July 28, 2011
New Report Explores Consumer Attitudes Toward Credit Card Protection Products
By David Gordon, SVP, Business Development, The Financial Services Group
The Bureau of Consumer Financial Protection (BCFP) officially opened last week amid lawmakers’ heated debates over its structure and purpose, and many bankers’ concerns that unintended consequences of the new agency will harm consumers.
When the dust settles and the confirmation process of the Bureau’s Director is complete, it’s likely that the topic of credit card protection products will be among its early areas of focus. In a March 2011 report, the Government Accounting Office recommended that the Bureau set some rules to regulate these types of offerings.
Commonly referred to as “enhancement products” or “fee-based products,” offerings such as credit protection, payment protection and wallet protection have become an increasingly important for card issuers, as government-imposed financial reforms (e.g., Dodd-Frank Act, Card Act) have impacted more traditional revenue streams. With the increased marketing of these protection products has come an increase in media coverage and scrutiny. However, there has been no large-scale empirical analysis of consumers’ use of and feelings about these services. Until now.
In late June of 2011, the Financial Services Group at Lightspeed Research fielded a survey to a nationwide sample of 10,000 U.S. consumers to better understand their awareness, ownership, and usage of credit protection offerings among major U.S. credit card issuers, including American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Discover, HSBC, U.S. Bank, and Wells Fargo.
On July 19th, we published our findings in a comprehensive study of protection product ownership, cross-ownership, product familiarity, purchase motivation, product satisfaction/value-price comparisons, reasons for non-renewal and potential customers. Here are some highlights:
- Protection products with higher costs tend to have higher levels of customer satisfaction
- Almost one in five customers of these products can’t recall why they signed up
- More than 75 percent of customers who have actively used their protection product felt that it exceeded their expectations
- Among non-customers who indicated a likelihood toward future purchase, a considerable portion had been unaware of the product’s existence.
Further information about this study can be obtained directly from the Financial Services Group at Lightspeed Research.
Category:Financial Services Group, Industry News, Research Products
Posted on July 28, 2011
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