Credit card rewards have become more lucrative, and consumers have noticed, with nearly half switching to new cards over the past year. That’s despite a huge chunk of cardholders who don’t fully understand their card benefits, a new report by J.D. Power found.
Customers get the most satisfaction from cards by Discover, American Express and Barclays, according to the J.D. Power 2018 Credit Card Satisfaction Study. At the bottom of the list were Credit One, Synchrony — which issues many retail credit cards — and Wells Fargo.
Card benefits shift
Stiffer competition among rewards credit cards is leading to better offers, a fact noticed by 47% of customers who switched to a new card within the past 12 months, the study found.
Card issuers are beefing up rewards but funneling money away from lesser-used card perks, said Jim Miller, senior director of the banking practice at J.D. Power, in a news release.
“The key for issuers in this highly competitive environment is to make sure they are offering the types of benefits that resonate with current and potential customers,” he said. “Most customers are aware of only a handful of benefits.” And they use even fewer, meaning there’s room to simplify benefits, he said.
The study found that 36% of credit card customers say they don’t fully understand the rewards available to them.
Card rewards affect customer satisfaction, which in turn influenced whether a consumer was likely to switch card companies, the study found.
Discover, AmEx rate highly
Among card companies examined, Discover ranked highest in customer satisfaction with a score of 836 on a 1,000-point scale, followed by American Express at 830. The industry average was 801.
Discover, which ranked the highest for the fourth time in five years, attributed its satisfaction scores to factors such as issuing all no-annual-fee cards, U.S.-based customer service, fraud alerts, free FICO credit scores, favorable rules for redeeming rewards and the ability to freeze activity on a card if it’s misplaced.
The J.D. Power ratings are typically topped by Discover or American Express, which was dominant in the early years of the study, getting top ranks from 2007 to 2013.
USAA, an issuer that caters to military personnel and their families, rated even higher than Discover. USAA scored 870 for satisfaction but it wasn’t officially ranked because it has membership requirements.
- American Express
- Capital One
- Bank of America®
- U.S. Bank
- Wells Fargo
- Credit One
A card company’s mobile app and the ability to get free credit scores were also factors that drove satisfaction, J.D. Power said. Digital billing, as opposed to paper bills, was a satisfaction driver for cardholders 40 and older, it found.
J.D. Power’s study, in its 12th year, included responses from 24,018 credit card customers from September 2017 to May 2018.