Complex Credit Card Offers Baffle Consumers and Hurt Satisfaction Scores

Years of raising the stakes in rewards and benefits has reached a point of diminishing returns, J.D. Power finds. It may also have opened the door for simpler, or more targeted offers from new competitors. Bank and credit union card issuers, can counter by rethinking features and improving consumer communications.

Much has been said about the intuitive, simple user experience of the new Apple Card. The industry will be watching intently for its impact on the hyper-competitive credit card market, and where Apple Card places on the next J.D. Power Credit Card Satisfaction Study.

The results of the 2019 study, conducted before the new card was in use, suggest there is room for improvement in the customer experience and overall satisfaction with credit card brands, especially as more and more consumers use credit cards digitally. J.D. Power reports that 71% of credit card customers interact with their provider either online or through mobile apps.

The issue of too much complexity bedevils the credit card business significantly, particularly in regard to benefits and rewards.

Competition Drives Up Complexity

Even with the existence of third-party referral sites such as Nerdwallet, Credit Karma and Points Guy that help consumers choose the best deal, increasingly complex offers and features have proliferated in recent years, and the majority of consumers don’t understand them.

“The average credit card customer today has roughly 16 different benefits available, yet only about one-third of customers say they completely understand all of the benefits available to them,” says John Cabell, Director, Wealth and Lending Intelligence at J.D. Power. About twice as many consumers (66%) understand the popular card reward offers than understand supplementary card benefits (36%). That benefit comprehension figure has been declining over the past three years, Cabell states.

In contrast to rewards — typically cash-back, points or miles — card benefits include such features as no annual fee, free credit score, free checked baggage, travel insurance and annual account summary. The consumer research firm notes that of the 16 benefits typically available to credit card customers, they use on average only two of them — the most popular being no annual fee and free credit score.


J.D. Power found that credit card customers who say they fully understand the benefits available to them have satisfaction scores that are 165 points higher than those who do not completely understand their card-related benefits (864 vs. 699 on a 1,000-point scale). More significantly, customers who completely understand their benefits cite fewer benefits available to them than those who do not understand their benefits.

The firm reports that “benefits and services” is tied with “credit card terms” as the lowest-rated factor in the latest satisfaction study, with consumers having the lowest levels of satisfaction with issuers’ explanation of card benefits. The benefits that caused the most confusion are travel-related, including free late checkout and free companion ticket.

These findings, taken together, prompt Cabell to observe that “the credit card incentive war may have reached its peak.” In response to questions from The Financial Brand he says consumers’ lack of understanding is a function of both program complexity and the difficulty of clearly describing multiple benefits and features in marketing communications. He recommends that banks and credit unions focus more attention on communication in order to help customers extract full value from their card products. Also that issuers should be sure to use consumers’ preferred channel of communication whenever possible.

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Cash-Back is Simpler and Increasingly Preferred

More than three out of five consumers who own a credit card earn cash-back rewards, according to Mintel Comperemedia’s Cash Rewards Cards Annual Review. The report cites data from CreditCards.com that nearly half of U.S. adults have at least one cash-back credit card. This type of reward card actually helps reduce complexity.

“The cash-back feature allows consumers to redeem rewards for statement credits, checks, or account deposits,” notes Mintel Senior Research Analyst Anjali Ambani in the report. “In contrast, miles and points are difficult to redeem, which creates lower consumer interest.” She states that cash-back gives issuing banks and credit unions the opportunity to make redemptions even more flexible, either within their apps or even at checkout, as Discover does with Amazon.

Citibank double cash complicated offer

Apple and its partner, Goldman Sachs Bank, having noted the complexity of the credit card market, designed a product from scratch that offers only cash-back rewards, along with the very simple concept of redeeming them daily within the app.

( Read More: Apple Card Rollout Threatens Traditional Financial Institutions )

However, well before the Apple Card launched, other financial institutions were taking steps to reduce complexity (and costs) by ending secondary benefits not used often by consumers, Ambani states. Chase, Citi and Discover, for example, have trimmed secondary benefits like price protection, and Capital One has scaled back some bonus offers and incentives.

At the same time, some issuers are offering new reward choices more targeted to the lifestyles of younger generations, according to Ambani. These include cash-back on streaming services or transit. Mintel finds that 36% of consumers between the ages of 18 and 44 say that cash-back features would encourage them to apply for a credit card.

Who Came Out on Top Nationally and Regionally

In J.D. Power’s 2019 Credit Card Satisfaction rankings, Discover ranks the highest in customer satisfaction among national issuers, followed by American Express in second, and Capital One and Chase tied for third. The first two places didn’t change from the 2018 study, but Capital One moved up from fifth to third, swapping places with Barclays.

John Cabell notes that the study was conducted before the well-publicized Capital One data breach. “It is possible we will see a change in customer perception about that bank in the 2020 study,” he observes, “but typically customers tend to have short memories about these events.”

For the first time in the 13 years of the study, J.D. Power ranked regional financial institution card issuers. It’s a distinctive market, Cabell notes, and several of these regional institutions had expressed interest in having the opportunity to be recognized for top performance.

The top three regional institutions in credit satisfaction were BB&T, PNC, and BBVA Compass.

The research firm made a point of noting the results of two financial institutions that technically don’t qualify for the rankings, but were included in the consumer survey: USAA at the national level and Navy Federal Credit Union at the regional level. Neither qualified because, as Cabell notes, they are closed-membership models.

Both institutions would have occupied the top spot in their respective lists if they were included in the rankings.

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