For the second year in a row, the AT&T Universal Card has topped the J.D. Power & Associates survey of customer satisfaction in the credit card industry.
AT&T earned a score of 108, based on attributes including statement quality, pricing, and reputation. That was seven points better than its closest rival, Wachovia Bank. Only five others in the basic or gold card category exceeded the industry's average satisfaction index of 98.
In a separate calculation for cards that provide rebates and rewards, compiled this year for the first time, the General Motors MasterCard, issued by Household Bank, scored a 110. Next came the Discover card at 105, the average rating.
Bidding to provide a credit card industry benchmark comparable to its better-known auto industry studies, J.D. Power ranked 47 products of 21 issuers.
The results, in which AT&T led the basic cards and eight rewards-type programs scored better than 100, reflect the broad impact of nonbanks and nontraditional marketing approaches such as cobranding.
But bank issuers acquitted themselves quite well. Although Wachovia, at No. 2 on the basic list, was sandwiched between AT&T and American Express' Optima card, five of the next six positions were occupied by commercial bank issuers. Household Bank was the exception.
Citibank, just behind Optima in a tie for fourth in basic and gold cards, also landed twice near the top of the rewards list, with cards it issues on behalf of American Airlines and Ford Motor Co.
In the rewards ranking, after GM and Discover, five of the next six were traditional-bank-issued: the two Citibank products, Bank of America's card with Sunoco, First Chicago NBD's with United Airlines, and Chemical Bank's with Shell Oil. The nonbank entry was GE Rewards.
Card industry executives were critical of the first Power report last year. It attached more weight to statement and billing procedures than to the fees, interest rates, and reward features that card issuers say are more important.
The second annual survey, conducted in June and July, came up with a similar weighting. For basic and gold cards, 40% of respondents said "billing and payment" was the most important factor, 23% cited the interest rate, 13% issuer reputation, and 10% credit limits. Only 3% said annual fees. (See chart.)
Similarly, in the rewards category, 37% mentioned billing and payment, 29% the interest rate, and 16% the rewards features.
"This does not diminish the importance of price and interest rate, but it shows that service is a more competitive issue today," said Andrew March, group director of J.D. Power, in Westport, Conn.
Other researchers disagree.
"The No. 1 retention strategy is low interest rates. They are what is driving the marketplace," said George Yacik, vice president of SMR Research, Budd Lake, N.J.
Bruce Brittain, president of Brittain Associates Inc., Atlanta, said "it is counterintuitive that billing is more important than interest rate." He said billing and payment never come up in open-ended survey questions asked by his firm.
The J.D. Power survey did show that the primary consideration in acquiring a credit card is a low, or no, annual fee.
J.D. Power's satisfaction findings may differ from conventional wisdom because of methodology. The company asks each consumer 20 questions that are not open-ended, so the respondents are never asked directly whether they believe billing and payment is most important. The conclusion is based on J.D. Power's statistical analysis.
As it happens, the AT&T Universal unit, which prides itself on customer service, redesigned its statement about a year ago to make it easier to read, said a spokesman for the Jacksonville, Fla., operation.
Basic and gold card issuers with a score below the 98 average included NationsBank, First USA, Banc One, MBNA, and Chase Manhattan. Mr. March said one reason for their lower scores might be over-use of teaser rates.
"There are some issuers who have a more predominant teaser-rate acquisition program than others," he said, "and people get upset when the interest rate goes up, even if it stays low."
Consumers also might mark down an issuer when its credit limit falls below those of competitors, even if the limit were higher than the industry average.
