American Express and Discover tie for first in credit card satisfaction study

It’s been a bumpy year in the relationship between consumers and their credit cards, thanks to a stream of high-profile data breaches. Yet consumers are happier with their card issuers than ever, according to the J.D. Power 2014 U.S. Credit Card Satisfaction Study. stack of credit cards

Average satisfaction across the credit card industry has hit a record high of 778 points (out of a possible 1,000). That’s up from 767 in 2013 and up 10.6 percent from 2009’s recession-related dip.

Those who have American Express (a CreditCardForum advertising partner) and Discover cards are particularly pleased with their cards, the study found. It also found that issuers’ responses to fraud and security breaches influence consumers’ satisfaction.

American Express and Discover tie at the top

American Express has occupied the top rung since J.D. Power started doing the annual study in 2007. It didn’t slip this year, but it’s now it’s sharing the top spot with long-time second-place finisher Discover. J.D. Power’s Satisfaction Index weighs six factors (interaction, card terms, billing and payments, rewards, benefits and services, and problem resolution).

Here are the 2014 rankings:

2014 J.D. Power Customer Satisfaction Index rankings
American Express819
U.S. Bank773
Wells Fargo773
Bank of America766
Capital One765
GE Capital Retail Bank739

It’s interesting to see Discover and American Express sharing first place, says Jim Miller, senior director of banking services at J.D. Power, because they have such different business models. American Express has a more affluent customer base and offers a complex array of cards with different types of rewards and a range of annual fees. Discover, meanwhile, has a broader customer base and simpler reward programs that are focused on cash back and no annual fees. What both have in common, though, according to the survey, is a dedication to customer service.

“That shows you can have high satisfaction through the strong execution of very different business models,” Miller says. “There’s more than one path to the top.”

Chase has been the “biggest mover” over the past several years, Miller notes. It’s climbed from seventh place in 2009 to solidify its three-year hold on third place.

As for the rest of the pack below the “industry average” bar, some have seen bigger increases in satisfaction this year than American Express and Discover have. Still, ending the Discover-AmEx dynasty will be a tall order in an industry that isn’t known for frequent, drastic, game-changing innovation. Issuers that score the best do so because they’re excelling in all of the categories the survey looks at – not because they’ve unveiled any secret weapons that blow away the competition.

“There’s not a really easy way to make a big jump,” Miller says. “But everybody in the study, if you go back four or five years, has gone up significantly.”

Overall satisfaction high

Average JD Power index score chart
The graph to the right shows the industry average Satisfaction Index ranking over the eight years J.D. Power has performed its annual study.

A couple factors have been fueling the upward trajectory since 2009, Miller says.

For one thing, the economy is improving.

“With credit cards that makes a big difference,” Miller says. “When people are feeling better about their financial situation, they’re feeling much better about being able to pay off their credit card or at least keep up with payments.”

Another possibility? Rewards are getting better — and more transparent.

“This is a really competitive industry, and from a consumer perspective, it gets better year after year,” Miller says, pointing out that getting 1 percent back on spending was considered good not too long ago. Now, it’s not hard to get 2 percent back, or more in certain categories.

Issuers, Miller says, are also making an effort to help consumers get the most out of their rewards. This year’s survey found an uptick in consumers who say they “completely” understand how to earn rewards (63 percent his year, vs. 59 percent in 2013).

“The focus on benefits and rewards used to be about getting you to sign up, and issuers weren’t as focused on getting you to use them,” Miller says. “But more and more, they’re finding that getting cardholders to use benefits and redeem rewards creates loyalty.”

Turning data breach lemons into lemonade

The most common problem consumers have with their cards, according to the survey, is unauthorized and fraudulent activity, accounting for 21 percent of the problems reported by survey participants. Yet instead of eroding consumers’ satisfaction, this has given issuers a chance to prove themselves to their cardholders.

The issuer’s response to a data breach can make the difference between disgruntled customers and happy (or at least understanding) ones. What consumers don’t like: getting a data breach notification letter and nothing else. That drops the satisfaction score to an average of 734.What they do like: getting a notification, getting a new card from the issuer and receiving email alerts. That raises average satisfaction to 835.

Replacing cards is a hassle for consumers (and has costs for issuers), Miller says. But consumers who feel taken care of tend to feel that issuers “are looking out for their best interests,” he says.

With EMV technology making headlines as a security improvement (and an antidote to retailer data breaches), does that mean consumers will be more satisfied with issuers that roll it out quickly – and less satisfied with the stragglers?

Not right away, Miller says, as so few U.S. merchants accept the technology. Frequent international travelers aside, magnetic stripe cards, for the time being, work just fine for most consumers.

“I think there’s a marketing element there [for issuers], Miller says. “But EMV doesn’t benefit customers right away. … When we reach the point where it’s more of a hassle to swipe the card [rather than insert it in the chip reader], there probably will be more pressure. You don’t want to be the last one swiping and having the merchant give you a hard time about it.”

Other study highlights

  • Satisfaction may be high, but 10 percent of consumers switched their primary card in 2014. Among those consumers, 42 percent did so for a better rewards program.

    “Offers to sign up [for new cards] are getting so rich that even satisfied customers are tempted by other offers or something that’s more tailored to them,” Miller says.

  • Satisfaction is all about communication, communication, communication, the survey found. Emailed service alerts (informing cardholders about when payment is due or when a payment is received, for example), increased satisfaction by 76 points. Satisfaction among customers who use mobile banking (which allows for increased contact) was 54 points higher than among customers who didn’t.
  • Issuers are actively trying to improve their reward programs to keep customers. In the 2014 survey, 19 percent of customers said their reward program’s value had improved over the year, an increase from 17 percent in 2013. Improvements might include streamlining rewards programs or making it more convenient for customers to redeem rewards (via online shopping, for example), Miller says.

About the study

The 2014 U.S. Credit Card Satisfaction Survey included responses from almost 20,000 cardholders. Results were released Aug. 28, 2014. The survey was conducted between September 2013 and May 2014.

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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