Are Credit Card Issuers Failing Customers?

Credit card users have grown frustrated and dissatisfied with the service they receive from issuers during the pandemic, according to market research provider JD Power.

Its 2020 Credit Card Satisfaction Study found that, while overall ratings increased on 2019, the period of the study that took place during the pandemic recorded significant falls in customer satisfaction with credit cards terms and issuer communications.

Just over a third of customers said they had been proactively contacted by their card issuer over the past 12 months, JD Power found, compared with 60% of mortgage customers and 48% of retail banking customers.

“Communication with customers is critical to building trust and brand loyalty during uncertain economic times,” the market research company said in a commentary. “At the same time, customers should always contact their card issuer if they have questions or need assistance with their account.”

In addition, satisfaction scores declined in some crucial customer segments, JD Power reported. In the affluent/mass affluent segment, scores declined by 14 points since the beginning of the pandemic on the company’s 1,000-point scale. This segment included some of the “most financially important” customers.

Customers among those worst affected by the pandemic also reported a fall in satisfaction to a point lower than those who have not been financially affected. This comes amid warnings that banks will have to manage their loan and credit portfolios carefully in the coming months as customers struggle to pay back their borrowings.

“Through the first two months of 2020, credit card customer satisfaction was on track to set record highs,” said  John Cabell, director of banking and payments intelligence at JD Power.

“That all reversed course when COVID-19 entered the equation, with satisfaction, trust, advocacy and brand image attributes resulting in sharp declines in May 2020.

“We’re living in a moment of truth for card issuers, and results in the next few months will be key to determining whether this decline constitutes a lasting trend. Issuers’ ability to communicate proactively and work closely with customers to address their pain points and fears will be critical to their long-term viability.”

Issuers were granted a “silver lining” by JD Power’s findings, however, as 89% of customers said their cards met their needs. This meant the fall in satisfaction was “not an indicator of near-term defection”.

“However, issuers should ensure that customers understand the terms and benefits associated with their cards, and customers, in turn, should be willing to change cards if fee-based perks or travel points are no longer relevant in the current environment,” JD Power said.

The full study is available here.