Customer Satisfaction And Card Usage Drop When Sellers Levy Credit Card Surcharges, Says J.D. Power

Credit card usage and cardholder satisfaction decline when merchants levy a surcharge to offset their card-acceptance costs, J.D. Power’s 2025 U.S. Credit Card Satisfaction study finds.

When consumers are levied a surcharge, satisfaction scores drop 39 points to 602 on a 1,000-point scale, compared to consumers that have not been levied a surcharge. Overall, 65% of cardholders have been hit with surcharges for using their credit cards, while 25% of cardholders have experienced no surcharges.

In addition to lower satisfaction scores, surcharging is also prompting consumers to use alternative payment methods to avoid the levies, with 81% of respondents saying they have used an alternate payment at one time to avoid a surcharge.

“While consumers that pay surcharges may feel they are supporting business, and small businesses in particular, by paying a surcharge, there is a level of frustration consumers feel over those fees being passed directly on to them,” says John Cabell, managing director of payments intelligence for J.D. Power. “Since Covid, we’ve seen more fees being passed on to credit card holders, and while they are becoming more accepted, the fees are not loved.” 

Use of buy now, pay later loans is on the uptick as “financial volatility and decreasing household incomes” prompt consumers to find more ways to stretch their purchasing power. BNPL usage has increased 20% year-over-year, while 37% of cardholders say they would consider using BNPL, up from 34% in 2024. Concurrent with the increase in BNPL usage, is a decline in average monthly credit card spending. The average total monthly spend across all cardholders is $1,058, down from $1,126 in 2024, according to the study.

“BNPL is an alternative to high-interest-rate credit cards,” Cabell says.

As the use of artificial intelligence becomes more common in the payments industry, consumers are high on the technology’s potential to improve security, even though they may not be aware their credit card issuer uses AI. Some 33% of cardholders perceive improved fraud prevention and data security as the biggest benefits of AI. When it comes to awareness about the use of AI, just 11% of cardholders say they “completely understand” how their card issuer uses the technology, while 13% say their issuer has “completely communicated” how they are using AI.

“There is a lack of clarity around what AI is and how it can be used [by card issuers], but the hope among consumers is that it will bring more precision to card security and result in fewer declines,” says Cabell.

Another reason credit card holders are enthusiastic about AI is that they feel it can help them get to a live customer service representative faster. “That speaks to the frustration consumers feel with automated systems,” Cabell adds.

Overall satisfaction among all credit card customers is 611 points, up a single point from 2024. The nominal improvement is driven in part by a 9-point increase in satisfaction among financially healthy cardholders and a 4-point increase among credit card transactors carrying no revolving debt. Among financially unhealthy consumers and cardholders carrying debt, satisfaction scores declined 1 point compared to financially healthy cardholders, the study says. The lower satisfaction scores among financially unhealthy consumers are driven by such factors as credit limit, account management, and ease of balance transfers.

J.D. Power measures consumer financial health by combining their spending/savings ratio, creditworthiness, and safety-net items, such as insurance coverage.

Among card issuers, American Express Co.ranked highest in customer satisfaction with a score of 643, followed by Bank of America(622) and Capital One Financial Corp. (621).