As Consumer Credit Card Debt Rises, Satisfaction With Card Rewards Declines

As consumers take on increasing amounts of credit card debt, their satisfaction with credit card rewards and loyalty programs is eroding.

That’s according to a report released Thursday by J.D. Power. The decline in satisfaction is being driven by consumers’ perception of the rewards earned per dollar spent, especially among cashback cardholders.

The consumer reaction to rewards programs is so great that consumer satisfaction with the rewards earned per dollar ranks as the third-lowest attribute behind service charges and interest rates. In prior years, consumer satisfaction with rewards ranked in the bottom 10.

“That consumer satisfaction is in the company of satisfaction with service charges and interest rates speaks volumes,” says John Cabell, managing director of payments intelligence at J.D. Power. “We are seeing a more challenging perception in regards to rewards satisfaction.”

The decline in satisfaction comes as consumers are taking on more credit card debt to finance daily purchases. Some 51% of credit card holders in the United States are carrying revolving debt at an average overall self-reported interest rate of 14.8%, the report says. “Consumers carrying credit card debt have a lower value perception of credit card products, especially when it comes to rewards,” Cabell says.

Despite the high level of dissatisfaction with credit card rewards programs, card issuers have an opportunity to reverse the trend by encouraging cardholders to make use of payment plans and by taking other steps to build goodwill and trust, Cabell adds.

Among cardholders classified as financially unhealthy—which J.D. Power measures by a consumer’s spending/savings ratio, creditworthiness, and safety-net items, such as insurance coverage—the self-reported interest paid on credit card debt is 16.5%. In addition, just 11% of financially unhealthy cardholders strongly agree their card helps them control their spending.

Overall, consumers carrying cards that charge annual fees that average $100 or more have the highest satisfaction with benefits and rewards, compared to consumers carrying cards with lesser or no annual fees. But when annual fees reach $500 or more, consumers tend to have more reservations about the value of their card. Among rewards cards that charge annual fees, the Bank of America Premium Rewards Elite Card ranks highest, with a score of 712, followed by the American Express Gold Card (693) and the American Express Platinum Card (687).

Among cobranded airline rewards cards, the Jet Blue Plus card from Barclays rates highest, with a satisfaction score of 643, followed by the Southwest Rapid Rewards Plus card (628) and the Citi American Airlines AAdvantage MileUp Mastercard  (614).