New research shows Americans are having a big love-in with their credit cards — relatively speaking, that is. J.D. Power and Associates said last week that we’re happier with our credit cards than we’ve ever been in the six years since it’s been conducting an annual survey. Card issuers should be thrilled, right? Well, that’s the funny part: When you look at what specific aspects of their credit cards that people like better and why they’re happier, regulatory reforms that the banks fought, kicking and screaming, are behind most of the changes.
Overall, card satisfaction averages 753 on J.D. Power’s 1,000-point index; when the company started conducting the survey in 2007, average satisfaction was 658. In a breakdown of issuers, American Express took the top spot, which it has done every year since the survey’s inception, even though the bar has risen. In 2007, AmEx scored 735; this year, it clocked in with 807.
While customer satisfaction is a worthwhile goal all by itself, the industry had some pretty powerful outside motivation nudging it along.
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Take a look at dispute resolution, for example. J.D. Power says, “Satisfaction with problem resolution has the largest satisfaction increase, a 31-point improvement. … Only 11 percent of customers report experiencing a problem with their credit card, down from 18 percent in 2009.” Credit card companies are handling customer complaints more promptly and more frequently to the customer’s satisfaction, it says.
This increased receptiveness to customers’ needs could have something to do with the public credit card complaint database the Consumer Financial Protection Bureau launched earlier this summer. Shortly before the first batch of complaints became public, the American Bankers Association fired off an objection. “The Bureau’s plan to release unverified data is disappointing and could mislead consumers,” it said in a statement. (The CFPB defended itself, saying it does verify information before logging complaints into the database.)
Is better complaint-handling a coincidence, or did banks see the writing on the wall and step up their game once they realized a searchable database of ticked-off customers’ gripes doesn’t make the best advertising?
Customers are also happier when it comes to both annual fees and penalty fees charged by credit card companies. When it comes to penalty fees, “One of the reasons the score is getting better is because fewer customers are having their late fees increased,” says Jim Miller, senior director of J.D. Power’s banking practice. “In fact, customers are reporting that they are charged a late fee less often than in 2010.” In addition, Miller says late fees have dropped from a median amount of $35 in 2010 to $30 today.
To give credit where it’s due in this case, look to the CARD Act, that big piece of financial reform legislation that was passed in the wake of the financial crisis in 2009 over the strenuous objection of the banking industry. In addition to protections like putting limits on credit card marketing to teens, the legislation went a long ways toward curbing punitive late fees and interest-rate hikes. Most of its major provisions kicked in the following year, which is why 2010 is a good point of comparison when evaluating changes.
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Banks absolutely hate the CARD Act because it cut into their revenues. But lately, some grudgingly have admitted that maybe consumer-friendly rules can benefit them, too. “If there is a silver lining to the CARD Act—I’m not here to say the CARD Act was good for our business, so nobody misunderstand the comment—but if there were a silver lining to it, it forced rationality,” Bloomberg Businessweek quoted Mark Graf, chief financial officer of Discover Financial Services, saying at a conference this spring. (Discover ranked second-highest in customer satisfaction in J.D. Power’s survey.)