JD Power: Credit Card Customer Satisfaction Is Rising, But Warning Signs Abound

After declining for two consecutive years, credit card customer satisfaction is rising again, according to the JD Power 2022 US Credit Card Satisfaction Study.

Overall satisfaction improved five points to 810 on JD Power’s 1,000 point scale. The study authors noted that the improvements were particularly significant in areas such as credit card terms, benefits, services and communication. Related increases were seen in consumers’ perceived level of trust in credit card issuers, as well as issuers’ net recommender scores.

The news isn’t all positive, though.

The report classifies most credit card holders (57%) as being in poor financial health, up four percentage points from 2021. Nearly a quarter of consumers (22%) say their financial situation is worse than a year ago. The highest inflation figures in 40 years and near-record credit card balances and interest rates on credit cards are certainly the main contributors to this malaise.

“There are very real concerns looming on the horizon,” said John Cabell, director of banking intelligence and payments at JD Power. “Chief among them is the declining share of spending on major credit cards. Despite recent spikes in travel and spending, cardholders have generally taken a more cautious stance with credit card spending over the past over the past five years. They are increasingly turning to other channels such as debit cards, BNPL [buy now, pay later] and even money. It will become critically important for card issuers to improve product value and enhance proactive support for a growing segment of financially challenged customers as we enter this next phase of the business cycle.

Loyalty seems to be eroding

Only 42% of cardholders’ monthly spending lands on their primary credit card, down from 47% in each of the past two years and 50% in 2019.

Another area of ​​opportunity is that less than one in three credit card holders (31%) feel they fully maximize their rewards opportunities. This suggests that some cardholders are better off switching to another card. Issuers could also perhaps better inform cardholders of their benefits and match them with the right products.

The credit card industry has long been competitive, as card issuers compete for premium status based on various factors such as rewards, interest rates, customer service, and more. Increasingly, competition is also coming from relatively new entrants to the payments space, BNPL providers such as Affirm, Afterpay and Klarna.

The impact of the BNPL

JD Power found that almost half (44%) of credit cardholders would consider other financing options when making a major purchase. BNPL tops the list with 28%, thanks to what the researchers described as reasonable fees and competitive interest rates. Some of these providers have even started offering rewards. Other alternatives mentioned in the study include personal loans and other types of flexible finance/installment loans.

The winners

American Express won the highest satisfaction score among national credit card issuers for the third consecutive year and the 12th time in the study’s 16-year history. His score of 848 marks a 10-point improvement over last year.

Discover, which has five first-place finishes including a tie with Amex in 2014, finished second for an 11th time. His score has gone from 837 last year to 841 currently.

American Express and Discover — generally in that order — have held the top two spots on this ranking since its inception in 2007.

Bank of America’s 13-point improvement was the largest of any domestic issuer over the past year. This helped him move from fifth to third place in the standings with a total of 818 points.

Goldman Sachs won the mid-sized issuer category for the second consecutive year.

The bottom line

The more credit cards I use, the more I care about good customer service. In fact, a card issuer really bailed me out recently by crediting my account for $500 after a hotel stay went wrong. This positive experience makes me much more likely to use this card for future travel purchases.

I have had bad experiences and good experiences on the rare occasions when I have needed to file a dispute. All of these elicited emotional reactions that made me feel better or worse about my dealings with card issuers.

Customer service can be measured in a variety of ways, from the rewards you receive, to the wait time it takes if you call with a problem, and more. I started using some cards more than others, especially when benefits like travel insurance or purchase protection came into play.

Have a question about credit cards? Email me at [email protected] and I’d be happy to help.

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