Credit Card Customers Not So Loyal

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It seems like everyone loves to hate credit card companies, but some firms are more unpopular than others, and the industry as a whole faces a distrusting public.

That’s the gist of the fourth annual customer satisfaction survey of 11 major card issuers by J.D. Power and Associates, the marketing-information firm. It found that American Express (Stock Quote: AXP), Discover Card (Stock Quote: DFS) and U.S. Bank (Stock Quote: USB) scored above-average, while HSBC (Stock Quote: HBC), Citi Cards (Stock Quote: C) and Capital One (Stock Quote: COF) brought up the rear.

While customers were a bit more satisfied than they were in the depths of 2009, the number “professing loyalty” to their card companies “continues to slip as skepticism that card issuers are focused on customers’ best interests remains,” J.D. Power states.

And that overall improvement in satisfaction was pretty small — up to714 on a 1,000-point scale, from 705 last year. In other bad news, the number of customers say they “definitely will not switch” their main cards in the next 12 months dropped to 22%, from 30% in 2008 and 25% in 2009.

In other words, 78% think they might switch and are considering the hassles and expenses a switch might entail.

Why are customers so down on their card companies? It seems like a dumb question given all the attention Washington has focused on hard-to-understand ways card companies impose fees, but here’s what J.D. Power said:

“According to the J.D. Power Web Intelligence Division, online consumer conversations about credit cards indicate that many of those consumers perceive their relationships with credit card companies as an ongoing game of ‘cat and mouse,’ with each side trying to outsmart the other. Social media discussions regarding credit cards also indicate that many consumers view even CARD Act disclosures with cynicism.”

The CARD Act, passed last year, prohibits some of the most disliked practices, like applying rate increases to balances built up under older, lower rates. It also required better disclosures of things like how long it would take to retire a card debt with minimum payments. The survey found many customers still don’t feel they understand card terms.

American Express, which has beat its competitors four years running, received top ratings in all six survey categories: billing and payment, customer interaction, problem resolution, credit card terms, rewards and benefits.

So if you’re unhappy with your card, should you switch?

Maybe, but keep in mind you could face balance-transfer fees as well as disruption to your credit history. Also, remember there is a surefire way to improve your satisfaction with the card you already have: keep its use to a minimum and pay off the entire balance every month.

Many of the things that aggravate customers arise from balances rolled over month after month. They can incur high interest charges and penalties, and of course you’ll be unhappy with things like “customer interaction” if you can’t get relief.

If you’re paying no interest because you don’t carry a balance, you needn’t care what the interest rate is, and you can focus on features like the generosity of the rewards program.

Use the Credit Card Minimum Payment Calculator to see what it would take to pay off your balance quickly. And if you’re really unhappy with your card, use the search tool to find a better one.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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