Credit Card Rewards Programs Gain Clout: J.D. Power
A new study from J.D. Power found that consumers’ satisfaction with their credit cards has risen to a four year high. However, even with that high degree of satisfaction, 10% of cardholders still switched their primary credit card in 2014.
The marketing research firm’s latest U.S. Credit Card Satisfaction Study found that of those who changed cards, 42% did so due to dissatisfaction with a rewards program. The study, in its seventh year, examined interaction, credit card terms, billing and payment, rewards, benefits and services, and problem resolution.
“Customers who use their card’s benefits spend an average of $400 more per month on their card, compared with those who are aware of benefits but do not use them, so clearly this is an area of importance to card issuers,” Jim Miller, senior director of banking services at J.D. Power said. “While most customers change cards for a better rewards program, they often don’t fully understand the rewards offered with their current card. There is a clear opportunity for issuers to better communicate rewards programs and benefits to not only keep customers loyal, but also to attract new customers.”
The firm found fewer than half of cardholders surveyed (47%) said they completely understood their credit card’s terms, with 73% indicating a lack of clarity about interest rates and 31% misunderstanding late fees.
“The fact that the economy is improving and consumers generally feel better about their personal financial situations is certainly helping to improve satisfaction with credit card issuers, especially considering there was such instability in the industry just a few years ago,” Miller said.
When surveyed about their financial outlook compared to a year ago, 27% of credit card customers said they were better off in 2013, up from 23% in 2012 and 20% in 2011. Conversely, 17% indicated they were worse off, down from 23% in 2012 and 29% in 2011, the firm reported.