Do you ever wonder if you have the right credit card in your wallet? Well, if you’ve had the sinking suspicion that you don’t, you’re not alone according to a new study by J.D. Power showing that at least one in five people would be better off with with a different credit card, whether they are looking for rewards, perks or a card with less fees.
The J.D. Power 2016 U.S. Credit Card Satisfaction Study found that over 20% of people do not have a credit card that gives them the best bang for their buck in terms of its benefits and fees, and that they would be better off with a different card.
“The percentage of people carrying the wrong card is alarming, and that doesn’t even include the 30-50% of people who have the right card, but could find a card that’s an even better fit for them if they looked at other options,” said Jim Miller, senior director of banking at J.D. Power. “Regardless of why customers have the wrong card, they are overall less satisfied with their card than those who have a card more appropriate for them. Carrying the right card is beneficial for both customers and card issuers.”
Credit card satisfaction trends
While the levels of payment card satisfaction are not all that different whether people have the right card or not, certain trends did stand out. When compared with people who have a credit card that is in alignment with their needs, people who have a card that isn’t invariably spend less than their counterparts (783 vs. $1,035), and they use it make a far fewer payments, going with cash and debit cards (37% vs. 45%).
And last but not least, in the end they are more likely to find another credit card (21% vs. 9%).
What is the primary reason people choose one card over another? The cards rewards program is key, but for 20% of people who have a rewards card, they would be better off with a different card, or even a card that offered a lower interest rate rather than rewards.
Why? There are three reasons:
• Their spend is not high enough to be worth the annual fee they are paying.
• They are paying a high interest rate even when they are creditworthy
• They are not using their rewards or the perks that come with their credit card
So why are people using cards that don’t meet their needs? For some it’s because their life or financial picture has changed since they signed up for their card, while others signed up for a rewards program that is outdated for them. And for others the card has changed when it comes to rewards or fees.
Promotional offers can be part of the equation too. With some people signing up for a card based on bonus miles or a balance transfer offer, but in the long term the card is just not a good match for their lifestyle long term.