People are slowly drifting away from credit cards as the COVID-19 crisis is expected to hang around for a few more years. Cardholders are complaining that the effect of the pandemic has left them unsatisfied unlike those who have escaped the suffering financially. The belief in credit cards is fading with each passing day and it’s only a matter of time before it is rejected completely.
Despite the banks offering various financial relief options and benefits to cardholders due to the current crisis it has had no impact whatsoever, and the piling debts continue to torment the consumers.
A Troublesome Journey
According to a study by the J.D. Power 2020 U.S. Credit Card Satisfaction, the key cardholder satisfaction since the pandemic has seen a significant decline. Credit card issuers were on the path to earning record high levels of customer satisfaction during the first three waves of the 2020 study, which were all conducted prior to the pandemic. Those gains were cut in the final wave of the study, with overall satisfaction falling 10 points (on a 1,000-point scale), led by declines in satisfaction with credit card terms and communications.
Customers have a tendency to use credit cards uncontrollably and the spending is always on the higher side in a given month. The money invested in the cards can be too dearer to the user. The pandemic has unsettled the relationship of cardholders with their issuers who are seeking options to bring down the burden.
Apparently, in recent times the usage of credit cards is showing considerable changes in the consumers’ trust, satisfaction, and brand.
Onus On Credit Card Issuers
Nothing looks positive as far as the end of the pandemic is concerned and the repercussions of the economic turmoil are clearly visible with unemployment numbers fast catching up with the coronavirus cases.
Credit card issuers are facing the heat with customers expressing their displeasure and disappointment under the current circumstances. The issuers are staring at a bleak future on retaining the loyal customer base.
Where Did They Fall Back?
In the past, credit cards had a reputation for bad debts and it continues to maintain that even today. With the current pandemic aggravating consumers are questioning the purpose of having a credit card.
A few issues about cardholders that were never addressed have come under the scanner such as:
- Lack of quick and digital communication for addressing consumer problems fast
- Ignorance of topics like credit limits, interest rates, and benefits that matter the most
- Non-observance of consumer spending patterns
Consumer advocacy organizations such as the U.S. PIRG (the United States Public Interest Research Group), are pitching in to create awareness on the need to up the ante for the sake of cardholders’ financial well-being.
A Warning Disregarded
Ever since the pandemic started, banks did not take notice of the repeated warnings and advice from regulators who stressed on getting into the act of working closely with the consumers. The cardholders were already facing the wrath of the crisis and the deteriorating economic condition but issuers paid no attention.
Banks are running helter-skelter as the flooding of credit card complaints with the Consumer Financial Protection Bureau (CFPB) is pointing at a grim situation for prolonging the credit card business in the coming days.
A Bumpy Road Ahead
Banks are assuring the regulators that they have been actively looking into the difficulties and complaints of consumers. The CFPB is not impressed with the developments though and still feels there is a lot of ground to clear.
Credit cardholders amidst the ongoing fiasco need to sit back and take note of the situation as the immediate requirement is how well you are placed to handle the expenses. Remember, the need of the hour is to tackle the basic expenses like daily utilities, which can be comfortably taken care of through payment apps.
Stay safe, be smart!
By Karthick V.