Will New Credit Card Rules Increase Satisfaction?by Tim Manni
Dissatisfaction over rates and fees has led to the lowest level of overall credit card customer satisfaction in three years. So says the J.D. Power and Associates (JDP) 2009 Credit Card Satisfaction Study, which gave the nation’s major credit card companies a score of 703 out of 1,000 possible points — the lowest tally since the study began in 2007.
The study graded the card companies based on the following six factors:
- Customer Interaction
- Fees and Rates
- Billing and Payment Process
- Benefits and Services
- Problem Resolution
It comes as no real shock that customers are highly dissatisfied over increases in rates and fees:
Nearly 20 percent of customers report experiencing an increase in their interest rate since 2008, almost double the 10 percent who said the same in 2008. The largest decline in satisfaction with fees and rates is among revolvers — customers who carry a balance from month to month — a drop of 53 index points from 2008. Nearly one-fourth of revolvers report an increase in their interest rate from 2008. In addition, late payment fees, which have the greatest negative impact on satisfaction, were incurred by 14 percent of customers, compared with 11 percent in 2008.
“Overall satisfaction declines 86 index points when a customer incurs a late fee,” said Michael Beird, director of banking services at J.D. Power and Associates. “Issues with fees also contribute to the high incidence of problems and complaints in 2009, with 18 percent of customers reporting problems, compared with 10 percent in 2008.”
Congress’ new credit card rules — which go into effect in February — have been designed to curb rate and fee increases. On the surface it would seem as if lawmakers have succeeded in creating greater customer satisfaction. However, one banking official at JDP says banks will need to do a lot more than just comply with Federal legislation in order to improve their customer satisfaction (emphasis added):
“These findings raise questions about the effectiveness of the recent implementation of legislation aimed at helping credit card customers,” said Beird. “It’s important to note that 53 percent of customers are unaware of the current APR on their cards, despite the APR being disclosed on their statements every month. Unless issuers do more than simply follow the regulations, customers will likely not be any more satisfied. Communicating and actually connecting with customers with the same intensity used to acquire customers in the first place-rather than just complying with regulations-is critical to customer satisfaction.”
The absence of strict late fees and unannounced rate increases won’t prevent the credit card companies from making their fat profits, and they won’t completely satisfy unhappy customers. Before too long, consumers will grow dissatisfied with whatever new, money-making strategies come along.
How can you stay satisfied? Become an educated cardholder — the more you understand the terms of your contract and the sooner you find a credit card that works best for you, the more satisfied you will be.
(hat tip: ConsumerWorld.org)