2014 Banking and Credit Card Survey

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1 2014 Banking and Credit Card Survey

2 About Credit Reporting Agency Credit Reporting Agency is the UK s first internet based credit reference agency, aimed firmly at serving consumers, rather than business users. It leads the UK market in the provision of online credit file based services and provides consumers with easy access to information on three websites: checkmyfile was first in the UK: - to provide consumers with online access to their credit files; - to offer consumers the ability to check their own credit score for free and to give plain English explanations of how credit scoring works. givemecredit was first in the UK: - to match lenders to consumer credit ratings for free, using credit scores, to help consumers find the cheapest deals and to reduce the risks of being declined; - to publish fully independent reviews of credit card and loan lenders based on expert evaluation and consumer feedback of customer service experience. annualcreditreport.co.uk was first in the UK: - to provide free annual credit reports to consumers to encourage more to check the quality of the information held about them, and to guard against the increasing threat of identity theft; - to provide free identity theft prevention services. About this survey Each year since 2005, Credit Reporting Agency has asked its customers to rate their bank or credit card company. Respondents are incentivised by an invitation to enter a prize draw. This year two respondents were each randomly selected to receive a cash prize of 250. Credit Reporting Agency uses the results to ensure that when suggesting financial institutions to its customers on any of its websites, it can give a consumer focussed assessment of the service levels likely to be provided. By using credit scoring, it also ensures that applicants are matched to lenders who are most likely to say yes, so the risks of being declined are minimised. 1,691 people took part in this survey. Responses were processed using surveymonkey.com and analysed by Credit Reporting Agency. This analysis was published on 23 February 2015.

3 Summary of Survey Results This year s survey results give further evidence of customer service levels improving. The general financial outlook amongst respondents improved for the third year in a row. - The number of respondents rating their bank as very good or excellent remained consistent at 70%, but with more of those in the top category. At the other end of the scale, the number of people rating the customer service they receive as poor increased from 2% to 4%. - More customers (24%, up from 20%) said that the service provided by their bank has improved in the last 12 months, mainly due to providing help when it was really needed. - The number of respondents who felt strongly enough never to recommend a particular bank or credit card to a friend dropped again to 38% - down from 40% in 2013 and 44% in There has been an increase in the number of respondents whose main credit card is less than 12 months old suggesting an increase in new applications driven by intense competition around introductory offers. - More people said that their finances are in a better shape than they were a year ago 45% compared to 40% in Most respondents this year said that their main financial goal for 2015 is to pay off debt, up from 32% in 2013 to 38% this time around. First Direct was voted best bank for customer service, making it 7 years in a row at the top. Santander was the largest climber this year, surging from 9 th place in 2013 to 2 nd place in this year s survey. Marks and Spencer claimed top spot when it comes to customer service from credit card providers moving up from 4 th place in 2013 and pushing American Express from 1 st to 2 nd. In contrast, Tesco fell from 3 rd best rated to 7 th this year.

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7 What is main reason you are with your current bank? I've always banked with them Good customer service Good online banking I just can't be bothered to switch banks My poor credit rating means I can't switch Other reason The convenience of my local branch I get a monthly reward I get a good interest rate on my credit balance I'm stuck with them due to my overdraft Because of additional account benefits I was lured in by a joining incentive, haven't left It's linked to my mortgage The overdraft is relatively cheap to use Their ethical policy is important to me I work there (or used to) 3% 3% 3% 3% 3% 2% 2% 1% 1% 8% 7% 6% 5% 15% 17% 21% 0% 5% 10% 15% 20% 25% Length of existing banking relationship and good customer service are the main reasons given by respondents to stay. Online banking seems slightly less important this year. Has the service provided by your bank changed significantly in the last 12 months? Yes - I think it has got worse, 9% Yes - I think is has improved, 24% No - it's pretty much the same as it was, 67% Positive signs overall, with more customers feeling that the service they have received from their bank has improved.

8 Why has your bank gone down in your estimation? They didn't help me when I really needed it The customer service has got worse Other Repeated mistakes My overdraft limit has been cut or costs more They turned me down for another product The interest rate I earn has been cut My local branch has closed Ethical Issues Their call centre has moved overseas 2% 1% 8% 7% 6% 6% 11% 10% 21% 27% 0% 5% 10% 15% 20% 25% 30% Fewer customers feel that their bank s customer service has gotten worse compared to last year but more customers resent having being turned down for products with their bank, up from 2% to 7%. What is the main reason you are happier with your bank? They gave me help when I really needed it 35% Their customer service has noticeably improved The account benefits have improved 18% 19% Other The overall image of the bank has improved 13% 12% Borrowing has got cheaper/charges have been 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Contrasting with the previous table, significantly more customers feel that their bank has helped them when they really needed it, increasing from 26% in 2013 to 35% in 2014.

9 Credit cards Do you have at least one credit card? No, 21% Yes, 79% I'm worried about staying in control of my spending, 11% Why don't you have a credit card? I used to have one, but the card isssuer closed the account, 7% My credit rating means I can't get one, 45% I just don't need one, 37%

10 If your credit rating were to improve, do you think you would get a credit card for day-to-day use? Yes, if my credit rating were to improve, I'd definitely want a credit card, 35% It would have to be a really good offer to tempt me to get a card, 36% No, my past experience with a credit card has put me off, 29% And do you use it regularly, or just as an emergency backup? I'm just paying off a previous balance, 19% I only use it for work expenses, 1% It's only there as an emergency back-up, 20% I use it regularly to pay for good or services, 59% Survey respondents appear to be using their credit card less often for regular spending, but there has been a jump in those paying off a previous balance, up from 13% to 19%.

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13 What is the main reason you use this particular card most? Convenience I can't get one from anyone else It has a rewards programme It has a high credit limit Other It's the only one I need It's linked to my bank account 0% on purchases It gives me cashback on purchases It has a low APR The added purchase protection To keep track of spending 2% 4% 5% 6% 8% 8% 9% 9% 11% 11% 11% 16% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% The most popular reasons for using a particular card are now convenience and lack of choice from other providers, rather than rewards programmes or cashback incentives, which have previously been most prominent. Has your opinion of your main credit card provider changed significantly in the last 12 months? Yes, they have gone up in my estimation, 10% Yes, but they have gone down in my opinion, 7% No, not really, 82%

14 They have moved their call centre overseas, 5% Why has your opinion of your credit card provider gone down? Turned me down for an additional product/wouldn't increase my credit limit, 6% Repeated mistakes, 10% My credit limit was reduced unexpectedly, 2% Poor treatment of a friend/i've heard bad things about them elsewhere, 3% My standard APR was increased, 22% Too many charges, 13% Generally worse customer service, 21% Lack of help when I really needed it, 17% An increase in the number of respondents citing rejection as a reason for their opinion of their bank going down rose from 3% to 6% year-on-year.

15 What is the main reason your credit card provider gone up in your estimation? Their rewards programme has improved, 11% They helped me when I really needed it, 20% They've reduced my standard APR, 8% General improvement in customer service, 37% They've given me the credit limit I needed, 24% Have you applied for a new bank account or credit card in the last 12 months? Yes, 39% No, 61%

16 Was your application approved or turned down? I was declined, 35% I was accepted, 65% Did you give specific consideration to your credit rating when deciding which bank or lender to apply to? No, 41% Yes, 59% The number of respondents taking their credit rating into consideration before applying for a credit card has increased from 50% in 2013 to 59% in 2014, indicating a growing awareness of its importance in the application process.

17 Is there a particular bank or credit card that you will never use again or recommend to a friend? Yes there is, 38% No, I don't feel that strongly. 62% The number of respondents with particularly strong negative feelings about a lender continues to fall, dropping to 38% this year, compared to 40% in 2013 and 44% in No reward for being a loyal customer, 6% Complete incompetence, 9% Is there a particular reason for your strong negative feelings? Aggressive debt chasing or selling on of debts, 4% Repeated mistakes, for example with Direct Debits, 3% Constant selling of other, unwanted products and services, 2% Very poor customer service, 23% Other reason, 16% Excessive and unfair charges, 15% I feel that APR is ridiculously high, 11% They offered no understanding or assistance when I was in financial difficulty, 12% Far less people cite complete incompetence for their negative feelings, dropping to 9% from 14% in 2013.

18 Would you say that your finances are in a better or worse position than a year ago? I'd rather not say, 5% I'm in a worse position, 16% I'm in a better position, 45% My finances are much the same as they were a year ago, 33% Continuing improvement in respondents financial outlook, with 45% considering themselves in a better position in 2014, compared with 40% in 2013 and 36% in What is your main financial goal for 2015? I'm aiming to pay off debt I've got no particular plan/goal 11% 6% 4% 4% 2% 2% 38% I hope to improve my credit rating Get a mortgage I'm saving for a new car/other big purchase I'm saving towards a big holiday 15% Remortgage to a better deal 18% I want to get a car loan Get a loan for something else (e.g. a new kitchen) More of our respondents are hoping to pay off debt in the next 12 months, up to 38% from 32% in the last survey. Slightly more people are also hoping to get a mortgage in 2015, up 3% year-onyear.