Show Me the Money! Cashback and Value Credit Cards Grow in Popularity as Financial Health of Cardholders Declines, J.D. Power Finds
August 15 2024 - 6:00AM
Business Wire
More than Half (54%) of U.S. Credit Card
Customers are Financially Unhealthy; 51% Carrying Revolving Debt as
Average Interest Rates Increase
The points, miles and perks that have come to define the modern
credit card marketing playbook are being replaced by cashback
rewards and lower fee cards as cardholder financial health1 grows
increasingly strained. According to the J.D. Power 2024 U.S. Credit
Card Satisfaction Study,SM released today, only 46% of cardholders
are now classified as financially healthy and 51% carry revolving
debt on their cards. Meanwhile, the average recalled interest rate
on new purchases has climbed to 15.6%, creating a tenuous
environment for cardholders and card issuers.
“Cardholders are facing mounting day-to-day financial pressures,
which are showing up in the form of high levels of revolving credit
card debt, declining levels of financial health and a migration
away from points/miles cards,” said John Cabell, managing
director of payments intelligence at J.D. Power. “These
pressures tend to be associated with higher annual fees. This is a
tough marketplace for card issuers to navigate, however, because
even though overall credit card customer satisfaction scores are
largely flat, the customer base has really become bifurcated into
one subset that is feeling squeezed by economic pressures and one
that is not. Card issuers need to be able to offer options that
resonate and deliver value for both segments.”
Following are some key findings of the 2024 study:
- Cashback cards are king: A majority (58%) of cardholders
use cashback cards, while just 31% are using points/miles cards and
11% are using value cards (e.g., credit-building cards with no
rewards). A reason provided more often for moving to cashback and
value cards is to incur lower/no annual fee. Cashback cardholders
also say they redeem rewards more often for a statement credit (21%
vs. 9% for points/miles).
- Financially unhealthy shift products: This trend away
from points/miles is consistent with a continued decline in
financial health among credit card customers. An increasing
majority (54%) of cardholders are now classified as financially
unhealthy. The use of points/miles cards by financially unhealthy
cardholders drops significantly in 2024 (27%) from 2023 (31%) with
concurrent growth in use of cashback and value cards.
- Revolving debt and high interest rates raise concern:
For a second consecutive year, 51% of cardholders are carrying
revolving debt. The recalled average interest rate for new
purchases has increased to 15.6% (16.9% among financially unhealthy
cardholders) in 2024, up from 14.6% in 2023, and cardholders are
spending $103 less per month, on average, than they were in 2023.
The percentage of cardholders saying the overall perks of their
card improve their lifestyle declines in 2024 to 25% (18% among
financially unhealthy cardholders).
- Financial health affects customer satisfaction: While
overall satisfaction declines just 2 points (on a 1,000-point
scale) this year (610 vs. 612 in 2023), cardholder perception of
credit cards varies widely based on financial health. Satisfaction
improves 2 points among cardholders without revolving debt but
declines 5 points among those with revolving debt. Overall
satisfaction scores are 61 points lower among cardholders carrying
debt (580) than among those without debt (641).
- Automated customer service fails to connect: When it
comes to interactions with customer service, whether for problem
resolution or questions about their account, automated phone and
virtual assistant channels significantly underperform personal
interactions with live representatives and digital engagement via
email, online chat, mobile app messaging, text and social media.
The overall satisfaction score for automated customer service is
609, which is 40 points lower than the study average for customer
service satisfaction.
Study Rankings
American Express ranks highest in customer satisfaction
among credit card issuers, with a score of 634. This is the fifth
consecutive year in which American Express receives a segment
award.2 Discover (629) ranks second and Capital One
(620) ranks third.
Capital One SavorOne Rewards Card ranks highest in
customer satisfaction among bank rewards credit cards with no
annual fee for a second consecutive year, with a score of 679.
Chase Freedom Flex (670) ranks second and Discover it
Student Cash Back Credit Card (657) ranks third.
Bank of America Premium Rewards Elite ranks highest in
customer satisfaction among bank rewards credit cards with an
annual fee for a second consecutive year, with a score of 692.
Blue Cash Preferred Card (American Express) (680) ranks
second and Chase Sapphire Reserve (669) ranks third.
Capital One Platinum Mastercard ranks highest in customer
satisfaction among bank credit cards with no rewards or annual fee,
with a score of 619.
Southwest Rapid Rewards Premier Card (Chase) ranks
highest in customer satisfaction among airline co-branded credit
cards, with a score of 658. Southwest Rapid Rewards Priority
Card (Chase) (649) ranks second and Delta SkyMiles Platinum
American Express Card (627) ranks third.
Apple Card (Goldman Sachs) ranks highest in customer
satisfaction among co-brand credit cards with no annual fee, with a
score of 654. This is the fourth consecutive year in which Apple
Card and issuer Goldman Sachs have collectively earned a segment
award.3 Hilton Honors American Express Card (644) ranks
second and Costco Anywhere Visa by Citi (634) ranks
third.
See the rank chart for each segment at
http://www.jdpower.com/pr-id/2024083.
The U.S. Credit Card Satisfaction Study, now in its 18th year,
measures customer satisfaction with credit card issuers by
examining seven factors (in alphabetical order): account
management; benefits; customer service; new account; rewards
earning; rewards redeeming; and terms. The study includes responses
from 38,852 credit card customers and was fielded from June 2023
through June 2024.
For more information about the U.S. Credit Card Satisfaction
Study, visit
https://www.jdpower.com/business/resource/us-credit-card-satisfaction-study.
About J.D. Power
J.D. Power is a global leader in consumer insights,
advisory services, and data and analytics. A pioneer in the use of
big data, artificial intelligence (AI) and algorithmic modeling
capabilities to understand consumer behavior, J.D. Power has been
delivering incisive industry intelligence on customer interactions
with brands and products for more than 55 years. The world's
leading businesses across major industries rely on J.D. Power to
guide their customer-facing strategies.
J.D. Power has offices in North America, Europe and Asia
Pacific. To learn more about the company's business offerings,
visit JDPower.com/business. The J.D. Power auto-shopping tool can
be found at JDPower.com.
About J.D. Power and Advertising/Promotional Rules:
www.jdpower.com/business/about-us/press-release-info
____________________________ 1 J.D. Power measures the financial
health of any consumer as a metric combining their spending/savings
ratio, creditworthiness, and safety net items like insurance
coverage. Consumers are placed on a continuum from healthy to
vulnerable. 2 J.D. Power 2023-2024 U.S. Credit Card Satisfaction
Study: Credit Card Issuers segment, which included issuers with
more than 1,000,000 active accounts, excluding co-branded cards.
J.D. Power U.S. Credit Card Satisfaction Study SM in 2020-2022:
National Issuers segment, which included issuers with more than
4,000,000 active accounts. Visit jdpower.com/awards for more
details. 3 J.D. Power 2023-2024 U.S. Credit Card Satisfaction
Study: Co-Branded Credit Cards segment excluded airline cards. J.D.
Power U.S. Credit Card Satisfaction Study SM in 2020-2022: Midsize
Issuers segment, which included issuers with 275,000-4,000,000
active accounts. Visit jdpower.com/awards for more details.
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version on businesswire.com: https://www.businesswire.com/news/home/20240815936809/en/
Media Relations Geno Effler, J.D. Power; West Coast;
714-621-6224; media.relations@jdpa.com John Roderick; East Coast;
631-584-2200; john@jroderick.com