When it comes to the American consumer's preferred method of
payment, it turns out that cash is not king. The credit card
A new study by J.D. Power and Associates shows that consumers
give credit card companies a much better rating now than any time
in the past six years. Of the major credit card purveyors,
) was given the best score, 807 out of a possible 1,000, followed
) , with 799. The bottom three were
Bank of America
) , 728; and
) , with 703. Right smack in the middles was
) , with a rating of 762.
Consumers are pleased with lack of fee hikes, customer
Satisfaction with credit card vendors has been increasing over
the past three years, probably due to the effects of regulation
like the Credit CARD Act of 2009, which has kept rules and fees
Card issuers are doing a better job with customer service,
too. The survey found that problem resolution received the
biggest gains, improving by 31 points over last year. This may
explain why Bank of America and Capital One received scores near
the bottom: Capital One recently paid $210 million to regulators
to settle charges that it sold credit protection products of
dubious quality to credit card customers. Bank of America, seeing
the writing on the wall, announced it would no longer offer these
products, either. It seems likely that such conduct and the
attendant negative publicity might have hampered good customer
relations for the two companies.
The good news keeps on coming
There are even more good tidings for the credit card industry.
After a span of rapidly falling credit card debt, the average
card holder held 6% more on his card balance at the end of June
2012 than one year ago. Not only that, but delinquencies are down
around the 1994 low of 0.61%, although it ticked up slightly to
0.63% in Q2 from its year-ago low of 0.60%.
Interestingly, increased regulation has been given the credit
for consumers giving their credit card bills higher priority in
the bill-paying queue. According to a report from Transunion, the
stricter rules regarding credit card approvals that sprung from
the CARD Act made card customers make a greater effort to retain
their card accounts, which many consumers use for emergencies or
to stretch shrinking paychecks.
To top it all off, all this positive activity is occurring
even as credit card interest rates continue to rise at an average
rate of a little over 0.01 percentage points each month for the
past six months.
This Fool's take
Despite the credit card industry's claims that additional
regulation would hurt them, the exact opposite appears to be
true. In addition, the forced stability that new rules have
brought to customers' accounts has reflected well on the
industry, increasing customer satisfaction to the highest level
since J.D. Power began the survey.
Currently, the Consumer Financial Protection Bureau is mulling
more changes, such as making card disclosures actually readable.
Card companies are complaining, of course. If history is an
indicator, though, the change will be for their own good.
Bank of America is about more than just credit cards. Learn
everything you should know about the big bank in
the Fool's premium report on B of A
. You'll get hard-hitting analysis along with a year's worth of
Check it out today and find out what you've been missing
owns no shares in the companies mentioned above.
The Motley Fool owns shares of Bank of America and JPMorgan
Motley Fool newsletter services
have recommended writing a covered strangle position in
American Express. The Motley Fool has a
. We Fools may not all hold the same opinions, but we all
considering a diverse range of insights
makes us better investors. Try any of our Foolish newsletter
free for 30 days
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a