-eyed industry regulators have noticed card issuers making more efforts to keep customers happy. In a July speech, Consumer Financial Protection Bureau Director Richard Cordray gave a shout out to some unnamed credit card companies for "consciously improving customer service not to rush people off the phone." He credited new methods of measuring customer service efforts by polling customers about their satisfaction after a question or complaint has been handled.
Complaints to the CFPB about cards went up by 6 percent in 2014, to 14,000. But the relatively small number of gripes probably doesn't reflect consumer satisfaction broadly. Of the people who complain to the consumer protection bureau, 88 percent have already tried to resolve their beef with the card issuer directly, the agency said.
Miller said card issuers have been driven by competition to pay more attention to keeping customers happy. "They're taking the longer term view," he said.
Among other findings from the 2015 survey, which was conducted from September 2014 to May 2015, concerns about data security continue to weigh on cardholders' minds. Only 32 percent of respondents felt their personal data was very secure, Power said. Younger customers, African Americans and Latinos were more likely than others to think their information was very secure.
People who had experienced a fraudulent charge actually have greater feelings of security than those who have been warned about a data breach that might expose their information, Miller said. "If you're notified that your card was used," he said, "you feel like the issuer is looking out for you."
See related: New protections from financial 'gotchas'
- Cash advance survey 2017: Read fine print before seeking quick cash – A review of 100 credit card cash advance policies found cash advance transactions can quickly consume an available credit line with fees, high interest charges, among other undesirable terms ...
- Household debt passes pre-recession peak, NY Fed finds – U.S. household debt has surpassed its pre-recession peak for the first time, says new data from the New York Fed. Economists say milestone doesn't mean consumers are over-leveraged ...
- Poll: Credit card fraud alerts surge, false alarms still common – Consumers report a 15 percent increase in contacts from banks about credit, debit card fraud ...