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Americans Have a Love-Hate Relationship With This Bank Product

A young woman making a call with her credit card and a laptop.

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If you're not in the habit of reading J.D. Power's customer satisfaction studies, you're missing out on interesting insights. For example, according to the J.D. Power 2021 U.S. Credit Card Satisfaction Study, many Americans are currently unhappy with their credit card providers. We spoke with John Cabell, director of banking and payments intelligence at J.D. Power, to learn why.

Another side effect of COVID-19

As millions of Americans lost their jobs early last year, more people turned to credit cards to pay essential daily expenses. For some, it was a shock to learn that their credit limits had been lowered just when they needed access to funds the most.

According to Cabell, only 2% of Americans experienced a credit limit reduction, but that 2% of consumers felt deeply impacted. "Cardholders were relying more on their cards as a borrowing tool, because of the economic situation," he explained.

Cabell points to other potential reasons consumers may have cooled on their credit card issuers. He says the pandemic led to a disruption in the marketplace. Not only were some credit limits lowered, but there were longer wait times at call centers.

At the same time, credit card companies used the pandemic as an opportunity to raise interest rates on many customers. And, according to Cabell, consumers were paying more attention to their interest rates at the time. It's reasonable to imagine that those who experienced a rate increase were frustrated.

Struggling to connect

At a time when people were under increased financial stress, some reported a lack of responsiveness from card companies. In other words, when cardholders needed them most, credit card issuers disappointed many who depended on them.

"While there are some bright spots this year among individual issuers, the pandemic broke a multi-year trend of improving satisfaction," said Cabell. "The industry missed the mark on supporting customers' changing needs when many were facing significant financial challenges."

One of the most interesting things about the J.D. Power findings was how much Americans have grown to depend on credit cards -- to the point of considering them a life raft during a financial crisis.

While it is clear that credit card issuers had their own financial concerns during the pandemic, they do not appear to have considered how cardholders will feel about them when COVID lessens. Time will tell if consumers move away from their cards to focus more on the other financial tools available to them, or build emergency savings accounts large enough to carry them through the next crisis.

Here are a few of the other J.D. Power findings:

  • Shrinking credit limits rubbed customers the wrong way. Only 2% of U.S. credit card customers report a reduction in their credit limits. Among customers with a credit card from a midsize issuer, though, that number jumps to 3%. Not surprisingly, those issuers experienced the steepest drop in customer satisfaction.
  • Consumers are less satisfied with credit card rewards. Despite additional opportunities to earn rewards through activities like grocery shopping and takeout dining, satisfaction is down.
  • Co-branded cards are the big winner in the rewards category. A co-branded card teams a card network (like Mastercard or Visa) with a business. Many retail stores offer co-branded cards.

According to Cabell, some consumers may be unhappy because they have the wrong credit card. For example, if a non-traveler has a rewards card offering airline miles, they naturally tend to be less satisfied than a frequent flyer who can use the miles. People can help themselves by regularly reviewing their credit cards to get the most bang for their bucks, and choosing cards that reward them with the things they need and want.

A snapshot in time

So, is this it? Will Americans continue to feel less affectionate toward their credit cards, or is there something credit card issuers can do? Cabell reminds us that customer satisfaction can change from quarter to quarter. This is simply a snapshot in time.

As we wait to see how cardholders feel about their credit cards next time they're surveyed, credit issuers may want to take a page from Goldman Sachs, issuer of the Apple Card, and the highest-ranking midsize issuer in the J.D. Power study. Goldman Sachs has, according to reviewers, learned that offering good service and rewards cardholders will use makes people happy. And happy customers are good for business.

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