Discover reclaims top rank in J.D. Power Satisfaction Study
Rewards chasing drives card switching – but more than one-third of users don't understand rewards, annual survey finds
Expert on consumer credit laws and regulations.
Discover edged past American Express to reclaim the No. 1 spot in J.D. Power's 2018 Credit Card Satisfaction Survey, the analysis company announced Thursday.
The annual look at our feelings toward credit cards found that rewards have become intricately linked with satisfaction. In fact, 47 percent of users who switched cards in the past 12 months jumped for better rewards.
"Competition is fierce among credit card issuers to provide ever-richer rewards," Jim Miller, senior director of banking practice at JDPower, said in a statement.
Key findings of J.D. Power satisfaction study 2018
- Discover, American Express and Barclays US took top three spots
- 36 percent of users don't fully understand their rewards
- Average satisfaction with cards ended a streak of yearly increases, falling back 1 point
But more than one-third of card users say they don't entirely understand their rewards programs, lowering their satisfaction scores. Thirty-six percent said they don't fully understand how to earn and collect their rewards.
Card issuers cut benefits to bolster rewards
So, it makes sense for cards to trim side benefits – a trend that has seen cutbacks in things such as purchase protection programs and flight insurance – and use the savings to beef up rewards, J.D. Power found.
"Most customers are aware of only a handful of benefits and use just nearly two of them, so there is room to simplify the benefits offered," Miller said.
The 12th edition of the annual study included responses from 24,018 credit card customers who were polled from September 2017 through May 2018.
J.D. Power's analysis asks card users about six kinds of experience – interaction, credit card terms, communication, benefits and services, rewards and key moments.
Discover reclaimed top positition
On that basis, Discover captured the No. 1 spot with a satisfaction score of 836 out of a possible 1,000. American Express, No. 1 in the 2017 study, trailed closely with 830. Barclays US was the number three issuer, a spot that Capital One had in 2017.
Average satisfaction ended a run of annual increases, falling one point to 801.
USAA, the bank for military servicemembers and their families, actually got the highest satisfaction score of the large card issuers, at 870, J.D. Power said. But the bank isn't eligible for an official rank in the analysis because of its customer membership requirements.
Other findings from the 2018 J.D. Power study
- Satisfaction with rewards tracks closely with the value of the reward program, and those most satisfied are least likely to switch card companies.
- Free credit scores also boost satisfaction, with scores 43 points higher for customers who get a free score than for those who don't.
- Users of mobile apps are happier, with a 25-point average increase in satisfaction, but just 39 percent of card customers are using them.
- Customers over age 40 see a big gain in satisfaction after switching to digital billing from paper, with a 23 point gain. Switchers under age 40 pick up just 1 point in the satisfaction scale.
Simplicity helps drive satisfaction
While other cards may be better known for rewards, Discover benefits from the simplicity of its business model, Miller said in an interview.
"They make it easy to redeem rewards, their customers have been earning rewards the same way for a long time," he said. Discover also has more control of the user experience, with its own transaction network, and no hotel or airline partners with their own points redemption schemes. "It's a dramatically different model than what companies like Amex and Chase are competing on."
The flattening in growth of overall customer satisfaction could be the result of the long economic recovery from the 2008-09 recession – making it easier for users to keep up with their payments. "When you're getting rewards, that's good; when you're getting calls from collectors, that's bad," Miller said.
In addition, rewards are a part of the card environment by now, providing less of a boost to satisfaction. "These fabulous offers are becoming more expected," he said.
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