Thursday, August 28, 2014

Report: BofA, Wells score higher for credit-card satisfaction

Bank of America and Wells Fargo have improved their satisfaction scores among credit-card customers, but the two lenders again scored below the industry average, according to a J.D. Power and Associates study released Thursday.

Charlotte-based Bank of America earned a score of 766 in this year's study, up from its score of 749 last year. San Francisco-based Wells Fargo earned 773 points, up from 757 last year.

American Express and Discover tied for first place with scores of 819.

Despite scoring higher compared with last year, Bank of America and Wells Fargo scored below the 778 average for the industry. In last year's study, the two lenders also earned scores below the industry average.

The study, which is in its eighth year, scored 10 credit-card issuers on six factors: interaction; card terms; billing and payment; rewards; benefits and services; and problem resolution. The study is based on a 1,000-point scale.

At 778, the industry's average score is at the highest it's ever been in the history of the study. In an interview Thursday, Jim Miller, senior director of banking services at J.D. Power, told me customer satisfaction with credit cards has been rising since the recession.

"Part of it is the economy is improving and customers are feeling better about their personal financial situation, and people feel better about their credit cards when they can pay it off and stay current on their payments," he said.

The rise in satisfaction comes as credit-card issuers are fiercely competing with one another, he said. He said the increase in competition comes as credit-card holders are charging less to their cards than before the recession.

The rising competition also comes as credit-card issuers seek to issue cards to "credit-worthy" borrowers, he said. He said that's a change from before the recession, when issuers were more open to giving cards to subprime borrowers, too.

"There’s not a big pool of credit-worthy consumers that don’t have a credit card" today, he said. "So in order to grow your business, at least from the number of cards that you have, you’ve got to take it away from someone else."

Lenders are seeking to grow their credit card business at a time when some other revenue sources, such as their mortgage businesses, have declined, Miller said. For example, lenders' refinancing business has fallen since mortgage rates began rising last year.

Miller pointed out that credit cards are a fairly steady revenue source for lenders.

"They are putting a lot of focus on their credit-card operations and trying to grow that business," he said.

For consumers, all this competition has benefits, Miller said. For example, issuers are using reward programs to make their credit cards more attractive, he said.

But, he said, issuers still face challenges, even when they have rewards that customers like.

“You might have a great rewards program today -- and somebody comes out with one tomorrow that surpasses that," he said.


Harry Lee said...
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