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September 8th, 2009

Will New Credit Card Rules Increase Satisfaction?



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
  • Rewards
  • 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)

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4 Responses to “Will New Credit Card Rules Increase Satisfaction?”

  1. Customer Survey Says: September 10th, 2009 at 5:43 pm

    Customer service plays an important role in an organization’s ability to generate revenues, and as such, customer service should be a fundamental part of any company‚Äôs “valued customer” approach. In fact, there’s an enormous body of research, which strongly indicates that customer satisfaction and loyalty; are major contributors to profitability.

    Thank you for sharing your knowledge and insight.

    Best wishes.

  2. Tim Manni Says: September 11th, 2009 at 9:30 am

    Customer Survey,

    Thanks for commenting. Your opinions seemed to go hand in hand with JD Power’s findings. Customer satisfaction via exceptional customer service seems to go a long way to increase profits and keep card holders. Talking on the phone with your credit card company is never an enjoyable experience, but if your credit card reps are helpful and respectful, the experience isn’t so bad.


  3. Mike Says: October 2nd, 2009 at 1:07 pm

    It would have been nice to see something about the contracts. Have you ever read one of these things? Some lawyers would have problems understanding them.

  4. Tim Manni Says: October 2nd, 2009 at 2:59 pm

    Hey Mike,

    Are you referring to a credit card contract? If so, I understand your point — easier said than done, right? Yet, it’s just the basic terms and conditions that even some don’t know or understand (credit limit, etc.)

    Good hearing from you again,

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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