Add credit cards to the list of important financial services that confuse Americans.
A large number of consumers don't understand the terms and reward programs of their cards, according to a new survey of 14,000 card users by J.D. Power.
Though people know the basic workings of credit cards, the survey revealed a surprising lack of awareness about critical elements, such as interest rates and late fees, that could affect their indebtedness.
Only 47% of survey respondents said they completely understand the terms of their credit cards, according to the survey. Among those customers, 73% don't understand details regarding the all-important interest rate policies. And 31% aren't versed on late-payment fees.
Customer understanding about how to earn and redeem rewards has dropped, with only 59% of customers saying they "completely" understand how it works, down from 66% last year. Another one-third of respondents said they're unaware of their cards' supposed benefits.
That's a big issue for card companies.
"Customers who use their card's benefits spend an average of $400 more per month on their card, compared with those who are aware of benefits but do not use them, so clearly this is an area of importance to card issuers," said Jim Miller, senior director of banking services at J.D. Power.