The J.D. Power study divides credit card users into two categories
Posted on October 16, 2007
Filed Under Advice, Balance Transfer, rates | Leave a Comment
Transactors: These are people who usually pay off their balance each month. These folks tend to be more satisfied with their credit cards than are card holders who carry a balance.
Because transactors don’t have to worry about interest rates, they tend to look for cards that provide the best rewards, Taylor says. That makes sense: If you don’t pay interest on your credit card, any rewards you receive are gravy.
But some rewards are more satisfying than others. Airline miles are still the most common credit card award, with about 40% of card holders receiving this incentive, the survey found. Still, customers who received cash-back awards, which are available to 22% of card holders, expressed higher levels of overall satisfaction, the survey found. Those who received hotel rewards points — available to only 9% of card holders — also expressed higher satisfaction. That may reflect difficulties consumers have faced in trying to use their airline miles, Taylor says.
The survey also found that most card holders aren’t aware of all the benefits their cards offer. Many cards, for example, offer travel insurance, emergency assistance and concierge service. Card holders who take advantage of all their card’s benefits tend to be more satisfied.
Revolvers: These are folks who typically carry a balance on their credit cards. If you fall into this category, forget about rewards programs. You can’t afford them.
Cards with generous rewards typically charge higher interest rates, says Greg Daugherty, executive editor of Consumer Reports. If you carry a balance, he says, the amount you’ll pay in interest will probably exceed the value of the reward.
Your best bet is to pay off your balance each month. But if that’s not possible, look for a card with a low interest rate and no annual fee.
by Sandra Block
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