Rewards Play Major Role In Credit Card Customer Satisfaction

Tuesday, September 25th, 2018
Updated: September 30th, 2018
The content is accurate at the time of publication and is subject to change.

The inaugural J.D. Power Credit Card Satisfaction Study found that when it comes to choosing a credit card, it’s all about rewards. But just offering rewards isn’t enough: cardholders have to understand how to redeem them, as well.

Jim Miller, Vice President of Banking and Credit Card Practice at J.D. Power, said there’s more to building a satisfying rewards program than points, miles, or cash back offered. “Understanding how to redeem rewards—and having redeemed rewards recently—has a significant effect on satisfaction and loyalty levels.” He said credit card issuers need to educate their customers on how redemption works, and design their programs in a way that encourages them to redeem their rewards frequently.

Eighty-seven percent of credit card holders who participated in the J.D. Power study are enrolled in a rewards program; this includes the 48 percent of respondents who said they’d switched their primary card during the past year in order to have access to a more valuable rewards program.

Knowing how to redeem rewards is key

The study showed that 64 percent of respondents say they completely understand how to redeem rewards with their credit card program. Among this 64 percent, credit card satisfaction is 87 points higher than it is for folks who said they don’t fully understand how their rewards program works.

Satisfaction with their credit card program was strongly linked to how often cardholders redeemed their rewards, whether that was in the form of cash back, free flights, upgraded hotel stays, or other types of rewards. That said, cash back and airline tickets were the most popular rewards among those surveyed.

Those survey respondents who had redeemed rewards within the past month were the most satisfied with their credit card issuer, compared with those who had redeemed rewards three months ago, more than a year ago, or not at all.

Not all credit cards offer rewards

While rewards credit cards are popular, and customers enjoy perks like cash back, hotel points, and airline miles, some credit cards don’t offer rewards programs—and that’s okay.

People with limited or no credit, for example, may benefit from a secured credit card. This type of card does not typically offer rewards, but is helpful for those who are looking to build or repair their credit. They are increasingly popular among a wide variety of customers, and provide a necessary service as well as a stepping-stone to better credit—and approval for a rewards credit card.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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