COVID-19 check-in: How have card issuers measured up during the pandemic
Quick summary
It's no secret that the coronavirus pandemic has wreaked havoc across many industries in 2020. Travel and tourism took a major hit, and so did the credit card industry. It was like overnight, the perks and benefits that cardholders used on a regular basis were no longer valuable in the short-term. Spending habits changed, vacations were canceled and work travel decreased for many, as work-from-home became the norm.
And as credit card issuers struggled to keep up with changing travel plans, insurance claims, a declining economy, and the risk of cardholders not being able to pay bills because of layoffs and other financial burdens, consumers have felt the affects through longer phone wait times, stricter approval requirements, cut credit limits and more.
A new report quantifies just how much this has impacted customer satisfaction in the industry.
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Study shows overall customer satisfaction dropped during the pandemic
J.D. Power released it's 2020 Credit Card Satisfaction Study on Aug. 24, and the results were mostly unsurprising — cardholders definitely felt less confident in their credit card issuers across key metrics because of this year's pandemic. In fact, the study reported a 14-point drop in consumer satisfaction from the start of the pandemic to the study publishing.
"Through the first two months of 2020, credit card customer satisfaction was on track to set record highs," said John Cabell, director of banking and payments intelligence at J.D. Power. "That all reversed course when COVID-19 entered the equation, with satisfaction, trust, advocacy and brand image attributes resulting in sharp declines in May 2020. We're living in a moment of truth for card issuers, and results in the next few months will be key to determining whether this decline constitutes a lasting trend. Issuers' ability to communicate proactively and work closely with customers to address their pain points and fears will be critical to their long-term viability."
The start of the pandemic was marked with confusion and uncertainty — cardholders were rushing to try and cancel trips, rearrange bills so they could meet payment deadlines and more. And to be frank, credit card issuers didn't always meet customer service expectations during that stressful first few months. Phone wait times to speak to a customer representative were potentially hours long, to the point where many major issuers such as Amex and Chase were asking cardholders not to call unless it was an immediate emergency.
Having to wait to call (with little to no online support for canceling travel or asking for bill assistance) while plans are in the air and money is on the line can be anxiety-inducing. Not to mention, many cardholders experienced difficulties getting refunds or filing credit card travel insurance claims.
While the study results did still indicate a marginal boost of four points compared to 2019 (where the average score across national issuers was 806 out of 1,000), COVID-19 has certainly highlighted some pain points customers are hoping issuers will address moving forward.
Credit card satisfaction dipped more than other financial services
One surprising thing to note is that this decline in satisfaction wasn't mirrored across other financial services sectors. For example, consumer satisfaction actually grew with retail banks and mortgage providers throughout the pandemic. The defining factor? Communication with customers.
The survey found that just 36% of credit card customers were proactively contacted by card issuers over the past year, compared to 60% of mortgage customers and 48% of retail banking customers throughout a similar timeline.
J.D. Power's results weights these factors in descending importance: Interaction, credit card terms, communication, benefits and services, rewards and key moments. We talk a lot about benefits, rewards and services at TPG (we even have an entire guide on coronavirus perks and benefits). But J.D. Power's survey focuses more on customer service and how issuers are interacting with cardholders.
After these results, it's clear to see many issuers didn't measure up to the level of care customers received from other financial service providers.
Which issuers came out on top?
American Express is ranked highest among national issuers (excluding USSA, which isn't included in the rankings because they do not meet J.D. Power's ranking criteria), with a score of 838. Discover came in a close second at 837. These two issuers are known for excellent customer service, which is a heavy factor in determining these results.
Bank of America, Chase, and Capital One all fell close together on the scale, but significantly lower than the top two. Citi also came in behind the pack at 801.
American Express really has been a leader throughout the pandemic across not only customer satisfaction measured by J.D. Power's study, but also in the ways it's helped cardholders make the most of cards while travel is on hold and spending habits have changed. Amex was the first to announce an extension for welcome bonuses to help cardholders meet minimum spending requirements, and it was the first to launch massive benefit changes across travel cards to help consumers make the most of changing spending habits and travel plans being put on hold.
While Chase and Capital One have certainly also been industry leaders in the benefits sector, you'll see that those efforts aren't necessarily reflected in their consumer satisfaction scores. As issuers make plans and add new tools and policies throughout the rest of 2020 and into 2021, I hope that these other issuers will consider how to better address customer pain points in areas like customer service.
Silver linings going into the fall
While the coronavirus pandemic certainly shed some light on customer concerns across many card issuers, the survey results weren't all doom and gloom.
Even though satisfaction waned overall, cardholders are still likely to hang on to their credit cards. The survey found that 89% of credit card customers say their current card(s) meets their needs. This is probably in part due to the fact that issuers have made strides in providing benefits to help cardholders — from adding new perks and bonus categories to allowing additional redemption options to adding new tools online to make the customer support experience more seamless.
Bottom line
It's no surprise that the coronavirus pandemic presented unique challenges for the credit card industry, but the J.D. Power 2020 U.S. Credit Card Satisfaction Survey results have definitely showcased how some issuers have risen to the challenge compared to others — at least when it comes to customer service and overall consumer happiness with services.
As more U.S. customers begin to book travel and once again shift spending habits as more businesses reopen in many areas of the country, it will be interesting to see how credit card issuers will continue to adapt to the changing landscape and differing cardholder needs.