lOMoAR cPSD| 38038415

A STUDY ON MERGERS AND ACQUISITIONS IN

INDIAN BANKING SECTOR
INDEX
4.19 Analysis of gender compared to how often do you
use your credit card instead of cash or cheques to pay for
the following items (Household Items)
4.20 Analysis of gender compared to how often do you use
your credit card instead of cash or cheques to pay for the
following items (Restaurants)
4.21 Analysis of gender compared to how often do you use your
credit card instead of cash or cheques to pay for the
following items (Personal Luxury Goods, Such As
Jewellery)
4.22 Analysis of gender compared to how often do you use
your credit card instead of cash or cheques to pay for the
following items (Rent Or Mortgage)
4.23 Analysis of gender compared to how often do you use
your credit card instead of cash or cheques to pay for the
following items (Travel Expenses)
4.24 Analysis of gender compared to how often do you use your
credit cards instead of cash or cheques to payfor the
following items (Online Entertainment).

LIST OF FIGURES
[Link] NAME OF FIGURE PAGE NO
1.1 Platinum credit cards
1.2 Silver credit cards
1.3 Gold credit cards
1.4 Titanium credit cards
1.5 Business/Corporate credit cards
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CHAPTER 1 INTRODUCTION

Credit card is a modern-day banking concept. Many new products were born setting new
trends and high standard in various economic parameters. Credit cards are now used
globally, transcending international borders and boundaries and are accepted as a common
currency by the international community. There are no language barriers. This product
has been established in the retail banking segment in as much as it is the most modern and
innovative multi-product. Credit card has given a new shape to money with instance
liquidity, constant flow of funds. It also offers different dimensions to credit cards.
Introduction of the credit card in Indian banking scenario opened up a glorious new
chapter.

Credit cards are small plastic cards. Each card has a unique number on it. Using this
number and few other details the holder can buy goods and services. Then the issuer of
the credit card transfers the money to the seller and then the credit card holder has certain
period of time to pay back the fund which he has borrowed from the card issuer, if the bill
is left unpaid for some period the credit card holder has to pay the interest for the amount
left unpaid. Payment through credit card is most common now a day.

A credit card is a rectangular slab of plastic issued by the credit card issuer. The credit
card issuer grants a line of credit i.e. (LOC) to the card holder which enables them to
borrow money in form of cash. The credit card issuer sets a borrowing limit based on the
card holder credit rating.

Any citizen of the country who is eligible to enter into a contract can apply for the credit
card. Banks need to check the regular income, net worth of that person. Many people use
charge cards. In that sense many of the card holder pays their bill in lump sum. Charge
cards are less popular than the credit cards as they are less flexible. As the credit card
offers them “BUY NOW PAY LATER” option to buy valuable goods and services. Credit
cards are used for convenience, emergency and transparency in dealing. Credit cards
enable e-payment facilities for buying anything thing anytime from anywhere.

If you pay through your credit card for few days you won’t be charged any interest on it,
have borrowed. For example. (If a user had Rs. 8,000 transaction and repaid it in full
within thisgrace period, there would be no interest charged. If, however, even Rs. 800 of
the total amounts remained unpaid, interest would be charged on Rs. 800 which was
outstanding. And in some banks the interest is charged from very next day no time period
is given to the card holder).
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There is growing popularity of credit cards being used as a mode of payment as opposed
to other modes of payment like cash and cheques. The credit card offers the users the
benefit of acquiring goods and services without having the burden of carrying cash. It also
offers access to credit without having to go through the elaborate paperwork involved in
case of a loan.

As the credit card ownership and use has expanded around the world, credit cards have
become a major source of financing consumer purchases as well as a method of money
transmission.

Credit cards serve two important functions for the consumers:

(1) A means of payment and

(2) A source of credit.

The popularity of credit cards as a payment medium has been attributed to convenience
of not carrying cash, thus credit card usage particularly has been increasing in developing
countries. At the beginning usage of credit cards had been very limited. However, later
significant changes occurred in Indian credit card market. Credit card use and ownership
have expanded very rapidly in India - mostly in upscale hotels and restaurants and retail
stores, more so in major urban centres.

Despite these all benefits, credit card usage and ownership has been significantly
associated with increased unplanned spending and debt. Debt associated with credit card
usage has been on the rise. This has raised concern over the adverse effects on the
consumers and economyat large. People have a tendency to increase their expenses while
using credit cards rather than debit cards, cash, cheques or other modes of payment.

Credit cards are a popular medium of payment for consumers today. In the USA, it has
been identified as the second most popular non-cash instrument. The use of credit cards
has already become a convenient way to expand purchasing power. Durkin (2000) asserts
that “in modern commerce, credit cards serve as a payment device in lieu of cash or checks
for millions of routine purchases as well as for many transactions that would that credit
cards provide benefits to customers and merchants that are not provided by other payment
instruments. This explains
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the explosive growth in number and value of credit card transactions over the last 20
years, although the first cards were reported to be introduced in the 1950s. The literature
suggests that research has been conducted on the use of credit cards and consumers’
attitudes, consumer behaviour, and the stickiness of credit card interest rates, money
attitudes, credit card use, and compulsive buying among college students, theory of credit
card networks, and the effects of credit cards on willingness to pay. However, these studies
were conducted in western countries and there is a paucity of such research in emerging
market economies, which includes Malaysia. Due to legal, structural, cultural,
geographical, and socio-economic differences between countries, variances in practices
may have an effect on credit card spending behaviour.

1.1 FEATURES OF CREDIT CARD

• Risk-costs: The credit card users face minimum risk even if they lost their credit
card. The issuing banks charge minimum or fixed nominal fees for loss of credit cards if
reported promptly. A duplicate card is been provided within few days with a fresh
password or PIN protection.

• Facilities e-payments: A card user is equipped with e-payment option which dives
the user the power to buy anything from anywhere, for any goods that are for sale that is
offered without i8ncurring any cost of travel and fuel. Significantly, they are benefited of
discounts, competitive auctions and bid offers.

• Security: Credit Card transactions are many times secure when carried out through
secured connections and using passwords and secret PIN number. Even though frauds and
misuse like thefts and fraudulent encashment are reported, they are less compared to other
modes of payments.

• Global acceptance: The credit card issuing banks have their own state- of -art
information network system throughout the geographical areas, nationally as well as
internationally. The operations are serviced well through outsourcing or BPO hubs and
their “24 hours helplines”.

• Practical and convenient: The transaction and queries on behalf of the customer
are put through telephonically and simultaneously the identity of the credit card holder is
verified in a professional manner. Customer verification is done by verifying the date of
birth, spouse name, telephone number, residential address, etc. and for it. This shall be
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done in a polite or customer friendly way manner and not in any other way6 to cause
harassment to the customer.

• Trigger off an overdraft: The credit card usage off creation of an overdraft or a
credit obligation by the card user to the credit card issuer. In that sense, it is different from
a debit card or an ATM card. It thus attracts the financial charges as well as service charge
till full and final settlement ofsuch dues as per terms ofthe credit card agreement (Menon
& Bhattacharya, 2007).

1.2 CREDIT CARD TRANSACTION PARTICIPANTS

• Card holder: There are two types of card holders the „transactor‟ who repays the
credit card balance in full at once and a „revolver who repays only a single portion‟ of
the balance while the others accrue interest.

• Merchant: This is the vendor who sells goods or services to the credit card holder.
The merchant accepts credit card payments from the credit card [Link] also sends card
information and requests payment authorization from the credit card holder’s issuing
bank.

• Acquiring Bank/Merchant’s Bank: The acquiring banks are responsible for

receiving payment requests from the merchant or vendor and sending them to the issuing
bank through the appropriate channels. It then relays the response of the issuing bank to
the merchant.

• Acquiring Processor/Service Provider: The third-party entity is an arm of the

acquiring bank. A processor provides a service or a device that allows all merchants to
accept credit cards as well as they send credit card payment details to the credit card
network. It then forwards the payment authorizations back to the acquiring bank.

• Credit Card Network/Association Member: These entities operate the network

that process credit card payments worldwide and govern the interchange fees.
Examples
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of credit card networks are Visa, Master card and American Express. In the transaction
process, a credit card network receives the credit card payment details from the processor.
It forwards the payment authorization request to the issuing bank and sends the issuing
banks response back to the acquiring processor.

• Issuing Bank/Credit Card Issuer: This is the financial institution that issues the
credit card involved in the transaction. It receives the payment authorization request from
the credit card network and they decide rather to approve or decline the transaction

1.3 CREDIT CARD TRANSACTION PROCESS

• Authorization

In the authorization, the merchant must obtain approval for payment from the issuing
bank. The credit card holder presents their credit card for payment to the merchant at the
point of sale. After swiping their credit card on a point of sale (POS) terminal, the
customer’s card details are sent to the acquiring bank or to its acquiring processor via an
Internet connection or a phone line. The acquiring bank or the processor forwards the card
details to the credit card network. The credit card network clears the payment and requests
for the payment authorization from the issuing bank. The authorization request includes
the following:

• Credit card number

• Card expiration date
• Billing address, for Address Verification System (AVS) validation
• Card security code, CVV, for instance
• Payment amount

• Authentication

In the authentication, the issuing bank verifies the validity of the customer’s credit card
by using fraud protection tools such as the Address Verification Service (AVS) and card
security codes such as CVV, CVV2, CVC2 and CID. The issuing bank receives the
payment authorization request from the card network. The issuing bank validate the credit
card number,
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checks the amount of available funds in the account, matches the billing address to the
one which is provided by the credit card holder and validates the CVV number. The
issuing bank approves, or declines, the transaction and sends back the appropriate
response to the merchant through the same channels i.e. credit card network and acquiring
bank or processor. Once the merchant receives the authorization, the issuing bank will
place a hold in the amount of the purchase on the credit card holder’s account. The
merchant’s POS terminal will collect all approved authorizations to be processed in a
„batch at the end of the business day. The merchant provides the customers a receipt‟ to
complete the sale.

• Clearing & Settlement

In the clearing and settlement, the transaction is posted to both the credit card holder’s
monthly credit card billing statement and the merchant’s statement. It always occurs
simultaneously with the settlement stage. At the end of the business day, the merchant
sends the approved authorizations in a batch to the acquiring banks or processor. The
acquiring processor routes the batched information to the card network for the settlement.
The credit card network forwards each and approved transaction to the appropriate issuing
banks. Usually within 24 to 48 hours of transaction, the issuing bank will transfer the
funds less an „interchange fee, which it shares with the card network.‟ The credit card
network pays to the acquiring bank and the acquiring processor their respective
percentages from the remaining funds. The acquiring bank credits the merchant’s account
for credit card holder purchases, less a merchant discount rate.
‟ The issuing bank posts the transaction information to the credit card holder’s account.
The credit card holder receives the statement and pays the bill.

1.4 ADVANTAGES OF CREDIT CARD

• Spreading purchases out: where you will be able to use your credit card for large
purchase, such as a home appliance, over several monthly payments. This can be useful
for emergency situations where you may struggle to pay immediately for something you
need. One can settle a deal or transaction with the help of a credit card through the net
practically from any part of the globe and that to instantly. If you don't like to carry large
amounts of cash money with you or if a company doesn't accept cash purchases
(forexample most airlines, hotels, and car rental agencies).
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• Protection of Purchases: Credit cards are easy to carry, handle and encash. They
are also protected and replaceable with duplicate cards. On the other hand lost cash can
also be recovered. Personal and accident insurance cover is provided by the card issuer
and benefits the card holder safeguarding his future interest. It, thus takes care of social
welfare and security aspects

• Buying now to pay later: It can be more convenient option to use a credit card, as
it can let you buy a product or service but not pay for it until your due date rolls around
and you can make your monthly repayment without any interest on it if the due date is
missed you have to pay the interest on the unpaid amount. Various card issuers offer zero
per cent finance through credit card purchase. This helps the card user to make purchase
of consumer items, electronic gadget, households, etc. on a buy now pay later at no extra
cost or incidence of interest. Credit card helps in budgeting short term or monthly
expenses with a personal and independent source of finance (Mehdi, 2019).

• Having purchase protection: Any purchases you do make for between Rs.100 and
Rs.30,000 on a credit, credit card is protected by Section 75 of Consumer Credit Act. This
means if a transaction goes wrong for example if the selling company goes bust or if the
purchase is faulty or goes missing you can claim the cost back from the credit card
provider. You will also be able to claim for a refund.

• Getting an interest free loan: Some credit cards offer 0% interest or no interest on
the amount which has been borrowed. The period that effectively lets you borrow for free,
providing you to make monthly payments. Even if you pay the minimum amount per
month, you will still be borrowing interest free fund until the due date ends. At this point
you can completely pay off your debt, otherwise you have to pay back on the credit card
issuer standard rate which can be quite high.

• Getting benefits and rewards: Many credit cards also come with different types
of benefits and incentives that can be useful if you pick the right one which is convenient
to the
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credit card holder. For example if you are a keen shopper you might find a cash back or
store credit card to be ideal, while if you re often flying from‟ country to country you
might prefer an airline credit card.

• Almost every other retail/dealer offers considerable discounts in the range of 5% to

20% on purchase made through cards. The card issuer offers reward- points, 2.5 to 5%
cash back on fuel bills (Menon & Bhattacharya, 2007).

• Cutting down your debt: with a balance transfer credit card you will be able to
transfer existing debts on to one credit account with lowered or no interest. This means
you reduce the amount of money you pay on interest, this let you pay off the debt quicker.

• You can request a chargeback if you are unhappy with a product or service:
You can request a chargeback through your credit card company if you are not satisfied
by the services provided in store or online.

• Credit cards work in any currency: Although currency conversion fees are
usually applied, you can use your credit card to make purchases in a foreign currency.
There are even credit cards that waive fees for international purchases, which could be
useful if you regularly shop at overseas online stores or have an international holiday
coming up.

• EMI facility: If you plan for making a large purchase and you don’t want to sink
your savings into it, you can choose to put it on your card as a way to defer payment. In
addition to this, you can also choose to pay off your purchase into monthly instalments,
ensuringthat you aren’t paying a lump sum amount for it and reducing your bank balance.
Paying through EMI is cheaper than taking a personal loan from bank to pay for a
purchase, such as a television or an expensive refrigerator ([Link]).
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Trackability: The electronic record keeping that comes with credit cards makes
it easy to track your spending and identify fraud.

1.5 DISADVANTAGES OF CREDIT CARD

• The possibility of debt: The biggest disadvantage of credit cards is that they
encourage people to spend money that they don't have. The main risk of taking
out a credit card is that you could put yourself in rising debt if you aren’t able to
pay back what you had borrowed. Young people are more indulgent spending on
luxuries without the knowledge of their caretaker, parents or guardians. This
results into unguided and wasteful spending. Some credit cards can charge high
rates of interest, sometimes over 20%, and this can build up quickly if you don’t
pay the balance off before the due date.

• Your credit score: letting your credit card debt to build up, or missing payments,
can influence your credit rating. The lower your credit rating the harder it will be
to apply for the credit in future.

• Fees and charges: credit cards can also come with fees and charges if you don’t
pay the borrowed amount or you exceed your credit limit. You need to be careful
with how you use them. Credit cards involve higher financial costs especially
when one chooses the revolving payment option. The interest is compounded on
monthly basis even though the card user is paying up to 5% of the outstanding
balance. When the customer has exercised a revolving payments option, interest
is not charged on the total spend, where as it is charged on the roll over credit
outstanding on the due date. Theyare required to pay back on a monthly
minimum basis 5% of the amount outstanding at the end of the previous month.

• Limited usage: you might have restriction in how and where you can use your
credit card. For example, many will charge you for withdrawing cash from the
credit card issuer.
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Credit Card Fraud: Like cash money, sometimes credit cards can be stolen. They
may be physically stolen from the wallet or someone may steal your credit card number
from receipt or phone or website and use your credit card to increase the debt. The news
is that, unlike cash money, if you realize your credit card or number has been stolen and
you can report it to your credit card issuer immediately, you will not be charged for any
purchases that are made by someone else. Loss of credit cards entails a financial charges
or penalty. It may also risk misuse by peoples, thugs and cheats who can impersonate and
defraud large sums.

• Hidden costs: Credit cards appear to be simple and straight forward at the outset,
but have a number of hidden charges that could rack up the expenses overall.
Credit cards have different types of taxes and fees, such as late payment fees,
joining fees, renewal fees and processing fees. Missing a card payment would
result in paying penalty and repeated late payments of due balance could even
result in the reduction of your credit limit, which would have a negative impact
on your credit score and future credit prospect.

1.6 TYPES OF CREDIT CARD IN INDIA

• Credit card for women: There are Credit cards which are specially made for
women customers. These Credit cards offer special discounts to women in
different department stores, grocery chains and supermarkets. Women who enjoy
dining out will have an advantage as Credit cards for women provide them
special offers for dining, apart from other lifestyle products. While some banks
offer rewards on entertainment expenses like movie tickets, other rewards on
flight travels, etc. Almost all banks are now providing one or more Credit cards
for women. Women’s now have the advantage of choosing between Credit cards
for women and regular cards.

• HDFC Bank Solitaire - Premium Women's Credit Card.

• Kotak Mahindra Bank Silk Inspire Credit Card.
• Citibank Rewards credit card.
• ICICI Bank Coral card.
• Standard Chartered Inner Circle Platinum.
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American Express Payback Credit Card.

Classic Credit cards: These are entry-level cards offered by almost all banks and
financial institutions. In most of the cases, banks charges no or nominal annual fees. The
Credit limits may or may not be very high on these cards. These cards are ideal for
beginners. They can get rewards and cash backs on purchases and keep their Credit score
by making timely payments. Amongst other benefit, these cards are accepted globally and
these credit cards can be used in any country for purchase of goods and services. The
cards also allow for cash advances to members i.e. credit card holders.

• Union Bank VISA International Classic Credit Card.

• Syndicate Bank Global Classic Credit Card.
• IndusInd Bank Classic Credit Card.
• Indian Bank Global Classic Credit Card.
• IOB Classic Credit Card.
• Canara Bank Classic Visa Credit Card.
• PNB Global Classic Credit Card.
• Vijaya bank Visa Classic Chip Credit Card.
• RBL Bank Classic Shopper Card.
• ICICI Bank British Airways Classic Credit Card.

• Rewards Credit cards: Rewards Credit cards are specifically designed as per
the needs of shoppers. The credit card holder earns rewards points for every
purchase. These rewards are basically points which are gained for shopping that
can be redeemed at the end of the month. These rewards points can be redeemed
on purchased products and goods as specified in the credit cards. Most rewards
Credit cards have tie-ups with shopping malls or retail outlets so the customer
enjoys benefits out of it. The interest rates on these credit cards may be slightly
higher than that of other regular cards. These credit cards are issued only to those
individuals who have a high Credit score. In few cases, there are cash rewards
for purchases made using the credit card. These cash rewards can help you for
paying back your Credit.

• Citibank Rewards Credit Card.

• Standard Chartered Platinum Rewards Credit Card.
• Citibank Rewards Domestic Credit Card.
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Cash back Credit cards: As the name suggests, cash back Credit cards are the
ones that offer cash backs on purchases made using the card. With these cards you can
get cash back returns of anywhere between 5 to 25%. The percentage of cash back is
different for each card. Most cash back Credit cards offer cash back on fuel surcharge.
Another benefit of these cards is that the annual fee is adjusted against the cash backs.
Attractive cash back offers are available on purchase of groceries, movie tickets and
payment of bills. There are also dining privileges at select restaurants that come with a
cash back card (money control, 2019)

• Entertainment Credit cards: Entertainment Credit cards offer discount and

rewards on purchase of entertainment products. You can enjoy offers such as buy
one movie ticket and get another free. The cards also have discounts on several
things around you. There are different shopping benefits where you can earn
rewards for lifestyle products. Some credit cards also offer access to golf clubs.
The rewards received can be used to buy movie tickets or make travel bookings.

• Kotak PVR Gold Credit Card.

• Kotak PVR Platinum Credit Card.
• HDFC Titanium Times Credit Card.

• Lifestyle Credit cards: Most of the lifestyle Credit cards are premium Credit
cards. They provide benefits in the lifestyle segment. Customers can earn bonus
and accelerated rewards points with lifestyle credit cards on their purchases.
They are created to fulfil the needs of individuals whose income and lifestyle
changes with time. These credit cards give access to golf clubs, shopping
privileges, exclusive dining privileges in selected restaurants as well as discounts
on travel. They also give access to luxurious lifestyle privileges and entry into
different clubs. These credit cards provide higher rewards on shopping and travel
bookings. For example – Axis Bank Signature Credit card with Lifestyle
Benefits.

• Prepaid Credit cards: These credit cards are similar to debit cards but they give
the benefits of a Credit card. The bank lets the person to deposit a certain amount
in an account. The amount which you have deposited becomes your Credit limit
against which you can swipe the card. Every time when you use your credit card
to make a payment, the amount is deducted from the account. Although there is
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no Credit issued to the cardholder, there are privileges and rewards to be accrued
through every transaction
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can deposit the money again and get your Credit limit upgraded again. These Credit cards are
ideal for the individuals with lower Credit score.

• Travel Credit cards: These type of Credit cards offer travel benefits. Travel cards such
as the HDFC All Miles Credit card are usually provided or offered by banks to the
customers in association with travel websites and airline companies. The cards
provided or offered in association have special discounts and offers for bookings on
these airlines. These types of credit cards have benefits such as air miles, access to
airport lounges as well as rewards points. The travel cards are eligible for benefits for
travels across the world. Apart from travel, there are benefits on different bookings like
hotel accommodations as well as holiday packages.

• Jet Privilege IndusInd Bank Voyage Amex Credit Card.

• Jet Privilege IndusInd Bank Voyage Visa Credit Card.
• Jet Privilege ICICI Bank Coral VISA Credit Card.
• Jet Privilege ICICI Bank Ruby x VISA Credit Card.
• ICICI Bank British Airways Classic Credit Card. Jet Privilege
HDFC Bank Titanium Credit Card.
• IndusInd Bank World Miles Credit Card.
• Axis Bank Miles & More Credit Card.
• Citibank Premier Miles Credit Card.
• Jet Privilege HDFC Bank Titanium Credit Card.
• IndusInd Bank World Miles Credit Card.
• Axis Bank Miles & More Credit Card.
• Citibank Premier Miles Credit Card.
• Balance transfer Credit Cards: Almost all banks allow their customers to transfer
their outstanding balance from old Credit card to a new credit card. Banks also allow
inter- bank Credit transfers. This means that if you have a Credit balance on your HDFC
Credit card, you can transfer that balance to your new Credit card in ICICI bank. Most
people with poor Credit score choose these cards to transfer their Credit or credit score
and covert the balance into EMIs on lower rate of interest. This gives a fresh chance to
the cardholder to improve their Credit score. It also reduces the debt-burden on the
credit card holder.

• Subprime Credit cards: A subprime Credit card is meant for those individuals who
do not qualify themselves for a Credit card under the market interest rate. These
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individuals have poor Credit history. It is also known as a second chance lending. The
cards were meant for those who have a bad Credit score, loan defaults or even those
who were bankrupt. The Credit limits of these cards are low and interest rates are much
higher than the market rates. Few banks and other non-banking finance companies are
offering these cards in India.

• Student Credit cards: Credits cards issued to college students are referred to as student
Credit cards. These cards have validity period of five years and have very low interest
rates. These cards are issued to students who are 18 years old or older. These types of
credit cards have a very low Credit limits compared to other Credit cards in the market.
This is to make sure that the student doesn t fall into the debt trap‟ by overspending.
The student does not need to submit any income proof to get a student Credit card.
Many banks offer student Credit cards as joint cards with their parents‟ cards. Student
Credit cards also provide offers on shopping as well as food expenses.

• Secured Credit cards: Secured Credit cards, as the name suggests are issued against a
security amount deposited by the credit card holder. Banks let the customers who have
poor Credit score, open a fixed deposit account and then issue a Credit card to the
customer. The fixed deposit amount is on lien in favour of the bank, in case if you
default on your Credit card. This credit card is ideal for those have a poor Credit score
and are having difficulty in getting a Credit card. The Credit card limit is usually a
percentage of the total fixed deposit amount. You can also transfer your Credit balance
from your previous bank Credit card to the new one and convert the Credit into equal
instalments. The interest rates on these types of Credit cards are lower than that of
secure Credit cards.

• Unsecured credit card: Most credit cards offered by the lenders or financial
institutions are unsecured. Simply put, it is a card which can be availed without any
collateral. Instead of asking for the collateral, banks charge an interest rate on the
purchases made by the customers through the card. You don t need to have‟ a fixed
deposit account with the bank or give any collateral. Customers selected for an history,
financial strength, and earnings potential. An unsecured credit card offers lowerinterest
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rates, extra benefits and better rewards than a secured credit card (INDIALENDS Blog,
2018).

• Kisan credit cards: Kisan credit cards are offered to the eligible farmers in India to
help them with timely credit for their operational landholding, cropping, pattern, etc.
determining the size of the facility which are approved by DLTC and SLTC ( District
level technical committees and state level technical committees).farmers are much
benefitted from the technological developments in the banking sectors, these benefits
thus reaching all those remote rural areas. The cards should be modified for their use in
the ATMs. Providing adequate credit to agriculture was not a challenging for the Indian
banks.

• Platinum Credit Cards:

Figure No 1.1 Source: PNGKIT

Platinum card is one of the most popular credit card and is owned by many people
because of the number of benefits and privileges it offers. The benefits include lifestyle,
dining, shopping and entertainment offers, etc. The annual, joining and renewal fee of
Platinum cards are a little higher compared to other types of credit cards. Every Platinum
credit card comes with an exceptional welcome package, gift vouchers from retail brands,
annual spend rewards, accelerated rewards points, cash back offers, Priority Pass
membership with access to premium airport lounges, renewal gift vouchers, global
lifestyle and golfing privileges, easy cash withdrawals, fuel surcharge waiver, add-on
cards for family, emergency card replacement
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services, etc. Platinum card members generally also get other exclusive privileges, deals
and offers with every card availed, depending on the financial institution they are banking
with.

• IndusInd Bank Platinum Select Credit Card.

• IndusInd Bank Platinum Aura Credit Card.
• SBI Advantage Platinum Credit Card.
• SBI BMB Platinum Credit Card.
• Bank of Maharashtra SBI Platinum Credit Card.
• Tata Platinum Card.
• Tata Croma Platinum Card.
• Oriental Bank of Commerce SBI Platinum Credit Card.
• Karur Vysya Bank SBI Platinum Credit Card.
• Federal Bank SBI Platinum Credit Card.
• Standard Chartered Platinum Elite Credit Card.
• Standard Chartered Bajaj Fiserv Platinum Credit Card.

• Silver Credit cards:

Figure No.1.2 Source: FAVPNG

Silver Credit cards are the entry level premium Credit cards. This means that the benefits
on a silver Credit card are not as much as those on gold or platinum Credit cards; it has
more advantages than the classic Credit card. A silver Credit card is specially designed
for salaried employees who seek premium rewards and has a work experience of around
4 to 5 years. The silver credit cards usually have no or low annual or membership fee. It
is available to those
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customers who have a decent Credit history. The interest free periods on these types of
credit cards range from 25 to 50 days.

• Gold Credit cards

Figure No.1.3 Source: Pinterest

Gold Credit cards are premium Credit cards which are meant for high-income
individuals. These cards are available only against a good Credit score. These cards have
higher Credit limits and allow as much as 100 % cash withdrawal limits. Theyprovide or
offer higher rewards on purchases and exclusive access to dining restaurants as well as
access to airport lounges. There are cash backs on travel and accommodation. Add on
cards can be issued to family members of the primary credit card holder from the same
account. Apart from high rewards, a gold card holder gets cash back offers, reward points
and free insurance of travels. So gold cards are also insured against loss and theft.

• Titanium Credit cards:

Figure No.1.4

Source:

FAVPNG

Titanium Credit cards are

also premium Credit cards
which offer different advantages which are almost similar to that of a gold card. With a
 lOMoAR cPSD| 38038415

titanium Credit card, you can choose for a revolving Credit facility, which means that your
Credit is upgraded as you pay off your debts. Apart from that, Titanium card holders are
eligible for the Titanium Rewards Point Program. Members also get insurance coverage
and accident covers. Here, the cash withdrawal limits are very high. Apart from offering
air miles and cash backs on purchases of lifestyle products, many Titanium cards come in
association with retailers and merchants, hence offering discounts at these shops.

• Tata Titanium Card.

• Tata Croma Titanium Card.
• ICICI Bank Titanium Credit Card.
• BOB Titanium Master Credit Card.
• Central Bank of India Titanium Credit Card.
• LIC Titanium Credit Card.
• Axis Bank Titanium Smart Traveler Credit Card.
• Standard Chartered Super Value Titanium Credit Card.
• RBL Titanium Delight Card.
• HDFC Titanium Times Credit Card.
• HDFC Titanium Edge Credit Card.
• First Citizen Citi Titanium Credit Card
• • Business/corporate Credit cards:

Figure No1.5 Source: YES BANK

Business or corporate Credit cards are for the companies and businesses, limited
companies, banks, government run companies and for partnerships. These cards are
available to any business i.e. small business or large business that needs an account to
 lOMoAR cPSD| 38038415

keep a track of its own expenses. If you have a small business or a corporate office you
can apply for Credit card for your business.

Credit Cards can be held primarily business head but cards can also be issued to
employees. The employer will have the option to control the monthly Credit limit and
also to control expenses of employees. Payment for different cards can be done at once.
There are rewards for expenses on travel, accommodation and entertainment.

• SBI Platinum Corporate Credit Card.

• SBI Signature Corporate Credit Card.
• SBI Corporate Utility Credit Card.
• Canara Corporate Credit Card.
• BOB Corporate Premium Credit Card.
• HDFC Corporate Platinum Credit Card.
• HDFC Corporate World MasterCard Credit Card.
• HDFC Corporate Visa Signature Credit Card.
• HDFC Business Gold Credit Card.
• HDFC Corporate Credit Card.
• Kotak Corporate Platinum Card.
• Kotak Corporate Wealth Signature Credit Card.

1.7 TYPES OF CARD NETWORKS

VISA CARDS

Visa Cards are the foremost name in plastic cards with international acceptance and
state of art features and subscribed by the people around the world. They provide
exceptional convenience and reliability in terms of transaction processing. 'VISA' is
accepted in 150 countries all over the world. VISA stands for 'Vis International Service
Association'. The Visa networks enable Vis International Payments (VIP) '. Through Visa
Cards, one can withdraw cash from 8,40,000 ATMS in the Visa Global Network. It is
reputed as a very secure and reliable way to make payment for anything one need
anywhere in the world. Most of the banks have tie-ups with VISA International and thus,
they can issue Visa Cards has from any part of the globe. VISA provides both
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Debit Cards as well as Credit Cards,

e.g., Canara Bank has put into circulation an "ATM-cum-Debit card (Visa Electron)" for
its growing clientele. VISA International, the world leader as a payment brand, has
achieved a record sales volume of $ 26 billion during the year ended September 30, 2005,
(Rs.117,000 Crore in rupee terms). It has also marketed far and wide through the small
towns and suburbs, i.e., Tier II and Tier III towns. This has, in effect, helped in the cause
of developing recently, VISA International has rolled out its area development program
in 17 cities throughout the country to enable increased acceptance of cards at merchant
locations. It has also indigenously developed "low-cost card payment terminals"
exclusively for the Indian market. VISA Cards have a "unique four-character value" in its
CPS /ATM program as a security feature. VISA enjoys a membership of 42 principal and
associate banks in India.

MASTER CARD

MasterCard was founded in year 1966 as the Interbank Card Association and MasterCard
was purchased by MasterCard in 1979. There are the California Bank
Association in 1969, and was renamed. There are approximately 25, 000 MasterCard,
Cirrus and Maestro members worldwide. Serving consumers in 210 countries and
territories. MasterCard also provides one of the wide-reaching payment services across
the globe. MasterCard International is a Global Payments Company, with one of the most
recognized and respected brands in the world. MasterCard man ages a full range of
payment programmes and services, including MasterCard credit and debit cards. Maestro
online debit cards, Cirrus ATM cash access, and related programmes. As of March 31,
2004, gross volume for credit and off - line debit programmes was US$331.9 billion; an
increase of 8. 4% over the same period in 2003. MasterCard is accepted at over 22 million
locations worldwide. Cardholders can obtain cash with the card at bank branches and at
all ATMs in the Global MasterCard, Maestro and Cirrus ATM Network, among the largest
ATM networks in the world with more than 9,00,000 locations in all the seven continents.

AMERICAN EXPRESS

American Express is a bit different inasmuch as this network is not opento other
members, as is the case with the Visa and MasterCard networks, but is proprietary in
nature. This means that American Express itself issues the cards; unlike in the other cases
where member institutions like banks. etc., issue the cards. Initially, American Express
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was issuing only debit cards. Presently it issues credit cards also. Considering the
proprietary nature of the network, its market share is not as high as that of the other two.
The credit card industry is growing very rapidly, especially in the emerging economies
like India and China. Asia Pacific therefore happens to be the target of Visa and the other
service providers. Consider the following: the Asia - Pacific credit and charge cards
market grew by 7.4% in 2002 to reach a value of US $ 404 billion. The compounded
annual growth rate of the market in the period 1998 - 2002 was
6. 0%. In terms of numbers, the Asia - Pacific credit and charge cards market grew by
4.4% in 2002 to reach a volume of 460 million cards. The compounded annual growth
rate of market volume in the period 1998 - 2002 was 2.9%. Credit cards generated 85.6%
of the Asia - Pacific credit and charge cards market in value terms in 2002.

Charge cards accounted for 14.4% of the market value in 2002. In 2002, Asia - Pacific
generated 15.2% of the global credit and
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charge cards market in terms of value. In 2002, Visa generated the largest share (41. 29)
of Asia Pacific credit and charge cards market in terms of value. Master Card was the
second largest competitor in the market in 2002. Accounting for 30% of the market share
(Source: Data Monitor).

1.8 HISTORY OF CREDIT CARD

The word credit comes from the Latin word which means trust. In the year 1951, it was
the Diners Club who issued the first credit card or a plastic card to some of its 200
customers. These were treated as “Members Cards” catering to a few subscribers or
clients. Early on, the members of the club could use these cards as about 27 restaurants in
New York.

In India the total consumption payments made, only 0.6% is affected through Credit
Cards. It means that for every Rs.100 spent, a payment of 60 p was made through credit
cards. Compared to this, credit cards settlements in the US equal to 16% (Rs. 16through
credit cards for a total of Rs. 100 spent). It means that the usage of utility of credit card
in an advance country like the US is more than 26 times higher than that in India. After
introduction in the country in the early 90s, the credit card market zoomed up and spread
to far-flung urban and semi urban canter’s. Much earlier plastic cards like Diner Club
Cards were very much present in circulation. Those were mainly used for availing various
services, facilities and benefits under different arrangement and schemes and not for
withdrawing cash, a form of “cash without cash”. They also require the particular club
membership for availing the services.

Introduction of credit cards in the Indian banking scenario opened up a glorious new
chapter in igniting and augmenting customer demand for bank credit. It not only added to
the appetite of the upper classes of the society but also fed to the needs of the e face of
the initial shyness, the credit card market picked up appreciable momentum as a result of
various marketing tie up arrangements and direct selling agents. The reward the product
offered are rich and the stakes are plenty both from the point of view of the card issuing
banks and institution as well as the card user. Credit card could be known as a key driver
for retail banking growth. It, however it exposes the card issuer to the financial risk of
bad credits. To offset extensive exposure risk, the card issuing banks and institution needs
to undertake studies on the basis of risk earning analysis that helps streamlining their card
policies as a credit instrument.
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Credit cards were initially sold to only elite clientele and white-collar businessmen more
as a status symbol. However, the card business in due course had to shed its shackles on
the face of cut-throat competition. Gradually, it crossed many milestones in circulation
with immense demand and popularity. Thus, gaining momentum, the number of player
who jumped into the fray also increased. The market now got flooded with mainly two
types of cards i.e., Master cards and Visa international cards. What we witnessed, rather
experienced was not only a surge in circulation of plastic money but more so, an important
credit instrument in the kitty of the leading financial players in the Indian money market.

In this era of post-globalisation, liberalization and reforms, the concept of credit cards
was introduced as if a gift from its global partners in the developed economies to the
Indian market. Initially, it was The Standard Chartered Bank and Citibank N.A. that had
issued their first credit cards in the early 1990 s in the country and then ventured into‟ the
plastic cards segment aggressively. They also spearheaded their marketing strategy by
appointing „third-parties‟ as a marketing agent christened, Direct Selling Associates or
Direct Marketing Associates (DASs or DMAs).

However, what followed has become history. The use of credit cards grew in size and
volume and spread their reach like wildfire. One bank after the other issued their own
credit cards with more and more specifications, features and modification. They presented
it with not only new and innovative features but also offered number of facilities,
concession, perks, incentives and valuable insurance protection to the carduser. The use
of credit cards has just flourished. In many cases due to excess drawings it also added a
burden of interest-cost and many business bankruptcies too were witnessed.

The year 1976 saw the birth of the trade name „Visa‟ that was previously known as the
„BankAmerica card while the Master card was started in 1966 as the „Interbank card‟
Association .‟

Early 1900s to 1940s. Oil companies and retail stores issued their own credit cards to their
own customers which were to be used only at that retailer. Cards were made of paper,
cardboard, and later, metal.

1950s. Diners Club was introduced in 1950 for travel and entertainment expenses. It s‟
believed to be the first widely used credit card. American Express issued its own plastic
travel and entertainment card later in the decade. Both cards required cardholders to pay
Mid 1960s. The first general-purpose credit cards, later known as MasterCard and Visa,
joined the market.
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1973. Electronic credit card processing was introduced. This allowed merchants to access
information from banks to ensure that the user had enough credit for the purchase, which
gave consumers far more flexibility in using their credit and more places to use a credit
card as payment.

1986. The Discover card launches nationally with a television commercial during Super Bowl
XX. The card focused on delivering consumer-friendly features and services, such as the very
first cash rewards program and no annual fee.

Mid 1990s. The EMV (Euro pay, MasterCard, Visa) chip was developed and launched in
Europe, providing more security. Now the technology has caught on in the World.

Today. Credit card holders can use their cards at merchants across the country and around
the world. They have the flexibility to pay off their balances each month or make monthly
payments to fit their budgets. Consumers can even link their credit cards to their
smartphones. Many cards provide rewards for purchases.

1.9 Technical specifications Of CREDIT CARD: -

The size of most credit cards is 85.60 by 53.98 millimetres (3+3⁄8 in × 2+1⁄8 in) and
rounded corners with a radius of 2.88–3.48 millimetres (9⁄80–11⁄80 in) conforming to the
ISO/IEC 7810 ID-1 standard, the same size as ATM cards and other payment cards, such
as debit cards.

Credit cards have a printed or embossed bank card number complying with the ISO/IEC
7812 numbering standard. The card number's prefix, called the Bank Identification
Number (known in the industry as a BIN), is the sequence of digits at the beginning of
the number that determine the bank to which a credit card number belongs. This is the
first six digits for MasterCard and Visa cards. The next nine digits are the individual
account number, and the final digit is a validity check digit.

Both of these standards are maintained and further developed by ISO/IEC JTC 1/SC
17/WG 1. Credit cards have a magnetic stripe conforming to the ISO/IEC 7813. Most
modern credit cards use smart card technology: they have a computer chip embedded in
them as a security feature. In addition, complex smart cards, including peripherals such
as a keypad, a display or a fingerprint sensor are increasingly used for credit cards.
 lOMoAR cPSD| 38038415

In addition to the main credit card number, credit cards also carry issue and expiration
dates (given to the nearest month), as well as extra codes such as issue numbers and
security codes. Complex smart cards allow to have a variable security code, thus
increasing security for online transactions. Not all credit cards have the same sets of extra
codes nor do they use the same number of digits.

Credit card numbers were originally embossed to allow easy transfer of the number to
charge slips. With the decline of paper slips, some credit cards are no longer embossed
and in fact the card number is no longer in the front. In addition, some cards are now
vertical in design, rather than horizontal.

CHAPTER 2

REVIEW OF LITERATURE

Literature review is very important in research work as it refers to the history of the work
done in a particular field. Noah Webster, in his 1828 dictionary, defined History as
“Annals relate simply the facts and events of each year, in direct chronological order,
without any observations of the annalist”.

Only with the help of history we can learn how to improve upon the experiences of the
past and avoid the mistakes done again. An understanding of the past enables us to make
better sense of today and prepares us to accept the challenges of the future. It is always
important to study the past to decide the strategies for the future.

The concept of using card for purchases was described “in 1888 by Edward Bellamy in
his utopian novel ‘Looking Backward’” (The Crest edition of TOI, TPI, 2011). Bellamy
used the term ‘credit card’ eleven times in this novel. “The Credit Cards originated in the
US in the early 40s. Credit cards actually have their roots in the first bank card named
‘Charg-It’ issued in 1946 by John Biggins a banker in Brooklyn bank”. (Gerson E.S. &
Woolsey B., 2012).

The modern credit card –made of cardboard –is mainly used for convenience and
entertainment purposes that are Diners Club Card. It was introduced in 1949 by Frank
McNamara and his partner Ralph Schneider, when they wanted an alternate to cash.
However, it was “in September 1958 that a small plastic card called the Bank America
card was mass mailed by the Bank of America, California to their Account holders (later
became VISA cards). And eight years later, in 1966, the banks comprising the Western
 lOMoAR cPSD| 38038415

State Bank Card Association issued the Master Charge Card (later became MasterCard).
With the introduction of the magnetic Strip in 1970, The Visa and the MasterCard became
a part of the information age and dominated the market of credit cards of today”. However,
the use of credit card has become universal with the coming of internet where purchases
could be made online.

The study has undergone the previous research both from India and foreign countries to
get better understanding about the various element of credit card holders and their
spending habits.

E- Commerce

Internet is one component which has developed for the past one decade as the ingredient
of quick and rapid lifestyle. The advent of information technology in the field of
commerce has given birth to E-commerce. It helps in connecting business people for
official purpose; internet is playing as a central hub for all. Electronic commerce plays a
major role in all the sectors, especially in the banking industries. E-banking is operating
with the support of internet known as internet banking and encourages people to use
online banking.

As there are many cards offered by the banks to their customers, majority of the customers
prefer to use credit cards as in case of debit card, customers can use only the amount
which they have in their account. In credit card, customers use it and fulfil their needs and
pay the amount later.

Patel (2018) studied that there is a wide growth of credit card in upcoming year. But it is
find out that there are many bank customers who have not knowledge about credit card,
howcredit card is used and what is the benefit of the credit card. And it may help in growth
of credit card business. High interest is also one of the factor that demotivate customer.
Banks required to reduce interest rate so that customer are increased to get the facility of
the credit card. Inorder to facilitate the customers to carry the cards with them, effective
protective measures must be taken to protect the cards against operational and security
risk.

Sudhagar (2012) observed that the credit card issue in terms of number of credit cards
witnessed a whopping growth during the past five years. It is further concluded that there
are a number of bank customers who do not have any knowledge about credit cards. Many
people have knowledge about credit cards, but do not possess credit cards because of the
fear of falling into debt trap. High income earners and highly educated class use credit
 lOMoAR cPSD| 38038415

cards more, availing high credit limits. Extent of usage of credit cards is smaller among
higher proportion of the card holders. Customers satisfaction is found‟ to be less because
of high rate of interest. Customers perceived core services and facilitating services at
higher level. Card holders face the major problem of lack of proper advice from banks.
Credit card market is yet to realize its potential. The scenario of credit cards during 2009-
2010 is very significant. Many card holders surrender their credit cards and instead of
using credit cards the bank the customers prefer debit cards. The debit cards to help them
avoid carrying cash and enable withdrawal of cash through ATM and they need not be
afraid of falling into debt trap as in the case of credit cards.

Due to
 lOMoAR cPSD| 38038415

financial inflation, many banks have stopped issuing credit cards to their customers. As
people are yet to realize the complete potential of credit card, its market is falling down.

Koparal and Calk (2014) This study reveals that almost half of the consumers own only
one credit card, and 20 % of them use kore than three cards. Card users are almost divided
equally in terms of the period they are using their [Link] consumers who pay less
attention to the prices of the products and services as long as they use credit cards is
around 70 %. A minority of 18 % rejects this idea. This does not prove that credit card
users are less sensitive to price in all their spendings but there is an evidence that they act
more free when using using credit cards than when they spend out of pocket.

Prasanth et al. (2019) analysed the usage of Plastic money with respect to amount of
transaction. The findings reveal that there is positive correlation between amount which
is monthly spending. Through plastic money and frequency of using plastic money.
Relationship between need of transaction & usage of Plastic money reveal that
insignificant between amount which spends by plastic money for the paying utility bills,
household consumables, luxury and durable goods & others. Some of the respondents are
not using plastic money because of chance of misuse by others, lack of knowledge, lack
of trust, malpractice by bank user, unstable income & other reasons. This study also
reveals maximum customer satisfied with plastic money.

Ferrao and Ansari (2015) has revealed that credit card has become a spending Patten for
people in India. And it has created a major impact on spending power of the people. It
also tells that the people are aware of credit card different private bank. Private Banks has
huge impact of credit card use. Provides awareness of credit card to different private bank.
Private Banks has huge impact of credit card use. It sector performs a crucial role in
development of Indian economy. So banks need to optionally make use of technological
innovation to increase transmission, improve their performance and efficiency, deliver
cost-effective products and services, provide quicker, efficient and convenient customer
support and thereby, promote the overall development and development of the country.

Idris and Jan (2013) studied that extensive growth of Islamic banking in the Malaysian
region as an alternative to the conventional banking, the consumer has wide option to
choose for availing micro credit through credit card. Credit card is seen to exhort the
 lOMoAR cPSD| 38038415

consumer behaviour towards excessive purchasing or compulsive buying. This study

provides a fresh empirical result to show the effect of Islamic credit card on consumer
spending for both conventional and Islamic credit card holders. It is found that most
consumers are ready to shift to Islamic credit card, with the exception of few who still
believe in conventional credit card because of the long banking experience that is better
equipped with proper channel of security management and its operation. The study shows
that Islamic credit holders spend less than the conventional credit holders in the short run
because the former acknowledge that Islam abhor excessive debt obligation. Islamic
credit card holders agree that the benefits of Islamic credit card are quite good and the
conventional card holders also see the same on their part. The conventional holders
assume the perceived risk of fraud through hacking or any fault through the online
payment mechanism far more than Islamic credit card holders do. In terms of delivering
quality services, conventional holders show preference over Islamic holders.

Mwende, Wachira, and Amata (2017) The study finds that credit card incentives used
by commercial banks will have an influence on the credit card uptake and spending
behavior of users. However, banks have set adequate policies and rules that mitigate the
issue of bankruptcy from credit cards but limited to credit limits and policies related to
recoveries. Indebtedness has been ascribed to other factors such as poor planning. The
study concludes that credit card incentives can be effectively used by banks intending to
increase the spending of their clients through credit cards and in increasing the number of
people using credit card as the form of payment. The findings also show that credit card
incentives were a major contributor to credit card uptake.

Sakarombe and Marabada (2017) in their study says that to assess whether plastic
money can be a therapy to the cash crisis in Zimbabwe. This was done through
investigating when the population of Zimbabwe would fully and willingly adopt and
implement the use of plastic money. The results showed that the use of plastic money is
still a bit far from acceptance by individuals as people still prefer cash to electronic money
reflected by a 66% cash preference and only 3% plastic money preference. The reasons
for unwillingness to change emanate from
lack of understanding the concept of plastic money, lack of trust in the banking sector,
fear of the unknown, exploitive charges in the use of plastic money and poor network
services. There is need to shift preferences from cash to plastic money.
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Khare, Khare, and Singh (2012) The relevance of the findings of this research for
practitioners and researchers cannot be emphasized enough. The lifestyle dimensions
examined in this research can help credit card companies in profiling the Indian customer
market. The sample comprised of customers from different regions of India. The Indian
customers’ risk and utility perceptions towards owning credit cards should be addressed
while designing marketing strategies. Lifestyle appears to play an important role in credit
card ownership. Since income levels have improved in the past few years, lifestyle
marketing of credit cards can help in positioning and segmenting strategies. At the global
level India presents an attractive market with a large middle class, dual income
households, and a large population which is between age groups 30 and 45 years. These
demographic and psychographic factors can play an important role in marketing of credit
cards. Multinationals and Indian banks can link credit card use with lifestyle and
convenience and this can help them in strategically marketing credit cards. Most Indians,
lack knowledge about credit card and are afraid to use it.

Anand (2014) While the research to date on credit card default has provided valuable
information about trends in market, of consumer behaviour and motivation in the use of
cards and subsequently in a more complete understanding of default. Results among the
general population suggest that increased financial knowledge is associated with
improved credit use behaviour. This study is very crucial in knowing the mindset of the
credit card users in respect to how they perceive different attributes and aspects relating
to credit card defaults. Banks should clearly explain the credit card agreement to the
customers before issuing them the cards. Similarly the customers should also be fully
aware about the consequences of defaulting on their card.

Agarwal and Zhang (2015) stated that Credit cards have become pervasively held by
most consumers. With increasing access to personal credit, households are now relying
more and more on electronic payment media, mostly credit cards in the UK and the US.
Meanwhile,
educators, consumer advocates and public policy administrators have raised concern over
the problems of credit card misuse and the massive accumulation of credit card debt. This
paper reviewed the empirical evidence, mostly in the US for the last two decades, on
issues related to consumers’ behaviour in the use of their credit cards. They listed several
behavioural biases found during credit card use. The first puzzle is that consumers were
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holding liquid assets and credit card debt simultaneously. This was highly irrational given
the high interest rates associated with revolving debts. Moreover, lab studies found
supportive evidence that consumers tended to overspend using credit cards compared to
alternative tools such as cash and checks. Consumers are also found to suffer from present
bias by only considering short- term borrowing. They are also overly optimistic regarding
their self-control of future spending and chose the credit contracts which were sub-
optimal ex post.

Antony (2018) studied that plastic money made a revolution in the banking industry
across the world. It has many advantages compared to paper money, but the convenience
of plastic money makes it easy to spend beyond means. Plastic money is a good system
but if you do not manage your plastic cards in a proper way that will lead to overspending,
financial burdens, and financial stress. Plastic money is convenient, less risky, and safer
than paper money, but it's important to remember that it is not compulsory that you should
use plastic money especially if you are not able to manage your money while using the
plastic cards. When we spend cash, there is emotional pain associated with handing over
our money and concretely knowing we now have less in our wallets. With cash, the
exchange of physical money for goods is visible, tangible, and immediate, but when a
plastic card is swiped, it doesn’t give any immediate feeling of loss. Even when a message
is communicated to the person, by the time they comprehend that the money is gone, the
damage has already been done and cannot be reversed. So, the selection of the mode of
money should depend on which mode helps you more to have a better control over your
hard earned money.

Lim, Ng, and Chin, Alexander Wei-Xiang Boo. (2014) noticed on overspending is one
of the main reasons why young consumers are in debt. Findings from the current study
illustrate a change in consumer culture from one which focused on saving first, spending
later to one which encourages spending now, thinking later. Various rationales have been
identified as motivators that encourage credit card usage, including security trends for a
cashless society and as a reflection of social desires. Attractive rewards and poor spending
restrictions afforded by credit cards were the main influences that caused young
consumers to spend more than what they could afford, Reports show that approximately
50% of people who declared bankruptcy did so due to credit card usage; these people
were aged 30 and below.
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CHAPTER 3

RESEARCH METHODOLOGY

Source of this research is based on primary.

The present study is exploratory in nature and has adopted survey method for its findings.
The study depends mainly on the primary data collected through a welldesigned and well-
structured questionnaire which has been used for the collection of data from the credit
card holders. However, efforts have been taken to collect information from all available
published data, especially from the web sources for presenting a fair case of study. Efforts
have also been taken to have intensive interaction with the users of credit cards for the
purpose of study.

3. 1 TYPE OF RESEARCH:

The topic for the research study is analysis of spending habit credit card holders and the
nature of the topic is theoretical and descriptive, so to conduct the research study the type
ofresearch suitable is descriptive research only. The data are collected from customer,
dealers, and business men. The descriptive research has met the retirement of research
study.

SOURCES OF DATA:

For the study purpose primary data is used. The primary data collected from the
customers, business men and dealers dealing with the credit cards. The primary data have
been collected to cover every aspect of the study. The primary data are related to
behaviour and response of business men, dealers and the customers. These data having
different merits and demerits and have serves our purpose of the research study.

PRIMARY DATA:

Primary data are information collected by a researcher specifically for a research

assignment. In other words, primary data are information that a company must gather
because no one has compiled and published the information in a forum accessible to the
public, companies generally take the time and allocate the resources required to gather 8
primary data only when a question issue or problem presents itself that is sufficiently
important or unique that it warrant the expenditure necessary to gather the primary data.
 lOMoAR cPSD| 38038415

Primary data are original in nature and directly related the issue or problem and researcher
collects through various methods like interviews, surveys, questionnaires etc.

The primary data have own advantages and disadvantages:

Advantages of primary data are as follows:

• The primary data are original and relevant to the topic of the research study so the
degree of accuracy is very high.

• Primary data is that it can be collected from a number of ways like interviews,
telephone surveys, focus groups etc. It can also be collected across the national
borders through emails and posts. It can include a large population and wide
geographical coverage.

• Moreover, primary data is current and it can better give a realistic view to the
researcher about the topic under consideration.

• Reliability of primary data is very high because these are collected by the
concerned and reliable party.

Following are the disadvantages of primary data:

• For collection of primary data where interview is to be conducted the coverage is

limited and for wider coverage a greater number of researchers are required.

• A lot of time and efforts are required for data collection. By the time the data
collected, analysed and report is ready the problem of the research becomes very
serious or out dated. So the purpose of the research may be defeated.

• It has design problems like how to design the surveys. The questions must be
simple to understand and respond.

• Some respondents do not give timely responses. Sometimes, the respondents may
give fake, socially acceptable and sweet answers and try to cover up the realities.
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• With more people, time and efforts involvement the cost of the data collection
goes high. The importance of the research may go down.

• In some primary data collection methods, there is no control over the data
collection. Incomplete questionnaire always gives a negative impact on research.

• Trained persons are required for data collection. In experienced person in data
collection may give inadequate data of the research.

3.2 INSTRUMENTS FOR DATA COLLECTION:

For collection of data the following instruments have been used:

Questionnaire: Questionnaire is a set of questions has been prepared to ask a number of

questions and collect answers from respondents concerning to the research topic. A
number of questions usually in printed or electronic form are to be answered by the
individuals. The forms often have blank spaces in which the answers can be written. Sets
of such forms are distributed to groups and the answers are collected related to research
topic. A questionnaire is a series of questions asked to individuals to obtain statistically
useful information about a given topic. When properly constructed and responsibly
administered, questionnaires become a vital instrument by which statements can be made
about specific groups or people or entire populations. Inappropriate questions, incorrect
ordering of questions, incorrect scaling, or bad questionnaire format can make the survey
valueless, as it may not accurately reflect the views and opinions of the participants. A
useful method for checking a questionnaire and making sure it is accurately capturing the
intended information is to protest among a smaller subset of target respondents. In a
research or survey questions asked to respondents, and designed to extract specific
information

It serves four basic purposes is to: -

• Collect the appropriate data

• Make data comparable and amenable to analysis,

• Minimize bias in formulating and asking question, and

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• To make questions engaging and varied. For our study purpose a set of questions
has been prepared to collect information relating to the topic of study. In a
structured questionnaire has been used with different types of questions such as
close ended and open ended. Special case has been taken to select the scales for
the questions for collection of responses very effectively.

3.3 Research Methods:

For collection of primary data for this research work survey methods has been used.
Experimental method is not found suitable for this study because the topic is a theoretical
topic and there is no need to have experiments. This method is explained below:

Survey Method : Survey is used to collect quantitative information about items in a

population. Surveys are used in different areas for collecting the data even in public and
private sectors. A survey may be conducted in the field by the researcher. The respondents
are warned by the research person personally, telephonically or through mail. This method
takes a lot of time, efforts and money but the data collected are of high accuracy, current
and relevant to the topic. When the questions are administered by a researcher, the survey
is called a structured interview or a researcher administered survey. When the questions
are administered by the respondent, the survey is referred to as a questionnaire or a self-
administered survey. It is an efficient way of collecting information from a large number
of respondents. Very large samples are possible. Statistical techniques can be used to
determine Validity, reliability, and statistical significance. Surveys are flexible in the sense
than a wide range of intimation on collected. They can be used to study attitudes, values,
beliefs and just behaviours because they are standardized; they are relatively free from
several types of error. There is an economy in data collection due to the focus provided
by standardizes questions. Only questions of interest to the researcher are the researcher
are asked recorded, codified, and analysed.
3.4 SAMPLING:

• Introduction:
The research is a systematic study to examine or investigate the issue or problem and find
out the relevant information for solution. For study data are to be collected from the
respondents. It is not possible to collect data from every one of the populations.
Population is a very large number of persons or objects or items which is not feasible to
manage. A population is a group of individuals, persons, objects, or items from which
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samples are taken for measurement. For research purpose a part of the population is to be
selected. Sampling is the process in which a representative part of a population for the
purpose of determining parameters or characteristics of the whole population is selected,
making it easier to contact a small part of the population for data collection. It can be done
within a limited time, efforts and with minimum cost. For selection of sample special care
should be taken that the sample is a proper representative of the whole population. Every
segment of the population should be included but the number should not be very large
which may become difficult to manage within the time cost limits. For this research study
purpose out of different sampling method the stratified random sampling has been
selected, the universe includes business men, trader’s dealers and customers of
MUMBAI.

• Objectives:
The study aims at Analysing the Spending Habits of Credit Card Holders in Mumbai.

• To analyse gender wise spending habit.

• To analyse the usage behaviour of the respondents on different periods and
different types of expenses.
• To study the level of consumer preference on credit cards.
• To identify the attributes that satisfy the credit cardholders.
• To identify the problems faced by the credit cardholders.
• To understand the spending habits of different individual according to income
groups.
• To know the influence of subjective risk on usage of credit card.
3.5 LIMITATIONS OF THE STUDY

To carry out the research study the following limitations were expected and faced during
the research study:

• •Time and location factors become major difficulties in completion of research.

• •Sample size may not be exact representative of the universe. There is possibility
of some error to a limited extent.
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• •There might be language barrier.

• •The time provided for the research was not enough so the data was limited to 100
respondents only.

CHAPTER

4 DATA

ANALYSIS
Table No.4.1 Gender analysis

GENDER NO OF RESPONDENT PERCENTAGE

MALE 81 40.5%

FEMALE 119 59.5%

Grand Total 200 100%

Figure No.4.1 Gender analysis

INTERPRETATION:
 lOMoAR cPSD| 38038415

In the count of gender, out of 200 respondents, 40.5% are Male and 59.5% are Female,
where 81 respondents are male and 119 respondents are females.

Table No.4.2 Analysis of age

AGE NO OF RESPONDENT PERCENTAGE

20-30 96 48%
30-40 66 33%
40-50 31 15.5%
50 &7 3.5%
ABOVE
Grand 200 100%
Total

Figure No.4.2 Analysis of age

INTERPRETATION:

The above diagram shows the age distribution of the consumers. Here 48% of the
population is between the age group of 20-30, 33% population form the age group of 30-
40, 15.5% of the population from the age group of 40-50, 3.5% of the population is
between the age group of 50 & Above.
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Table No.4.3 Analysis of qualification

QUALIFICATION NO OF RESPONDENT PERCENTGE

HSC 18 9%
GRADUATE 76 38%
POST GRADUATE 55 27.5%
PROFESSIONAL 16 8%
PROFESSIONAL 21 10.5%
CERTIFICATE
DOCTARATE 8 4%
CERTIFICATE 6 3%
Grand Total 200 100%

Figure No.4.3 Analysis of qualification

INTERPRETATION:

The above chart shows the count of qualification, 9% of the population are HSC, 38%
of the population are Graduate, 27.5% of the population are Post Graduate, 8% of the
population are Professional , 10.5% of the population are Professional Certificate , 3%
of the population are Doctorate and 4% of the population are Certificate
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Table No.4.4 Analysis of monthly income

INCOME NO OF RESPONDENT PERCENTAGE

0-10000 56 28%
10000-20000 59 29.5%
20000-30000 24 12%
30000-40000 32 16%
40000-50000 21 10.5%
50000 & ABOVE 8 4%
Grand Total 200 100%

Figure No.4.4 Analysis of monthly income

INTERPRETATION:

The above chart shows the monthly income of a person, 28% of the population earns
between 0-10000, 29.5% of the population earns between 10000-20000, 12% of the
population earns between 20000-30000, 16% of the population earns between 30000-
40000, 10.5% of the population earns between 40000-50000 and 4% of the population
earns between 50000 & above.

Table No.4.5 Analysis of are you a credit card holder

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Credit Card NO OF RESPONDENT PERCENTAGE

Holder
YES 171 85.5%
NO 29 14.5%
Grand Total 200 100%

CREDIT CARD HOLDER’S FREQUENCY

Figure No.4.5 Analysis of are you a credit card holder

INTERPRETATION:

In the above graph it clearly shows that out of 171 respondents out 200 of them use the
credit card and 29 respondent don’t use credit card.
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Table No.4.6 Analysis of Which type of card do you use

CARDS NO OF RESPONDENT PERCENTAGE

MASTER CARD 85 42.5%

VISA 88 44%

AMERICAN EXPRESS 27 13.5%

Grand Total 200 100%

TYPE OF CARD USAGE

Figure No.4.6 Analysis of which type of card do you use

INTERPRETATION:

The above graph shows the count of which type of card do you use, 42.5% of them use
Master Card, 44% of them use Visa, 13.5% of them use American Express.
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Table No.4.7 Analysis of are you a regular credit card user

COUNT NO OF RESPONDENT PERCENTAGE

YES 128 64%

NO 72 36%

Grand Total 200 100%

FREQUENCY OF REGULAR CARD USERS

Figure No.4.7 Analysis of are you a regular credit card user

INTERPRETATION:

The above chart shows the count of are you a regular credit card user where 64% of
population are not regular user of credit card and 36% of people are regular user of the
 lOMoAR cPSD| 38038415

Table No .4.8 Analysis of where do you use your credit card

Uses Of Credit Card NO OF RESPONDENT PERCENTAGE
Online Shopping 63 31.5%
Payment Of Bill 57 28.5%
Business Purpose 38 19%
Local Stores 20 10%
Shopping Mall 17 8.5%
Travelling 5 2.5%
Grand Total 200 100%

PLATFORMS OF CREDIT CARD USAGE

Figure No.4.8 Analysis of where do you use your credit card

INTERPRETATION:

The above chart shows the count of where you use your credit card,31.5% of them use on
Online Shopping, 28.5% on the Payment of Bill and 19% use in Business Purpose, 10%
of them use in Local Stores, 8.5% of them use in shopping mall, 2.5% of them use in
travelling purpose.

Table No.4.9 Analysis of which type of card do you prefer for daily transaction

CARDS NO OF RESPONDENT PERCENTAGE

SILVER 52 26%
GOLD 54 27%
PLATINIUM 46 23%
SIGNATURE 21 10.5%
OTHERS 27 13.5%
Grand Total 200 100%
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CARDS PREFERRED FOR DAILY TRANSACTION

Figure No.4.9 Analysis of which card do you prefer for daily transaction

INTERPRETATION:

The above chart shows the counts of which type of credit card do you prefer for daily
transaction, 26% of the population uses the silver, 27% of the population uses the Gold,
23% of the population uses both platinum, 10.5% of the population uses the Signature
And 13.5% of the population uses other types of cards.
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Table No.4.10 Analysis of do you feel easy to deal with

COUNT NO OF RESPONDENT PERCENTAGE

YES 163 81.5%

NO 37 18.5%

Grand 200 100%

Total

EASY TO USE

Figure No.4.10 Analysis of do you feel easy to deal with

INTERPRETATION:

The above chart shows the count of do you feel easy to deal with, 14.5% don’t use credit
card, 18.5% of population don’t find it easy to deal it and 81.5% of population feel easy to
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Table No.4.11 Analysis of have you ever faced any security issues in using credit
card

COUNT NO OF RESPONDENT PERCENTAGE

YES 115 57.5%

NO 85 42.5%

Grand Total 200 100%

RANGE OF SECURITY ISSUES FACED IN USING CREDIT CARD

Figure No.4.11 Analysis of have you ever faced any security issue in
using credit card

INTERPRETATION:

The above pie chart shows the analysis of have you ever faced ant security issues in
using credit card, 42.5% of the population says that they have never faced any security
issue, 57.5% of the population says yes that they have faced security issues.
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Table No.4.12 Analysis of do you think credit card is riskier than credit card

COUNT NO OF RESPONDENT PERCENTAGE

YES 107 53.5%

NO 51 25.5%

MAYBE 42 21%

Grand Total 200 100%

CREDIT CARD IS RISKY THAN DEBITCARD

Figure No.4.12 Analysis of do you think credit cards is riskier than debit card

INTERPRETATION:

The above chard shows the count of do you think credit cards is riskier than debit card,
25.5% of the population says they don’t find credit card risky, 53.5% of the population
says yes as they find credit card riskier, 21% of the population says may be the credit
card can be risky.
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Table No.4.13 Analysis of have you ever taken balance transfer

RESPONSE NO OF RESPONDENT PERCENTAGE

YES 122 61%

NO 78 39%

Grand Total 200 100%

BALANCE TRANSEFR

Figure No.4.13 Analysis of have you ever taken balance transfer

INTERPRETATION:

The above chart shows the analysis of have you ever taken balance transfer, 39% of the
population says no as they have not taken balance transfer, 61% of the population says
yes, they have taken balance transfer.
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Table No.4.13.1 Analysis of have you ever got benefit by doing balance transfer

RESPONSE NO OF RESPONDENT PERCENTAGE

YES 102 51%
NO 39 19.5%
Didn’t Use Balance Transfer 59 29.5%
Grand Total 200 100%

BENEFIT FROM BALANCE TRANSFER

Figure No.4.13.1 Analysis of have you ever got benefit by doing balance transfer.

INTERPRETATION:

The above chart shows the analysis of have you ever got benefit by doing balance
transfer, 51% of the population says yes as they have got benefit by doing balance
transfer, 19.5% of the population says no as they have not got any benefit by doing
balance transfer and 29.5% didn’t used balance transfer.
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Table No.4.14 Analysis of risk of debt in credit card

RISK NO OF RESPONDENT PERCENTAGE

PARAMETER
HIGH 48 24%
LOW 51 25.5%
MODERATE 60 30%
VERY HIGH 30 15%
VERY LOW 11 5.5%
Grand Total 200 100%

RISK OF DEBT IN CREDITCARD

Figure No.4.14 Analysis of risk of debt in credit card

INTERPRETATION:

The above chart shows the count of risk of debt in credit card, 24% of the population says
that the risk of debt in credit card is high, 25.5% of the population says that the risk of
debt in credit card is low, 30% of the population says that the risk of debt in credit card is
moderate, 15% of the population says that the risk of debt in credit card is very high, 5.5%
of the population says that the risk of debt in credit card is very low.

Table No.4.15 Analysis of number of family members using credit card

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NO OF NO OF RESPONDENT PERCENTAGE
CREDIT
CARDS
1 64 32%
2 64 32%
3 46 23%
4 20 10%
MORE THAN 4 6 3%
Grand Total 200 100%

NUMBER OF FAMILY MEMBERS USING CREDIT CARD

Figure No.4.15 Analysis of family members using credit card

INTERPRETATION:

The above chart shows the count of number of family members using credit card, 32% of
the population says that only 1 member uses the credit card in their family, 32% of the
population says that 2 members uses the credit card in their family, 23% of the population
says that 3 members uses the credit card in their family, 10% of the population says that
4 members uses the credit card in their family, 3% of the population says that more than
4 members uses the credit card in their family.

Table No.4.16 Analysis of gender compared to how often do you use your credit cards
instead of cash or cheque to pay for the following items [food from super market]
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INTERPRETATION:

The above chart shows the comparison between the genders and how often do you use
your credit card instead of cash or cheques to pay for the following items [food from super
market]. The total number of respondents are 100%, out of which 40.5% always pays
from the card, 22.5% says they often pay from card, 22% of the population says they
Sometimes pay from card, 15% of the population says they never pay the from the card.

Table No.4.17 Analysis of gender compared to how often do you use your credit
cardsinstead of cash or cheques to pay for the following items (clothing)

GENDER CLOTHING PERCENTAGE

ALWAYS 30 15%
OFTEN 91 45.5%
SOMETIMES 59 29.5%
NEVER 20 10%
Grand Total 200 100%
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10
0
90
80
70
60
50
40
30
20
10

CLOTHIN G

Figure No.4.17 Analysis of clothing

INTERPRETATION:

The total percentage of respondent are 100%, where 15% of them always
buy clothes online, 45.5% of them never buy online, 29.5% of them often
buy clothes online, 10% of them buys clothes sometimes.
Table No.4.18 Analysis of gender compared to how often do you youse your credit
cards instead of cheques to pay for the following items (electronics such as cell
phone or computer).

GENDER ELECTRONICS SUCH AS PERCENTAGE

CELL PHONE OR
COMPUTERS
ALWAYS 54 27%
OFTEN 62 31%
SOMETIMES 60 30%
NEVER 24 12%
Grand Total 200 100%
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70

60

50

40

30

20

10

ELECTRONICS SUCH AS CELL PHON E OR

COMPUTERS

Figure No.4.18 Analysis of electronic such as cell phone or computer

INTERPRETIATION:

The Total number of respondents are 100%, where 27% of them Always use credit card
for buying electronics, 31% of them Often buy electronic goods through credit card, 30%
of them Sometimes buy goods through credit card and 12% of them Never use their credit
card to buy electronic goods.

Table No.4.19 Analysis of gender compared to how often do you use your credit cards
instead of cash or cheques to pay for the following items (household items).
GENDER HOUSEHOLD ITEMS PERCENTAGE

ALWAYS 36 18%
OFTEN 58 29%
SOMETIMES 67 33.5%
NEVER 39 19.5%
Grand Total 200 100%
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80

70

60

50

40

30

20

10

HOUSEHOLD ITEMS
AlwaysOftenSometimes

Figure No.4.19 Analysis of household items

INTERPRETATION:

The Total number of respondents are 100%, where 18% of them Always
use their credit card for the purchase of house hold items, 29% of them
Often use credit card to buy house hold items, 33.5% of them Sometimes
use their credit card to buy goods, 19.5% of them Never use their credit
card sometime for the purchase.
Table No.4.20 Analysis of gender compared to how often do you use your credit cards
instead of cash or cheques to pay for the following items (restaurant)

GENDER RESTAURANT PERCENTAGE

ALWAYS 47 23.5%
OFTEN 61 30.5%
SOMETIMES 52 26%
NEVER 40 20%
Grand Total 200 100%
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70

60

50

40

30

20

10

RESTAURANT
AlwaysOftenSometimes

Figure No.4.20 Analysis of payment in restaurant through card.

INTERPRETATION:

The total number of respondents are 100%, where 23.5% of them Always
use credit Card for the payment in the restaurant, 30.5% of them Often pays
through credit card in the restaurant, 26% ofthem Sometimes use credit
card for payment, 20% of them Never use their credit card for the payment
in the restaurant.
Table No.4.21 Analysis of gender compared to how often do you use your
credit cardsinstead of cash or checks to pay for the following items
[Personal Luxury Goods, Such As Jewellery]
GENDER Personal Luxury Goods, Such PERCENTAGE
As Jewellery
ALWAYS 43 21.5%
OFTEN 51 25.5%
SOMETIMES 63 31.5%
NEVER 43 21.5%
Grand Total 200 100%
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70

60

50

40

30

20

10

Personal Luxury Goods, Such A s Jewellery Always Often

Sometimes

Figure No.4.21 Analysis of personal luxury goods, such as jewellery

INTERPRETATION:

The total number of respondents are 100%, where 21.5% of them Always
use their credit card for the payment of luxury goods, 25.5% of them Often
use credit card for the payment of luxury goods, 31.5% of them Sometimes
use credit card for the payment of the goods, 21.5% of them Never use
credit card sometimes for the payment of luxury goods.
Table No.4.22 Analysis of gender compared to how often do you use your
credit cards instead of cash or cheques to pay for the following items (Rent
or Mortgage)
GENDER Rent and Mortgage PERCENTAGE

ALWAYS 40 20%
OFTEN 57 28.5%
SOMETIMES 53 26.5%
NEVER 50 25%
Grand Total 200 100%
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60

50

40

30

20

10

Rent and Mortgage

AlwaysOftenSometimesNever

Figure No.4.22 Analysis of rent or mortgage

INTERPRETATION:

The total number of respondents are 100%, where 20% of them always use credit card for
the payment of Rent and Mortgage, 28.5% of them Often use credit card for the payment
of Rent and Mortgage, 26.5% of them often use credit card for the payment of
Rent and Mortgage, 25% of them never use credit card for the payment of Rent and
Mortgage.
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Table No.4.23 Analysis of gender compared to how often do you use your
credit cardsinstead of cash or cheques to pay for the following items (Travel
expenses).

GENDER TRAVEL EXPENSES PERCENTAGE

ALWAYS 46 23%
OFTEN 57 28.5%
SOMETIMES 62 31%
NEVER 35 17.5%
Grand Total 200 100%

70

60

50

40

30

20

10

TRAVEL EXPENSES
AlwaysOftenSometimesNever

INTERPRETATION:

The total number of respondents are 100%, where 23% of them Always
use credit card for payment of online entertainment, 28.5% of them Often
usecredit card for the payment, 31% of them Sometimes use credit card
for the payment and 17.5% of them Never use their credit card for the
payment of online entertainment.
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Table No.4.24 Analysis of gender compared to how often do you use your credit cards
instead of cash or cheques to pay for the following items (Online Entertainment).

GENDER Online Entertainments PERCENTAGE

ALWAYS 43 21.5%
OFTEN 67 33.5%
SOMETIMES 60 30%
NEVER 30 15%
Grand Total 200 100%

80

70

60

50

40

30

20

10

Online Entertainments

Always Often Sometimes Never

Figure No.4.24 Analysis of online entertainment

INTERPRETATION:

The total number of respondents are 100%, where 21.5% of them Always use credit card for
payment of online entertainment, 33.5% of them Often use credit card for the payment, 30%
of them Sometimes use credit card for the payment and 15% of them never use their credit
card for the payment of online entertainment.
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CHAPTER 5

Findings

In the study on analysis of spending habit of credit card holder or consumer on

credit card, has performed well to the need of the people. In India the entry of the
credit card is success due to join hand of GE capital and State Bank of India, no
doubt but stillthe credit card consciousness is lacking amongst many people, this
is due to card fees and interest charges.

In this study about 66 % of the people don’t use the credit card on regular basis as
they think that plastic money leads to debt trap. While few people does not feel it
easy to deal with either they may be illiterate or they are matric pass or theyare
senior citizens who don’t find it easy as they find difficulty in using credit cards.

In this study we also get to know that few people face security issues or who are
afraid of frauds don’t use the credit card as this can increase their debt. As many
people think that credit card is riskier than credit card. As many people also think
that the risk in the credit card is moderate or high.

People use their credit card in different ways, for shopping, buying house hold
items, for buying clothes or for electronic gadgets, etc. Females find it difficult to
deal with credit cards as they don’t use credit card, very few women are the regular
credit card holders.

Due to this bank need to take more effective measures to so as to make credit card
more attractive. Such and attempt will enable credit card to achieve greater heights
in the banking sector. From the above analysis, it can be proved that how the
customer preferences vary from one person to another.

The study shows that the convenience and security element that credit cards offer
is most important.

Considering the increasing number of independent working women, specialized

product that gives extra benefits for shopping household items, etc.
 lOMoAR cPSD| 38038415

Increasing the technology, security and reducing the frauds may build the trust
among the people for using credit cards.

It is also concluded that there are number of bank customers who do not have any
knowledge about the credit card. Many people are aware of the credit card, but do
not possess credit cards because of the fear of falling into debt trap.

High income earner and high educated class use the credit card more, availing
high credit limits.

Consumers perceived core services and facilitating services at higher level. Card
holders face the major problem of lack of proper advice from the bank.

SUGESSTIONS
21ST Century banking has become wholly customer-driven & technology driven by
challenges of competition, rising customer expectations & shrinking margins, banks
have been using technology to reduce cost & enhance efficiency, productivity &
customer [Link] intensive delivery channels like net banking,
mobile banking, etc have created a win-win situation by extending great
convenienence & multiple options for customer. From educating customers about
credit cards there is a need to educate them about the differentiating factors of the
cards. Because visa and master card are advertising regularly and thereby increases
awareness. The strategy should be to emphasize on its differentiating characteristics.
They also need to identify potential customers and target those using mailers. As
internet is growing at a fast rate the net users can be targeted by having interactive
sites. The prospective company’s card personality could also be used in the home page
to solve customer queries in the ‘Best Possible Manner’.
Popularizing the Credit Cards Can Card is found to be less popular among the
respondents. Hence methods should be adopted to bring a higher degree of
popularization of this credit card through mass media channel like television, radio,
railway centers, and super markets with a pictorial review of the card facility. Creating
Awareness about Interest Free Credit Period The most lucrative feature of a credit
card is the interest free credit period offered to card holders. Nonholders of credit
cards are not aware of this benefit of credit cards. Hence awareness should be created
about this benefit of credit cards among the non- holders. Direct Marketing Credit
 lOMoAR cPSD| 38038415

card issuers, though offer international levels of service and credit support to the card
holders, have failed to make an impression among the less educated and the
agricultural category with middle level income. They also feel that the cost of credit
cards is high and therefore make it a status symbol rather than meeting their needs.
Hence, direct marketing by the banking clubbed with other services will be helpful to
impress this untapped segment. Implementing Regulatory Measures The credit limit
availed by many card holders are found to be less than their eligibility limits. The
working group on regulatory mechanism for credit cards has suggested measures
aimed at encouraging card usage in a safe and secure manner. This guideline should
be implemented so that the entire eligible credit limit may be availed by the card
holders. Extending Incentives to all Types of Cards Despite more widespread usage,
most of the credit card users are the more educated with professional types of jobs
and high income earners. Most of the card holder should be extended to all types of
cards to promote greater usage of credit cards like „Exclusive and „Silver held by
lower and middle income earners. Providing More‟ Facilitating Services It is found
from the analysis made in the study that supplementary
 lOMoAR cPSD| 38038415

services are perceived more as the expected features of the credit card by the card
holders. Hence maximum supplementary service elements should be added to the
credit cards. Providing Knowledge about Supporting Services It is identified from the
study that respondents did not consider the supporting services for purchase
evaluation. This is due to inadequate information regarding supporting services.
Providing knowledge about supporting services to customers can help the marketers
to develop an advantage for themselves in the market Visa Vis other players. Reducing
Interest Rates One of the reasons for low level of satisfaction of card holders has been
the high rates of interest which the card holders are actually paying ranging from 36
to 45 percent. Hence it is suggested that these rates be brought down. Making the
Internal Control System Effective With the average credit limit of Rs.10,000 to Rs.
30,000 the credit cards have not made an attractive case of fraudsters, still a few cases
of credit card frauds (02%) have been reported in the study. Hence banks are advised
to implement the „Internal Control System‟ formulated by the RBI effectively to
combat frauds.
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CONCLUSION
Looking at the broad scenario,there is no doubt that the credit card usage is rising up
in the market. The day will come when all the transaction will be done through credit
cards, yet there are more further technologies which have been implemented in Japan
and US but India is still growing in its first phase. The day will come when all the
train tickets would be purchased by credit cards. People will start keeping bunch of
cards in their pockets instead of currencies. The day will come when the cinema
tickets will be purchased through credit cards. Thus in these growing phenomenon
there doesn’t seems any declination instead it growing at a higher rate. Consumers are
preferring these cards mostly for shopping online Ecommerce has given a better way
to use the credit [Link] can be concluded that credit card has a very bright future in
the coming years because of the increasing trend of ecommerce.
Credit cards have become pervasively held by most consumers. As the credit card
market is becoming more competitive, banks actively solicit potential consumers by
extending attractive offers, such as low interest rates or longer payment periods.
However, related papers highlighted two potential problems, adverse selection and
moral hazard. Solicitations, especially those with inferior conditions, tend to attract
consumers with higher credit risk, who were more likely to default ex post. Even if
banks successfully guaranteed borrowers’ credit quality, the high interest rates
included in some solicitations may provide greater incentives to default.

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