• by Tanya Gazdik , October 11, 2007

American Express ranks highest among credit cards in customer satisfaction, according to the J.D. Power and Associates 2007 Credit Card Satisfaction Study.

The inaugural study, released earlier this week, measures customer satisfaction with credit cards by examining five key factors. In order of importance, they are: benefits and features (34%); rewards (25%); billing and payment process (21%); fees and rates (16%); and problem resolution (4%).

American Express ranks highest among the 10 credit card issuers examined in the study with a score of 735 on a 1,000-point scale--performing particularly well in benefits and features, as well as problem resolution. Discover closely follows American Express with a score of 728, performing well in rewards, and billing and payment.

The company is clearly doing a good job of informing customers of the benefits they receive from being cardholders, says Jeff Taylor, senior director of the banking practice at J.D. Power and Associates, which is headquartered in Westlake Village, Calif. "Those customers identify an average of 6.3 benefits versus 3.5 for the overall industry average. It really differentiates them from the rest of the industry."

Only non-business account American Express customers were surveyed, Taylor says. The study focused on the primary card used by the participants, who said on average that they use three major credit cards regularly. The study is based on responses from 7,812 credit card users, and was fielded in June and July.

Credit card holders typically fall into one of two categories--those who always or usually pay the full balance on their cards each month (called transactors) and those who don't (referred to as revolvers). The study finds that each group selects their cards for different reasons. Nearly 65% of transactors indicate that rewards programs are most important, while only 29% of the revolvers say the same. Conversely, nearly 40% of revolvers indicate that lower interest rates and fees are most important, compared with only 8% of transactors.

The study also finds that rewards are key in credit card selection across the industry, and 80% of cardholders receive some type of reward with their credit card usage. The most popular rewards program is airline miles, with 40% of credit card holders receiving this incentive. However, customers who receive cash points (22%) applied to their card's balance or hotel rewards points (9%) express higher levels of overall satisfaction.

While rewards programs are important to many credit card customers, some are also attracted to credit cards that offer lower interest rates and no annual fees. The study finds that customers of Discover, WaMu and Wells Fargo frequently cite "no annual fees" as the reason they selected their cards. In addition, 84% of Wells Fargo cardholders also use Wells Fargo as their primary bank.

Here is how the cards ranked in customer satisfaction:

Based on a 1,000-point scale:

American Express	735
Discover	728
Industry average	658
Citi Cards	652
Chase	651
US Bank	646
WaMu	638
Wells Fargo	636
Capital One	617
Bank of America	607
HSBC	571