Two nonbank card brands shot to the top of J.D. Power and Associates' annual customer satisfaction ranking.
While numerous bank-issued and cobranded cards scored above average, the Discover card was rated No. 1 for convenience users-people who pay their bills without incurring interest charges.
American Express Co.'s Optima True Grace card, its title denoting the 40-day period before interest accrues, came out best for cardholders who carry their balances from month to month.
Bank-issued cards took the next three places in each ranking based on attributes identified and weighted in J.D. Power's survey of 10,540 credit card customers.
On the convenience-user side they were the Citibank-American Airlines AAdvantage card, Chase Manhattan Bank's Shell Oil card, and Citibank's own cards. For interest payers they were Wachovia Bank cards, Chase's cobranded Wal-Mart Stores card, and Citibank's again.
J.D. Power, based in Agoura Hills, Calif., brought to the credit card industry two years ago the quality-rating methodology that it is best known for applying to the automobile industry.
AT&T Corp.'s Universal Card unit led in the first two surveys, but because of changes in approach, the results of the 1997 Comprehensive Cardholder Satisfaction Study are not comparable with the earlier ones.
AT&T Universal, which has restructured its cardholder rewards program but committed at the beginning to "no annual fee for life," still was one of 12 issuers or products equaling or exceeding the average index of 104 for convenience usage.
Convenience users tended to put more emphasis than balance carriers on customer service and rewards. The balance payers put relatively greater weight on pricing, card servicing, and issuer reputation.
A total of 22 card issuers with 54 card programs were analyzed.
This year's survey was designed to reflect consumer behavior more closely than in the past, said Andrew March, director of financial services, who is based in J.D. Power's Westport, Conn., office.
Some companies scored above average among both the convenience users and interest payers. Discover, Chase's Wal-Mart card, and Citibank were among the top six in both categories; Citibank/Ford was sixth among interest- paying cardholders and tied for eighth with AT&T on the convenience side.
Advanta, MBNA, NationsBank, Optima True Grace, and Bank of New York were among those that fell below the 104 average score for convenience cardholders. Advanta, Bank of America, Chase/Shell, NationsBank, and Wells Fargo Bank fell short of the 95 average for convenience users.
Discover, which J.D. Power said is gaining loyalty among people with multiple cards, did particularly well in terms of price, customer service, and rewards.
Thomas R. Butler, president of Novus Services, the unit of Morgan Stanley, Dean Witter, Discover & Co. responsible for the card, said its "one-call resolution" policy is meant to answer all of a cardholder's questions during one conversation with a customer service representative.
Mr. Butler also said Discover's cash-back feature set an industry standard and is "consistently appreciated by consumers."
In the revolving category, Optima True Grace's score of 106 was 3 points better than Wachovia, which is known for its Prime for Life rate and other pricing innovations.
Competition is stiffest in the interest-charging category, said Mr. March. Cardholders are more likely to own six cards versus four for average convenience users. Credit users are also more likely to cancel their cards when an attractive offer comes along.
Optima True Grace has succeeded at attracting higher-than-average balances-$1,714 versus the $1,675 for other cards aimed at revolvers, J.D. Power said.
Credit card consultant James L. Accomando of Fairfield, Conn., contended the True Grace card succeeded because American Express targeted advertising effectively at people who use credit.
J.D. Power also found that consumers have not reduced their number of credit cards but are using fewer of them for spending.
Mr. Butler speculated that consumers who are overextended, "are putting away cards and getting their houses in order" by consolidating their spending on one or two.
Frederick F. Reichheld, director of Bain & Co., Boston, and an expert in customer retention theory, said another reason might be that credit is plentiful and it has become less necessary to have many cards.
