Overall credit card customer satisfaction finally rose this year after a three-year slump, but loyalty to card brands is falling, according to J.D. Power and Associates’ 2010 Credit Card Satisfaction Study released Thursday.

The study also suggests consumers are skeptical about the benefits of the Credit Card Accountability, Responsibility and Disclosure Act, which went into effect earlier this year.

The study, conducted online among 8,500 U.S. credit card customers during May and June, measures six key factors of credit card customer satisfaction, including card issuer interaction; rates and fees; billing and payment processes; rewards, benefits and services; and problem resolution.

Overall satisfaction among credit card customers increased this year to 714 on J.D. Power’s 1,000-point scale, up 9 points from 705 a year ago (see story).

But the study reveals troubling signs of rising customer dissatisfaction in a few key areas, Michael Beird, director of banking services for J.D. Power, tells PaymentsSource.

Only 22% of cardholders this year said they have no plans to switch primary cards in the next 12 months, down from 25% who said so in 2009 and 30% who said in 2008 they had no plans to switch.

 “Retention is now more subject to risk because consumers are becoming more financially secure and want more control over their credit cards,” Beird says. “Consumers feel empowered to consider other card options.”

And despite new Credit CARD Act rules requiring issuers to provide better explanations of card rates and terms, many consumers still are unable to completely grasp the details, the study shows. Moreover, further research the firm conducted on social media sites shows many credit cardholders view the Credit CARD Act disclosures with cynicism, Beird says.

According to the study, 16% of participants said they never received Credit CARD Act disclosures from their card companies. Among those who did, only two-thirds said the disclosures improved their understanding of how the act affects their personal circumstances. Moreover, only one-third of respondents said they fully understand their credit card terms.

“It is important for card companies to utilize multiple communication channels so customers are more inclined to grasp the message,” Beird says. “Direct mail sent as a separate letter from a billing notice actually has the highest response rate. Beird says. E-mail is also an effective communications channel, he adds.

Among cardholders who typically revolve credit card balances from month to month, customer satisfaction this year rose to 29% from 24% a year ago. And satisfaction among consumers who pay off their outstanding card balance each month increased to 21% from 13% in 2009.

American Express Co. for the fourth consecutive year ranked highest in cardholder satisfaction. AmEx earned a score of 769, up from 762 last year, performing well in all six customer satisfaction categories.

Discover Financial Services was second with a score of 757, up 6 points from 751 in 2009 with respondents noting the company excels in the company-interaction factor.

Coincidentally, Discover this week launched a new TV campaign touting its superior customer service (see story). 

Capital One Financial Corp. saw the highest increase in customer satisfaction, up 28 points to 699 from 671 last year, moving from 14th place to ninth.

J.D. Power says the common denominators of performance among the highest-ranked issuers are customer satisfaction with rewards and benefits, strong telephone- and online-based customer service and a focus on reducing problems in a short amount of time.

Beird says the study suggests card companies seeking to improve customer satisfaction should “focus on transparency and keeping customers in the loop,” Beird says.

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