When it comes to the American consumer's preferred method of payment, it turns out that cash is not king. The credit card is.

A new study by J.D. Power and Associates shows that consumers give credit card companies a much better rating now than any time in the past six years. Of the major credit card purveyors, American Express (NYSE: AXP) was given the best score, 807 out of a possible 1,000, followed by Discover Financial (NYSE: DFS), with 799. The bottom three were Capital One, 734; Bank of America (NYSE: BAC), 728; and HSBC Holdings (NYSE: HBC), with 703. Right smack in the middles was JPMorgan Chase (NYSE: JPM), with a rating of 762.

Consumers are pleased with lack of fee hikes, customer service
Satisfaction with credit card vendors has been increasing over the past three years, probably due to the effects of regulation like the Credit CARD Act of 2009, which has kept rules and fees fairly static.

Card issuers are doing a better job with customer service, too. The survey found that problem resolution received the biggest gains, improving by 31 points over last year. This may explain why Bank of America and Capital One received scores near the bottom: Capital One recently paid $210 million to regulators to settle charges that it sold credit protection products of dubious quality to credit card customers. Bank of America, seeing the writing on the wall, announced it would no longer offer these products, either. It seems likely that such conduct and the attendant negative publicity might have hampered good customer relations for the two companies.

The good news keeps on coming
There are even more good tidings for the credit card industry. After a span of rapidly falling credit card debt, the average card holder held 6% more on his card balance at the end of June 2012 than one year ago. Not only that, but delinquencies are down around the 1994 low of 0.61%, although it ticked up slightly to 0.63% in Q2 from its year-ago low of 0.60%.

Interestingly, increased regulation has been given the credit for consumers giving their credit card bills higher priority in the bill-paying queue. According to a report from Transunion, the stricter rules regarding credit card approvals that sprung from the CARD Act made card customers make a greater effort to retain their card accounts, which many consumers use for emergencies or to stretch shrinking paychecks.

To top it all off, all this positive activity is occurring even as credit card interest rates continue to rise at an average rate of a little over 0.01 percentage points each month for the past six months.

This Fool's take
Despite the credit card industry's claims that additional regulation would hurt them, the exact opposite appears to be true. In addition, the forced stability that new rules have brought to customers' accounts has reflected well on the industry, increasing customer satisfaction to the highest level since J.D. Power began the survey.

Currently, the Consumer Financial Protection Bureau is mulling more changes, such as making card disclosures actually readable. Card companies are complaining, of course. If history is an indicator, though, the change will be for their own good.

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