After eight consecutive years as consumers’ favorite credit card issuer, American Express is now No. 2. “The fact that Discover ranks highest in satisfaction among all credit card issuers in each of the six factors measured in the study is a testament of the relentless focus and importance the company has placed on the ease of redemption and use of benefits”. Discover scored a total of 828 points based on a 1,000-point scale while American Express recorded 820 points.
The study focused on six factors: interaction, credit card terms, billing and payment, rewards, benefits and services and problem resolution.
So what pushed Discover over the edge to claim the title this year?
Unlike travel reward and cash-back credit cards, which typically require a high credit score and are popular in the Midwest and on both coasts, secured credit cards “can be appealing to those with poor or no credit”, said Sreekar Jasthi, an analyst at NerdWallet.
That’s important for issuers because customers who rate their rewards as attractive spend more per month, $1,132 on average, than those who consider their rewards unattractive, averaging $744, J.D. Power said.
The study included responses from more than 20,000 credit card customers from September 2014 to May 2015.
The study also found that in this year’s survey, credit card customers are redeeming the rewards and benefits they earn more frequently. Discover’s stock price is down 15 percent this year, AmEx’s is down 12.9 percent, and Capital One (NYSE: COF) – which finished in third place in the J.D. Power survey – is down a relatively modest 2.8 percent for the year.
“You also have to take into account perception of the big banks, they don’t have the greatest reputation right now and so that can effect a bank like Citi”. “The industry has become so competitive that generally, rewards are getting better”, said Miller.
Secured credit cards got the most clicks by people in Florida and Mississippi, while balance transfer cards led the way in Alabama and Louisiana, according to the study.