Have Card Rewards Peaked? J.D. Power Study Suggests So
This latest study shows that only about one-third of consumers "completely understand all of the benefits available to them,”
Faced with rising competition from alternative lenders and digital payment apps. credit card issuers set out to lure customers with better rewards programs. However, the card incentive war may have peaked.
According to the “J.D. Power 2019 Credit Card Satisfaction Study” lack of knowledge and understanding remains a problem, and suggestion companies should focus on helping customers understand their rewards and ancillary benefits available to them.
“The average credit card customer today has roughly 16 different benefits available, yet only about one-third of customers say they completely understand all of the benefits available to them,” John Cabell, director, wealth and lending intelligence at J.D. Power, said. “While the last several years of rewards-based competition among issuers has served to steadily increase overall customer satisfaction, issuers may have wrung all of the value they can out of this approach. They should now turn their attention to communication to help customers extract the full value from their products and buttress themselves against competition from a growing crop of rivals.”
Some key findings of the 2019 study:
- Complex offerings only valued with customer understanding: Facing a rich mix of rewards and benefits, 66% of consumers completely understand rewards offerings but just 36% fully understand their supplementary benefits.
- Customer-focused communication around card benefits lacking: Benefits and services tied with credit card terms as the lowest-rated factor in the study, with customers having the lowest levels of satisfaction with the issuer’s explanation of card benefits. Among the most problematic individual benefits either causing confusion or not functioning as expected, most are travel-related, such as free late checkout and free companion ticket.
- Room for reputational improvement: On a 7-point brand image scale, customers scored credit card issuers 4.97 on customer-driven versus profit-driven; and 41% “strongly agree” issuers act in their best interest. J.D. Power suggested as branded products like the Apple Card enter the market, issuers should communicate clearly and deliver consistently on customer promises to boost their image.
- Cybersecurity and identity theft fears decline in 2019: Recent, high profile data breaches have not yet had a negative effect on customer perception of security, with 52% of customers reporting they “strongly agree” that their credit card issuer protects their personal identity, up from 49% in 2018. However, given the timing of events, monitoring fluctuations in customer trust in the coming months will be important.
The report found the rankings somewhat different from last year. There are now two categories – one for national issuers and the other for regional banks. Discover ranks highest in customer satisfaction among national issuers, American Express ranks second, while Capital One and Chase rank third in a tie. In the new segment for regional bank issuers, the inaugural award winner is BB&T. PNC ranks second.
The U.S. Credit Card Satisfaction Study, now in its 13th year, measures customer satisfaction with credit card issuers by examining six factors (in descending order of importance): interaction; credit card terms; communication; benefits and services; rewards; and key moments. The study includes responses from 28,236 credit card customers, fielded from September 2018 through June 2019.