J.D. Power 2007 Credit Card Satisfaction Study

The inaugural study measures customer satisfaction with credit cards by examining five key factors. In order of importance, they are: benefits and features (34%); rewards (25%); billing and payment process (21%); fees and rates (16%); and problem resolution (4%).

American Express ranks highest among the 10 credit card issuers examined in the study with a score of 735 on a 1,000-point scale, performing particularly well in benefits and features, and problem resolution. Discover closely follows American Express with a score of 728, performing well in rewards, and billing and payment.

Credit card holders typically fall into one of two categories -- those that always or usually pay the full balance on their card each month and those that don't -- and the study finds that each group selects their card for different reasons. Nearly 65 percent of credit card holders who say they always or usually pay the full balance on their card each month (referred to as transactors) indicate that rewards programs are most important, while only 29 percent of card holders who pay less than the full balance each month (referred to as revolvers) say the same. Conversely, nearly 40 percent of revolvers indicate that lower interest rates and fees are most important, compared with only 8 percent of transactors who say the same.

"Transactors and revolvers look for very different things in a credit card issuer, so it's important for card holders to identify their payment habits and select a card that will best suit their financial needs," said Jeff Taylor, senior director of the banking practice at J.D. Power and Associates.

The study also finds that rewards are key in credit card selection across the industry, and 80 percent of card holders receive some type of reward with their credit card usage. The most popular rewards program is airline miles, with 40 percent of credit card holders receiving this incentive. However, customers who receive cash points (22%) applied to their card's balance or hotel rewards points (9%) express higher levels of overall satisfaction.

While rewards programs are important to many credit card customers, some are also attracted to credit cards that offer lower interest rates and no annual fees. The study finds that customers of Discover, WaMu and Wells Fargo frequently cite "no annual fees" as the reason they selected their card. In addition, 84 percent of Wells Fargo card holders also use Wells Fargo as their primary bank.

While other credit card benefits -- such as travel-related insurance, emergency assistance and concierge services -- are also important to many card holders, most are not fully aware of the benefits their card offers.

"It's important for credit card issuers to communicate to their customers all of the benefits their card has to offer," said Taylor. "Customers who are aware of and use their card benefits are generally more satisfied with their issuer."

From an industry perspective, credit card customers provide an average satisfaction score of 658 points. This is considerably lower than the average satisfaction scores provided by customers in other financial markets the firm conducts studies in: mortgage servicing (798), online investing (773) and retail banking (763).

"A factor contributing to lower levels of satisfaction is that credit card issuers generally have limited control over all phases of processing of a transaction," said Taylor. "However, for those credit card companies who own the network processes -- such as American Express and Discover -- overall customer satisfaction is generally higher."

Among the credit card networks, customer satisfaction with American Express and Discover is significantly higher than with MasterCard or Visa. However, 89 percent of Visa customers and 87 percent of MasterCard customers indicate that their card is accepted everywhere they want to use it, while only 17 percent of American Express and 19 percent of Discover customers say the same. MasterCard holders have slightly higher satisfaction than those with a Visa, which is primarily driven by higher satisfaction with membership benefits.

The 2007 Credit Card Satisfaction Study is based on responses from 7,812 credit card users. The study was fielded in June and July 2007.