Many people have had it with their credit cards. But are they really all that bad?
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For years, people have complained about their credit cards. The interest rates are too high, they hit you with too many fees, and it seems impossible to get out of their clutches.
But are these products really plastic piranhas? According to a recent report from J.D. Power and Associates, 2012 marks the third consecutive year of increased credit card customer satisfaction. And my own observations reveal credit cards are getting better, not worse, at helping the savvy user.
So before you cut your cards up in a fit of rage, consider how your credit cards have gotten better…
1. Better customer service
According to J.D. Power’s 2012 U.S. Credit Card Satisfaction Study, the number of customers happy with the way their problems have been resolved has climbed a whopping 31 percentage points in the past year.
In addition, “Only 11 percent of customers report experiencing a problem with their credit card, down from 18 percent in 2009.” Banks aren’t perfect, but they seem to be treating their credit card customers better.
2. Substantial rewards
Credit cards feature a dizzying array of points, miles, and cash-back programs. Better yet, sign-up bonuses keep reaching new heights. For example, the Hyatt credit card from Chase offers two free nights at any of their properties in the world. That can be worth more than $2,000 at some of their finest hotels in Europe and Asia.
Satisfaction with rewards was up 28 percent in the survey. “Credit card companies also are doing a good job communicating their rewards programs, as 66 percent of customers in 2012 say they ‘completely’ understand how to earn rewards, and 80 percent of customers say they ‘completely’ understand how to redeem their rewards.”
Finally, the study shows “the value of their rewards programs has increased” while expiration of points has decreased.
3. Lots of options
You only get a handful of companies to choose from when it comes to airlines, cell phone contracts, and Internet providers. But if you want a credit card, you can choose from dozens of issuers with hundreds of products, many tailored just to your needs. The Money Talks News credit card page features dozens of offers.
4. Long-lasting promotional financing offers
According to an August 2012 report on balance transfer credit card deals, zero-percent balance transfer terms average 13 months. That means the average credit card issuer is willing to forgive interest on your balances for more than a year, with some offers extending as long as 18 months.
5. Solid fraud protection
While 24 percent of the people in J.D. Power’s survey reported experiencing some sort of fraud, more than half said their card issuer informed them of it before they were even aware of the problem. And the fact that federal law protects cardholders from fraudulent charges is one of the 5 reasons I don’t care about headlines related to credit card security breaches.
6. New technology
Customers enjoy banking on their smartphone and receiving text alerts about their credit card accounts. Credit cards are also integrating with mobile devices in new ways. For example, Citi is rolling out compatibility with the Google Wallet service. In addition, many credit cards issued to Americans are now equipped with EMV smart chips that allow them to be used at unattended kiosks in Europe.
7. The CARD Act
And last but not least, what is the real driver behind better customer satisfaction?
The J.D. Power report doesn’t mention it, but it seems obvious to me: If customer satisfaction has been rising for three years, you have to ask, “What changed in 2009?” The answer is the CARD Act of 2009, the most sweeping credit card reform in at least a generation. This law eliminated many of the tricks and traps that caused cardholders untold grief in the past.
So don’t be too hard on your cards until you realize how good you have it. And if you still don’t like the card you have, just remember, companies are willing to offer all kinds of great bonuses to entice you into a new one.