Friday, August 19, 2022
Most BNPL schemes feature low/no interest, with purchases paid off in installments, typically over a span of two to three months. BNPL is most popular among online shoppers, and saw a huge uptick in usage when ecommerce sales surged at the height of the Covid-19 pandemic.
The 2022 boost in satisfaction follows a notable decline in cardholder satisfaction reported in 2021. J.D. Power uses a scale of 1,000 to gauge customer satisfaction with different credit card issuers. In 2021, overall customer satisfaction with credit card issuers fell six points to 805; this year it climbed back to 810.
The rise in customer satisfaction is largely driven by significant scores for card benefits and services, credit card terms, mobile features, and communication factors, the research and analytics firm said, adding that Net Promoter Scores were also up four points, rising to 46 on a 100-point scale.
While they are more satisfied, consumers are using their primary credit cards less, J.D. Power found. On average, cardholders are allotting just 42 percent of monthly spending to their primary credit cards this year, down from 47 percent in 2021 and 2020. In 2019 it was 50 percent. Over the past five years, average monthly cash spend has been up 49 percent and debit card usage is up 80 percent, researchers noted.
John Cabell, director of banking and payments intelligence at J.D. Power, observed that while credit card issuers are building strong customer relationships in a highly uncertain economic environment, some real concerns loom on the horizon. "Despite recent spikes in travel and spending, cardholders have been taking a more cautious stance with credit card spend in the past five years," he said. "They are increasingly turning to other channels, such as debit cards, BNPL and even cash.”
Cabell added that it will “become critically important for card issuers to improve product value and boost proactive support for a growing segment of financially stressed customers as we move into this next phase of the economic cycle.”
J.D. Power reported increased cardholder interest in financing alternatives, with 44 percent indicating they would consider alternatives. BNPL is the most popular of the alternatives, with 28 percent saying they would use it. Reasonable fees and competitive interest rates are the key drivers of BNPL, J.D. Power said.
Separately, a recent survey by AC Cutts & Associates found 36.9 percent of BNPL users choose the payment option to avoid paying credit card interest rates.
J.D. Power also warned that consumer financial health is suffering, noting that more than half (57 percent) of credit card customers are classified as financially unhealthy, up four percentage points from a year ago. J.D. Power measures the financial health of a consumer by combining their spending/savings ratio, creditworthiness and safety net items like insurance coverage, and places them on a continuum from healthy to vulnerable.
Twenty-two percent of consumers say told J.D. Power they are worse off financially than a year ago, up from 18 percent in 2021. Forty-nine percent are carrying revolving debt on their primary cards, up from 43 percent in 2021.
A report issued by TransUnion earlier this month paints a different picture of financial health, however. The credit reporting agency reported that credit delinquencies fell to pre-pandemic levels during the second half of 2022, and that credit card numbers and average balances both are up.
According to TransUnion’s data, 161.6 million consumers had credit cards in the second quarter, up from 153.3 million in Q2 2021. Average credit card debit per cardholder also rose, from $4,817 in Q2 2021 to $5,270 in the quarter ending June 30, 2022.
“Consumers are facing several challenges that are impacting their finances on a day-to-day basis, namely high inflation and rising interest rates,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. “These challenges, though, are happening against a backdrop where employment opportunities are still plentiful and jobless levels remain low.” 
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