Credit Card Customers Lack Full Grasp of Terms, Rewards

Credit Card Customers Lack Full Grasp of Terms, Rewards   More credit card consumers say they do not fully understand their card’s terms, benefits and rewards program, J.D. Power found in its latest study of customer satisfaction.
The study found that customer awareness of earning and redeeming rewards with their credit card has declined year over year, with 59 percent of customers saying they “completely” understand how to earn rewards in 2013, compared with 66 percent in 2012.
Moreover, 33 percent of customers indicate they are unaware of the benefits associated with their card.
J.D. Power’s study is in its seventh year and measures customer satisfaction with credit cards by examining six key factors: interaction; credit card terms; billing and payment; rewards; benefits and services; and problem resolution.
Less than one-half (47 percent) of credit card customers say they “completely” understand their credit card terms. Among these customers, 73 percent indicate a lack of clarity regarding interest rates, and 31 percent lack an understanding of late payment fees.
“Customers who use their card’s benefits spend an average of $400 more per month on their card, compared with those who are aware of benefits but do not use them, so clearly this is an area of importance to card issuers,” said Jim Miller, senior director of banking services at J.D. Power.
Most customers change cards for a better rewards program, but they often don’t fully understand the rewards offered with their current card, he added.
“There is a clear opportunity for issuers to better communicate rewards programs and benefits to not only keep customers loyal, but also to attract new customers,” Miller said.
Despite low customer understanding of card benefits and terms, credit card satisfaction has improved for a fourth consecutive year.
Overall satisfaction averages 767 on a 1,000-point scale, which is a 14-point improvement from 2012. The study also finds a lower incidence of interest rate increases, compared with 2012 (5 percent vs. 6 percent, respectively).
“The fact that the economy is improving and consumers generally feel better about their personal financial situations is certainly helping to improve satisfaction with credit card issuers, especially considering there was such instability in the industry just a few years ago,” said Miller.
When surveyed about their financial outlook compared to a year ago, 27 percent of credit card customers indicate they are better off in 2013, up from 23 percent in 2012 and 20 percent in 2011.

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