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Submitted To:

Dr. Juanling Huang

By:

Rohit Sharma

     
 

 ï!ï

This piece of systematic study has been done on the area of consumer behaviour

towards the use of credit card as a medium of purchasing power. This study includes a

comparative study of Birmingham based consumers and New Delhi (India) based

consumers. In order to achieve the objectives of this piece of work researcher has done

extensive literature review and chosen sample from both the countries towards

conducting primary research.

Researcher has collected data from the identified samples and analysed that data to get

the conclusion and relate the same with the established objectives. Conclusion of this

project is very interesting. Researcher found that it is the good and bad experience of

the consumers that influencing consumer behavior that leads to usage and non usage

of the credit card. But in India this outcome is completely different. Most of the

consumer are falling in the same category, that is their choice of using and non using of

credit card is depending on the good and bad experience of the consumer with the

service provider but there are some factor which seems equal influence to the

consumer behavior of Indian consumers that is the influence of their family members

and overall their family culture.

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I would foremost like to place on record my deepest regards, gratitude and appreciation

to my supervisor in the research work Dr. Juanling Huang, who have been a driving

force behind the completion of this project. She has been a great source of inspiration

and learning, guiding me smoothly throughout this period.




 "!#c #"

Credit cards are convenient way to pay for all kind of products. Many consumers regard
them safer then use of cash. Credit cards basically offer the most flexible form of short
term borrowings and repayment terms available on the high street. The use of credit
cards is increasing rapidly all over the world but percentage of consumers varies in
different countries according to the consumer usage behavior.

In today¶s era, with expansion of new industries and globalization there are many
sectors which have flourished other then Production and Manufacturing units. There has
been outstanding improvement in the financial sector all over the world. Although there
was drastic affect of recession in many parts of the world, still the financial sector has
regained its position by upcoming Technology and debt covers. In this competitive
world, Plastic money holds a wider place in everyone¶s life. The use of plastic money
(Credit/Debit/ATM cards) has made life easy and comfortable. The use of plastic money
varies from individual to individual. As students prefer to use ATM/DEBIT card for their
day to day expenditures whereas business men prefer to use Credit Cards as the
common mode of expenditure. With use of Plastic money, card holders enjoy the fun of
shopping and making expenditures without cash payments.

There are various pros and cons in use of Credit Cards. Use of credit card is of great
ease while using them at the time of travelling or purchase of some expensive item at
one point for which customer might not be carrying hard cash in pocket. It is easy to
carry and simple to use but on other side of the coin it has many negative effects in
respect to which there have been huge default ratio of credit cards and of course one of
the major reason of recession in the US. Many people fear using credit cards because
of high interest rates to be paid at nonpayment of the credit cards bills. Secondly it does
not let make a hold on person¶s expenditure list, as customers do not feel hard to pay
through credit cards as compared to paying Hard cash.


   
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India Is consisted on Area of total: 3,287,263 sq km, which include land: 2,973,193 sq
km water: 314,070 sq km with the population of 1,173,108,018. Population of India is
the second highest in the world. India is included in large domestic markets and there is
dramatic rise in domestic demand. Economy of India is going good, and is set to be a
global growth outperformer Indian economy is showing stability from number of years
and is among countries have high growth rate. Central bank of India is showing positive
attitude towards stable policy and encouraging commercials to introduce new products.
Currently banking sector of India is facing some difficulties for example increasing
number of loans. There is lack of links between Indian banks and the global financial
system . The banking sector is held back by low levels of per capita GDP. Banking
sector in India have to face some problems of logistics, for example logistics involve in
running the bank operations. There are other problems involve are too much
dependency on papers for example cheques. ³Some 600,000 villages in India lack
banking services, Reserve Bank of India data show. The central bank has ordered
commercial and regional banks to bring financial services to at least 400,000 of those
by 2015(Chibber, 2010). Indian financial institutions issued 185 million debit cards as of
the end of April, up 32.1% from 140 million issued a year earlier ³(Chibber, 2010).

 

Uk is multicultural country with 61 million people, and is considered one the most
developed country on this world. UK has people all around the world. UK is also one of
those countries where people enjoy their basic human rights, and UK Government is
working for basic human right in other countries like Pakistan and Afghanistan. UK is
one of those countries which have low poverty level. The UK is made up of 4 countries.
³Throughout history, many different races and cultures have had an influence on the UK
and consequently played a role in creating the diverse society UK is living today.
Germanic tribes such as the Angles and Saxons, the Romans, Scandinavian Vikings
and the Normans all invaded and settled in the UK a thousand years or more ago. More
recently, large numbers of South Asians, Africans, West Indians, Australians, South
Africans and others have come to live in the UK's towns and cities´ (FCO, 2009).

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This project is based on credit cards and its usage. The project has been undertaken to
bring in lime light the usage of credit cards between Birmingham (UK) based and New
Delhi (India) based consumers.

This study is based on factors which affect the behaviour of consumers in these
categories towards usage of credit cards .The behavior of these consumers towards the
acceptance and negligence of credit cards has been studied. Various kinds of cultural
values and norms has been studied which relates to the credit cards usage in both the
categories and countries.

ï  The aim of this research is to explore the consumer behavior on usage of credit
card as a mode of expenditure in India and UK.

#1 


1. To review and critically analyze the consumer behavior of India and UK towards
usage of credit cards as mode of expenditure.

2. To identify the impact of cultural difference on credit cards usage.

3. To identify various reasons that affects the usage/Non usage of credit cards in India
and UK

4. Suggestions on the base of findings, to improve the usage of credit cards.


!
.
 


1. What are the factors that affect usage and non usage of credit card in India and
UK?
2. what is the difference in preference of usage of credit card in the consumers of

New Delhi (India) based and consumers of Birmingham (UK)?

3. What are the possible cultural and other difference effecting the usage of credit
cards.

*
    

Organizations expansion is key point for any organization in this world,

company¶s works to maximize their profits. Key strategies for profit saving companies
use are Cost saving and getting more specialization on key competencies aspects, and
capture more markets. A lot of companies are already operating in different parts of
world. The main obstacles they feel in operating in different countries are difference of
culture, norms values and different environment.
Consumer behavior is an important expects of any business success, and is
directly related to culture of any society. Consumer behavior is more important for
organizations operating in different cultures.

  
 

 Banking industry is one of those industries which are globally recognized. Indian
banking industry is somehow influenced by UK banking industry. Credit card is
considered as a global product and will be a good selection In order to understand the
clear picture of cultural impacts on business operating in different areas of world with
same product.
 c

 

This piece of research project has been presented in following order.

Introduction chapter

Literature review

Research method

Analysis and discussion

Conclusion and recommendations

Bibliography and Appendix.

 2

%  

Background Information:

In our day of age, there is rapid growth of technological which has not only improve the
system and operations but brought a different view of handing different things and
situations. All these things bring more competition in Banking Sector. It is clear that the
organizations that are unable to keep align themselves with these technological
advancement for example electronic banking are faced with the threat of not being able
to compete with their competitors and faced the danger of going out of business. It will
not be false if we say that electronic banking has changed the shape of the competition
and competitive environment. Technology assures the customers to meet their
demands and wants at right time and right place.

The credit card market has grown markedly since the first cards were introduced in the
1950s ([2] Durkin and Price, 2000). Credit card is and important part of electronic
banking. Credit card is used instead of paper money and is considered as contemporary
tool for paying bills. As the credit card services currently focus on customers,
determining the effective factors on credit card ownership and usage is crucial for
marketing purposes. According to this, the subject of this experimental study is to
determine the factors of how to become a credit card holder and the effective user of
the credit cards. As the summary of research obtained via factor analysis, 2 out of 5
factors were found to be effective on owning/using credit card.

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A recent survey shows that nearly one in four people in UK use credit cards to pay their
household bills and meet day-to-day expenses. Credit cards companies are now
beginning to offer less µfree¶ balance transfers, introducing the balance transfer fee. This
is a charge levied on balance transfers that you make and are set around 2% of the
balance.

In the UK by the end of 2005 there were 70 million credit cards in circulation, held by
31.6 million cardholders, with an average of 2.4 cards per person. (APACS, 2006). This
is a growth of 14 million cardholders since 1995 and credit cards are now held by over
two-thirds of the UK over-18 population. Spending on credit cards in the UK was £125
billion in 2005, with the average value of a credit card transaction being £60 ( APACS,
2006). Lindley
 (1989) identified the characteristics of consumers who held credit
cards and established the types of spending for which they used their credit cards. This
study, just like that of Hawes (1988), was longitudinal. The findings suggested that the
growth in number of households which possess credit cards had slowed since 1971,
implying that the market had become more saturated. They also found that women use
credit card more often as mode of expenditure whereas men use it occasionally Card
usage had increased for payments relating to furniture/appliances, clothing/shoes and
small household goods (sheets, towels, dishes, etc.) but had declined for gasoline/oil
payments.

According to research from the Halifax, cash is no longer king. When asked to 935 UK
consumers, how long they could last with their credit card alone, over 54% of
respondents say a week or more. Almost one in three (29%) say they would feel
comfortable going a month or more. And it is the convenience of paying with a credit
card that is most appealing. When asked "why do you use your credit card?" by Halifax,
the top answer was convenience (49%), followed by the fact consumers don't like to
carry cash (17%) and that cards offers added protection (16%) Credit cards are still the
preferred method of online payment probably because any personal information lost to
hackers wouldn't empty their bank accounts. (Sarawak,2008)

Credit card usage in India:

India's improving economy is helping to drive higher overall payment card usage, with
debit cards growing significantly faster than credit cards, new data from India's central
bank show, It is because of uncertainty and insecurity and high debt risk people want to
go for debt cards but still Indian consumers in June spent 55.4 billion rupees (US$1.2
billion) on credit cards, up 14% from 48.6 billion rupees spent during June 2009. They
initiated 20.2 million transactions, up 5.8% from 19.1 million during the same period a
year ago, according to the Reserve Bank of India. But still credit card consumers are
very less in India as compared to the other big developed or developing nations.

Indian financial institutions issued 20.4 million credit cards as of Dec. 31, down 20.9%
from 25.8 million a year earlier, the central bank says. The current upswing for credit
card spending bodes well for card issuers affected by the economic slowdown, Mrinalini
Manral, an analyst with Mumbai-based electronic payments research firm Dassler
Business Intelligence, tells Payments Source.

"Card issuers like ICICI have been paring down cards ...," she says. "The lack of
confidence could also be seen by the decision of RBS to not carry on with ABN Amro's
card operations This card-usage upsurge should instill some confidence back into the
market," she adds. (By: Ankush Chibber)

Credit Card Users:

(Mathews and Slocum,1969) classify credit card holders into two categories, based on
their "use" of credit cards. The first group is labeled " 
 

" because they
elect to pay an amount less than their monthly balance and by rolling over part of the
debt, they consequently pay interest charges. The second group is labeled
"  users". This group considers cards as substitutes for cash and they pay
all the balance due within the billing cycle. More recent terminology (see Worthington,
2005) categories these repayment behaviors as "transistors" (those who repay in full at
the end of each billing cycle) and "revolvers" (those who do not repay in full and hence
take debt and pay interest on that debt). In both studies, the researchers compare
cardholders based on their social class. They find that upper class cardholders, in
comparison with lower class cardholders, have a greater tendency to use cards for the
convenience they offer and to pay the whole sum due within the billing period.
Advantages of Credit Card

ýï ± Credit cards are quick and easy to use, no matter where ever u are. It gives you
quick access to finance up to your credit limit at any time u want, making them very
useful for dealing with unexpected costs and expenses.

ý3  ± You can use credit cards to pay for anything as you need it, last minute or
unexpected costs can be covered without any tension as you are given at least 56 days
before paying interest. If you don't like to carry large amounts of cash with you or if a
company doesn't accept cash purchases (for example most airlines, hotels, and car
rental agencies), putting purchases on a credit card can make buying things easier.
Though you should always pay off as much off the credit card balance as possible to
avoid interest building up.

0
0 ± In a way credit card gives protection to your purchases means if
u lost your real receipt card statement helps you to prove that that u purchase such
things. one can easily track his or her purchases as all purchases made by a credit
card listed (online and in bills)as compare to chauqes or cash which involve keeping
numerous receipts. I¶d you provide employees with a credit card then it becomes much
easier to keep track of their purchases, and advise them where purchases may not be
considered suitable expenditure by you. Some cards even give insurance on large
purchases.

    
- In addition to the benefits listed above, some credit cards offer
additional benefits, such as discounts from particular stores or companies, bonuses
such as free airline miles or travel discounts, and special insurances (like travel or life
insurance.)
Most of these benefits are meant to encourage you to charge more money on your
credit card. The benefits are real and can be helpful as long as you remember your
spending limits.

Disadvantages of Credit Card

Remember, credit card companies start making their money when you can't afford to
pay off your charges!

  /  -- The biggest disadvantage of credit cards is that they
encourage people to spend money that they don't have. Most credit cards don¶t ask you
to pay off your balance each month, so even if you only have £100, you may be able to
spend up to £500 or £1,000 on your credit card. While this may seem like 'free money'
at the time, but you will have to pay it off -- and the longer you wait, the more money
you will owe since credit card companies charge you interest each month on the money
you have borrowed.


 ± Most credit cards have relatively high rates of interest compared to loans and
other finance; which means if you allow interest to accrue, the cost of using credit cards
can be very high.

&3

  ± If you give a credit card to an employee, they are able to pay for
expenses and other costs instantly. Whereas if they had to pay cash you could ensure
that they do not get their money back for items you consider not to be expenses.

 ý - Like cash, credit cards can also be stolen. They may be physically
stolen (if you lose your wallet) or someone may steal your credit card number (from a
receipt, over the phone, or from a Web site) and use your card for large purchase. The
good news is that, unlike cash, if you realize your credit card or number has been stolen
and you report it to your credit card company immediately, you will not be charged for
any purchases that someone else has made. Even if you don't realize your credit card
number has been stolen (sometimes you might not know until you receive your monthly
statement), most credit card companies don't charge you or only charge a small fee.
There are several things you can do to prevent credit card fraud:

p If you lose your card or wallet, report it to your credit card company
immediately.
p Don't loan your credit card to anyone and only give out your credit card
information to trusted companies or Web sites.
p Check your statement closely at the end of each month to make sure all
charges are yours.

Credit cards can make life easier and be a great tool, but if they aren't used wisely they
can become a huge financial burden. If you do decide to use credit cards, remember
these simple rules:

= Keep track of all your purchases.

= Payback your charges quickly
= Find the right deal for yourself
= Don't spend outside your budget.
= Pay off your balance on all of your credit cards at the end of each month.
= Don't loan your credit or give out your credit card information to anyone but
reliable companies.

Evidence on the profitability of credit card arbitrage

Many banks offer credit card balance transactions with low, or no interest rates. The
balances can generally be transferred to pay off another card. These introductory low
interest rate offers are intended to attract the individuals to open an account with the
financial institution or to transfer their balance to a lower interest rate credit card. The
low interest rate offers generally apply to an introductory period and have an up-front
fee. The introductory time period is typically anywhere from three months to eighteen
months. Other promotions offer the introductory rate until the balance is paid off. Some
promotions require the cardholder to make a purchase to receive the special rate.
Although the credit card offers are intended to attract more credit card business for the
bank, they may also provide the customer with the potential to earn an arbitrage profit.
To earn an arbitrage profit, an individual takes a cash advance against the credit card
and deposits the funds received into an FDIC insured money market account. An
arbitrage profit is earned if the interest earned on the money market account exceeds
the cost of funds related to the credit card cash transfer. Low introductory rates serve as
a loss leader for the financial institution. Banks profit from these offers in several ways.
Some of the offers are made on accounts with an annual fee. In the event of a missed
or late payment, the interest rate on the card reverts to the regular, much higher rate
allowing the bank to earn a profit. Banks may also earn a profit if the cardholder uses
the card for purchases in addition to the cash advance. The bank earns a transaction
fee in these instances. These transaction fees offset the cost of providing the low
introductory rate. Finally, some introductory offers, despite having an enticing
appearance, are designed in such a way that arbitrage attempts will be unprofitable.
The paragraph above has directly analyzed arbitrage opportunities available through the
use of credit cards.

Chakravorti and To (2002) propose a model that explains interactions between

consumers, merchants and card issuers. In their model, the issuer's ability to charge
higher merchant discount fees depends on the number of customers gained when the
credit cards are accepted. Each merchant faces a prisoner's dilemma where each
independently chooses to accept credit cards, however all merchants' profits are
reduced because of inter temporal business stealing across industries.

Ausubel (1999) examines preapproved credit card solicitations. He finds evidence of

adverse selection whereby the least creditworthy individuals receiving the offer are
more likely to respond. Moreover, he finds that recipients of credit card solicitations over
respond to the introductory interest rate, relative to the duration of the introductory offer
and to the interest rate that applies after the introductory period. Specifically, he finds
that consumers are at least three times as sensitive to changes in introductory interest
rates as compared to dollar-equivalent changes in the post introductory interest rate. He
also finds that consumers are two to three times as responsive to changes in the
introductory interest rate as compared to dollar-equivalent changes in the duration of
the introductory offer. Our research will extend this line of literature by precisely
measuring arbitrage profits at different interest rate combinations. This measurement
provides additional evidence on the motivations of individuals to respond to interest rate
changes.

Some people surmise that credit card companies have taken steps to target individuals
who are least likely to incur and manage additional credit card debt well. Several
studies, including Black and Morgan (1999) and Bird, Hagstrom and Wild (1999) argue
that credit card debt has become more readily available to lower income households on
an absolute basis and has increased at a faster rate than for middle- and high-income
households. Stavins (2000) finds evidence that bank credit card companies which
extend credit to higher risk borrowers, charge higher interest rates and fees, earning
higher net revenues. Kidane and Mukherji (2004) analyze the characteristics of
consumers who are targeted and those who are neglected by credit card companies.
Contrary to the spirit of the previous work in this area, they provide evidence that credit
card companies target consumers who have greater financial resources, a clean credit
history, and a track record of responsible credit use. They also find evidence that
individuals with fewer financial resources, recent payment problems, or limited credit
history are neglected by credit card companies. These results have important
implications for our study of credit card arbitrage. They imply that individuals with better
credit history and financial resources are more likely to receive credit card offers that
position them to execute credit card arbitrage transactions.

Sullivan and Worden (1995) consider credit card defaults and bankruptcy. They find
evidence of a moral hazard where consumers who are paying high interest rates on
credit cards, tend toward the aggressive use of credit in an apparent attempt to
maximize the value of their option to default. They argue that these findings provide a
plausible explanation for consumers' seeming insensitivity to interest rates charged on
credit cards.
A critical issue related to credit card arbitrage is the impact that it might have on a
consumer's credit score. While the precise computation of credit scores is not publicly
available, many popular press articles propose actions that will improve individual credit
scores. Some factors that are commonly referenced include the number of credit cards,
the length of credit history, and the incidence of late or missed payments. Cardline
(2006) reports that from 2001 to 2006 the average consumer credit score fell seven
points to 675 whereas the average consumer balance on credit card debt increased
from $7,270 to $12,300. Two other factors potentially contributing to these lower credit
scores are an increase in late payments and delinquencies and an increase in the credit
balance to credit limit ratio. Spencer (2006) describes situations where consumer credit
scores have been damaged by fees and fines owed for items like overdue library books
and unpaid parking tickets. In some cases, the impact led to higher mortgage rates and
down payments. King and King (2005) provide a compelling argument for consumers to
prefer the use of credit cards over debit cards under the assumption that the credit card
balance is paid on time each payment period. Their work considers the use of credit
cards as a substitute for cash, checks, and debit cards. This approach assumes that
individuals pay off the balance of their credit cards each month. Because the credit
function of the cards is not the focus of their work, they do not address the issue of
credit scores.

Credit Card Market

When customers in the market are homogeneous then in that case we can offer the
product with undifferentiated marketing strategy that implies that product will go after the
whole market with one offer. This is very simple and easy marketing condition where
there will be less cost of advertising and other marketing efforts for the customers.

Another situation where product doesn¶t match the objective of every customer, then the
previous marketing strategy will not work. In this situation there should be a separate
marketing strategy for the different kind of customers along with different kind of the
product. In credit card market, there are vast number of credit card issuers all over the
world which leads to high competition in the market. So credit card companies need to
segment the market according to the need of customers of different age group or
different cultures and accordingly try to satisfy their needs.

Right marketing is not simply sale of the product; rather it is to have customer
satisfaction. When marketing strategy is made to offer right product to the right people
that basically requires matching the product with the people. In order to do the exercise
of matching the product with the people, market should be segmented in to different
groups of people with same requirements . This division of the market is known as
Market Segmentation. As per Kotler 1993, ³Market segmentation is the process of
classifying customers into groups with different needs, characteristics or behaviors´. So
market can be segmented based on the demographic factors, socio-economic factors
and even the geographical factors. While doing the segmentation we need to match the
above factors along with factors like- benefits, attitudes or beliefs and personality or
lifestyle etc.

Market strategies

1 ³With emerging globalization trends in trade and technology, there is a vast growth
in financial markets. Cross-border transactions can happen easily and with use of
credit cards, the business house has lot more options to go ahead with. They are
no longer under pressure and continue to find innovative ways to market their
products and services. Credit cards are used by people all over the world and the
number of users is growing at an extremely high rate.
2 Credit card companies are using affiliate marketing as a strategy and the use of
internet has proven to be a success. They use conventional marketing tools like
advertisements in newspaper; magazine, radio and television as well. But
advantages of Internet Promotions and affiliate marketing are known to credit card
companies. Internet offers opportunities to small entrepreneurs, who want to earn
online.
3 The advent of internet and its spread to the household has been understood by
prime financial institutions. For a small business entrepreneur, to market or
promote its product or services through online media can be difficult. But, with
 sufficient information small businesses can get significant advantages from
Internet. In other words, affiliate marketing strategy generates the highest return on
investment if adequately supported by online interment advertisements. The
number of Credit cards sold by affiliate marketing over the internet has grown
rapidly over the number of years proves the success of such strategies.

However one must fully understand the implications of this strategy.

Credit card policies

Arbitration Clause/Agreement

Some credit cards have a mandatory arbitration clause. This clause states that if you
have a dispute with the credit card company you waive your right to have your case
heard in a court of law. Instead your case will be heard by a mediator. The majority of
mediation cases are decided in favor of the credit card company.

Default Rate

A credit card usually has a default rate. If you are late with your payment your interest
rate could increase to 29.99 percent, depending on the credit card. Even if you have a
zero percent promotional rate for balance transfers, a late payment will cause it to
increase.

Universal Default

When you are late with a credit card payment it could affect your other credit card
accounts with other companies. They could lower your credit limit, increase your rate, or
close your account. It all depends on that credit card company. This is known as the
universal default clause.
Payment Allocation

When you make a purchase or a balance transfer they are usually subject to different
interest rates. When you make your monthly payments the balance with the lowest
interest rate gets paid first.

Rate Change

A credit card company can change your interest rate any time even if the rate is fixed.
They have to give you written notification, which is usually 15 days prior to the change
in rate.

³Credit Card Operations of banks Pursuant to the announcement made in the Annual
Policy Statement 2004-05, the Reserve Bank of India had constituted a Working Group
on Regulatory Mechanism for Cards. The Group has suggested various regulatory
measures aimed at encouraging growth of credit cards in a safe, secure and efficient
manner as well as to ensure that the rules, regulations, standards and practices of the
card issuing banks are in alignment with the best customer practices. The following
guidelines on credit card operations of banks have been framed based on the
recommendations of the Group as also the feedback received from the members of the
public, card issuing banks and others. All the credit card issuing banks / NBFCs should
implement these guidelines immediately. Each bank must have a well documented
policy and a Fair Practices Code for credit card operations. In March 2005, the IBA
released a Fair Practices Code for credit card operations which could be adopted by
banks / NBFCs. The bank / NBFC's Fair Practice Code should, at a minimum,
incorporate the relevant guidelines contained in this circular. Banks should widely
disseminate the contents thereof including through their websites, at the latest by
November 30, 2005.

Guidelines for Implementation

1. Issue of cards
a. Banks / NBFCs should independently assess the credit risk while issuing cards to
persons, especially to students and others with no independent financial means. Add-on
cards i.e. those that are subsidiary to the principal card, may be issued with the clear
understanding that the liability will be that of the principal cardholder.

b. As holding several credit cards enhances the total credit available to any consumer,
banks should assess the credit limit for a credit card customer having regard to the
limits enjoyed by the cardholder from other banks on the basis of self declaration/ credit
information.

c. The card issuing banks / NBFCs would be solely responsible for fulfillment of all KYC
requirements, even where DSAs / DMAs or other agents solicit business on their
behalf.

d. While issuing cards, the terms and conditions for issue and usage of a credit card
should be mentioned in clear and simple language (preferably in English, Hindi and the
local language) comprehensible to a card user. The Most Important Terms and
Conditions (MITCs) termed as standard set of conditions, as given in the Appendix,
should be highlighted and advertised/ sent separately to the prospective customer/
customers at all the stages i.e. during marketing, at the time of application, at the
acceptance stage (welcome kit) and in important subsequent communications.

2. Interest rates and other charges

a. Card issuers should ensure that there is no delay in dispatching bills and the
customer has sufficient number of days (at least one fortnight) for making payment
before the interest starts getting charged.

b. Card issuers should quote annualized percentage rates (APR) on card products,
(separately for retail purchase and for cash advance, if different). The method of
calculation of APR should be given with a couple of examples for better comprehension.
The APR charged and the annual fee should be shown with equal prominence. The late
payment charges, including the method of calculation of such charges and the number
of days, should be prominently indicated. The manner in which the outstanding unpaid
amount will be included for calculation of interest should also be specifically shown with
prominence in all monthly statements. Even where the minimum amount indicated to
keep the card valid has been paid, it should be indicated in bold letters that the interest
will be charged on the amount due after the due date of payment. These aspects may
be shown in the Welcome Kit in addition to being shown in the monthly statement.

c. The bank / NBFC should not levy any charge that was not explicitly indicated to the
credit card holder at the time of issue of the card and getting his / her consent.
However, this would not be applicable to charges like service taxes, etc. which may
subsequently be levied by the Government or any other statutory authority.

d. The terms and conditions for payment of credit card dues, including the minimum
payment due, should be stipulated so as to ensure that there is no negative
amortization.

e. Changes in charges (other than interest) may be made only with prospective effect
giving notice of at least one month. If a credit card holder desires to surrender his credit
card on account of any change in credit card charges to his disadvantage, he may be
permitted to do so without the bank levying any extra charge for such closure.

3. Wrongful billing

a. The card issuing bank / NBFC should ensure that wrong bills are not raised and
issued to customers. In case, a customer protests any bill, the bank / NBFC should
provide explanation and, if necessary, documentary evidence to the customer within a
maximum period of sixty days with a spirit to amicably redress the grievances.

b. To obviate frequent complaints of delayed billing, the credit card issuing bank / NBFC
may consider providing bills and statements of accounts online, with suitable security
built therefore.

4. Use of DSAs / DMAs and other agents

a. When banks / NBFCs outsource the various credit card operations, they have to be
extremely careful that the appointment of such service providers does not compromise
with the quality of the customer service and the bank / NBFC¶s ability to manage credit,
liquidity and operational risks. In the choice of the service provider, the bank / NBFCs
have to be guided by the need to ensure confidentiality of the customer¶s records,
respect customer privacy, and adhere to fair practices in debt collection.

b. The Code of Conduct for Direct Sales Agents (DSAs) formulated by the Indian Banks¶
Association (IBA) could be used by banks / NBFCs in formulating their own codes for
the purpose. The bank / NBFC should ensure that the DSAs engaged by them for
marketing their credit card products scrupulously adhere to the bank / NBFC¶s own
Code of Conduct for credit card operations which should be displayed on the bank /
NBFC¶s website and be available easily to any credit card holder.

c. The bank / NBFC should have a system of random checks and mystery shopping to
ensure that their agents have been properly briefed and trained in order to handle with
care and caution their responsibilities, particularly in the aspects included in these
guidelines like soliciting customers, hours for calling, privacy of customer information,
conveying the correct terms and conditions of the product on offer, etc.

5. Protection of Customer Rights

Customer¶s rights in relation to credit card operations primarily relate to personal

privacy, clarity relating to rights and obligations, preservation of customer records,
maintaining confidentiality of customer information and fair practices in debt collection.
The card issuing bank / NBFC would be responsible as the principal for all acts of
omission or commission of their agents (DSAs / DMAs and recovery agents).

4!   

a. Unsolicited cards should not be issued. In case, an unsolicited card is issued and
activated without the consent of the recipient and the latter is billed for the same, the
card issuing bank / NBFC shall not only reverse the charges forthwith, but also pay a
penalty without demur to the recipient amounting to twice the value of the charges
reversed.

b. Unsolicited loans or other credit facilities should not be offered to the credit card
customers. In case, an unsolicited credit facility is extended without the consent of the
recipient and the latter objects to the same, the credit sanctioning bank / NBFC shall not
only withdraw the credit limit, but also be liable to pay such penalty as may be
considered appropriate.

c. The card issuing bank / NBFC should not unilaterally upgrade credit cards and
enhance credit limits. Prior consent of the borrower should invariably be taken
whenever there are any change/s in terms and conditions.

d. The card issuing bank / NBFC should maintain a Do Not Call Registry (DNCR)
containing the phone numbers (both cell phones and land phones) of customers as well
as non-customers (non-constituents) who have informed the bank / NBFC that they do
not wish to receive unsolicited calls / SMS for marketing of its credit card products. The
DNCR should be set up within two (2) months from the date of this circular and wide
publicity should be given to the arrangement.

e. The intimation for including an individual¶s telephone number in the Do Not Call
Registry (DNCR) should be facilitated through a website maintained by the bank / NBFC
or on the basis of a letter received from such a person addressed to the bank / NBFC.

f. The card issuing bank / NBFC should introduce a system whereby the DSAs/ DMAs
as well as its Call Centers have to first submit to the bank / NBFC a list of numbers they
intend to call for marketing purposes. The bank / NBFC should then refer to the Do Not
Call Registry (DNCR) and only those numbers which do not figure in the Registry
should be cleared for calling.

g. The numbers cleared by the card issuing bank / NBFC for calling should only be
accessed. The bank / NBFC would be held responsible if a Do Not Call Number
(DNCN) is called on by its DSAs / DMAs or Call Centre/s.
h. The card issuing bank / NBFC should ensure that the Do Not Call Registry (DNCR)
numbers are not passed on to any unauthorised person/s or misused in any manner.

i. Banks / NBFCs/ their agents should not resort to invasion of privacy viz., persistently
bothering the card holders at odd hours, violation of "do not call" code etc.

ð 5
    

a. The card issuing bank / NBFC should not reveal any information relating to
customers obtained at the time of opening the account or issuing the credit card to any
other person or organization without obtaining their specific consent, as regards the
purpose/s for which the information will be used and the organizations with whom the
information will be shared. Banks / NBFCs should satisfy themselves, based on specific
legal advice that the information being sought from them is not of such nature as will
violate the provisions of the laws relating to secrecy in the transactions. Banks / NBFCs
would be solely responsible for the correctness or otherwise of the data provided for the
purpose.

b. In case of providing information relating to credit history / repayment record of the

card holder to a credit information company (specifically authorized by RBI), the bank /
NBFC may explicitly bring to the notice of the customer that such information is being
provided in terms of the Credit Information Companies (Regulation) Act, 2005.

c. Before reporting default status of a credit card holder to the Credit Information Bureau
of India Ltd. (CIBIL) or any other credit information Company authorized by RBI, banks /
NBFCs may ensure that they adhere to a procedure, duly approved by their Board,
including issuing of sufficient notice to such card holder about the intention to report
him/ her as defaulter to the Credit Information Company. The procedure should also
cover the notice period for such reporting as also the period within which such report will
be withdrawn in the event the customer settles his dues after having been reported as
defaulter. Banks / NBFCs should be particularly careful in the case of cards where there
are pending disputes. The disclosure/ release of information, particularly about the
default, should be made only after the dispute is settled as far as possible. In all cases,
a well laid down procedure should be transparently followed. These procedures should
also be transparently made known as part of MITCs.

d. The disclosure to the DSAs / recovery agents should also be limited to the extent that
will enable them to discharge their duties. Personal information provided by the card
holder but not required for recovery purposes should not be released by the card
issuing bank / NBFC. The card issuing bank / NBFC should ensure that the DSAs /
DMAs do not transfer or misuse any customer information during marketing of credit
card products.

ð 5ý 0 
  

(a) In the matter of recovery of dues, banks / NBFCs may ensure that they, as also their
agents, adhere to the extant instructions on Fair Practice Code for lenders (circular
DBOD. Leg. No. BC. 104 /09.07.007 / 2002±03 dated May 5, 2003) as also IBA¶s Code
for Collection of dues and repossession of security. In case banks / NBFCs have their
own code for collection of dues it should, at the minimum, incorporate all the terms of
IBA's Code.

(b) In particular, in regard to appointment of third party agencies for debt collection, it is
essential that such agents refrain from action that could damage the integrity and
reputation of the bank / NBFC and that they observe strict customer confidentiality. All
letters issued by recovery agents must contain the name and address of a responsible
senior officer of the card issuing bank whom the customer can contact at his location.

(c) Banks / NBFCs / their agents should not resort to intimidation or harassment of any
kind, either verbal or physical, against any person in their debt collection efforts,
including acts intended to humiliate publicly or intrude the privacy of the credit card
holders¶ family members, referees and friends, making threatening and anonymous
calls or making false and misleading representations.

6. Redressal of Grievances
a. Generally, a time limit of sixty (60) days may be given to the customers for preferring
their complaints / grievances.

b. The card issuing bank / NBFC should constitute Grievance Redressal machinery
within the bank / NBFC and give wide publicity about it through electronic and print
media. The name and contact number of designated grievance redressal officer of the
bank / NBFC should be mentioned on the credit card bills. The designated officer should
ensure that genuine grievances of credit card subscribers are redressed promptly
without involving delay.

c. The grievance redressal procedure of the bank / NBFC and the time frame fixed for
responding to the complaints should be placed on the bank / NBFC's website. The
name, designation, address and contact number of important executives as well as the
Grievance Redressal Officer of the bank / NBFC may be displayed on the website.
There should be a system of acknowledging customers' complaints for follow up, such
as complaint number / docket number, even if the complaints are received on phone.

d. If a complainant does not get satisfactory response from the bank / NBFC within a
maximum period of thirty (30) days from the date of his lodging the complaint, he will
have the option to approach the Office of the concerned Banking Ombudsman for
redressal of his grievance/s. The bank / NBFC shall be liable to compensate the
complainant for the loss of his time, expenses, financial loss as well as for the
harassment and mental anguish suffered by him for the fault of the bank and where the
grievance has not been redressed in time.

7. Internal control and monitoring systems

With a view to ensuring that the quality of customer service is ensured on an on-going
basis in banks / NBFCs, the Standing Committee on Customer Service in each bank /
NBFC may review on a monthly basis the credit card operations including reports of
defaulters to the CIBIL, credit card related complaints and take measures to improve the
services and ensure the orderly growth in the credit card operations. Banks / NBFCs
should put up detailed quarterly analysis of credit card related complaints to their Top
Management. Card issuing banks should have in place a suitable monitoring
mechanism to randomly check the genuineness of merchant transactions.

8. Right to impose penalty

The Reserve Bank of India reserves the right to impose any penalty on a bank / NBFC
under the provisions of the Banking Regulation Act, 1949 for violation of any of these
guidelines´.

Short term finance

With holidays like Christmas or the New Year seeming to come round too quickly,
people often find they have not saved up enough for their celebrations. Moreover,
budgeting is an alien concept during this and spending can spiral out of control. To
cover the inevitable shortfall in resources, the credit card is an obvious attraction. There
are advantages to using the card to finance your expenditure:

i) It gives you free access to about a month¶s credit.

ii) It gives you the temporary ability to spend beyond your current means.

iii) It allows you to track your expenditure.

iv) You do not have to carry lots of cash around with you.

Use of credit card, however, does carry with it significant dangers if it is not carefully
controlled. Research indicates that spending could increase by up to 35% when using a
credit card compared with using cash. Here are some key principles to help you guard
against running into credit card debt trouble.

1. Spending Plan

If your spending is going to exceed your income for the festive month, consider cutting
intended festive expenses, or other expenses, to stay within your income. I am
assuming you have drawn up your spending plan for that period. That¶s where a credit
card comes to the rescue. Though not readily apparent, the use of your credit card can
create distortions in the management of your finances. Unless you are monitoring your
spending in both cash and credit, there is a danger that you will be uncertain whether or
not you are living within your means. It would therefore be unwise to begin using a
credit card if you are not in control of your finances, that means using a spending plan.

2. Debt to Income Ratio

Do not forget that use of your credit card adds to your indebtness. In managing your
financial affairs, one of the key indicators to watch is your debt-income ratio. This is
monthly debt repayment as a percentage of your monthly after-tax income, and raises a
red flag when you tinker with too much debt. A ratio of over 20% is becoming unhealthy.
If you already have credit card debt that is overdue, do not add to it.

3. Bridging Finance

Use of a credit card is ideally a means of short- term financing of your operations. That
means settling any debt incurred using your card within days. Paying the minimum
balance will not do. If you are not confident that you can pay it off in full, you wound do
yourself a huge favor by not using a credit card. Should you decide to go ahead and use
a card, you need to be prepared for extra costs in interest and penalties associated with
extended credit. This adds to your expenses, and you need to be ready to be ready to
reduce other regular expense to accommodate this, otherwise you run the risk of
creating ongoing hard-core debt.

4. Net Worth

Credit card debt incurred during the festive season is usually for consumer spending
paying for your holiday, buying gifts, entertainment, traveling expenses, etc and creates
what is known as consumer debt. This kind of debt adds to your liabilities, but
contributes nothing to your assets. Your net worth is reduced to the extent of consumer
debt incurred. Shrinking net worth is not good for your financial health. So do have
yourself a happy holiday. But as you go about it, finance it in a way that gives you the
comfort that you won¶t be debt-laden the following month

Understanding consumers

As per ï
ð

5 Companies today recognize that they cannot appeal
to all buyers in the marketplace, or at least not to all buyers in the same way, Buyers
are too numerous, too widely scattered, and too varied in their needs and buying
practices. Moreover, the companies themselves vary widely in entire market, sometimes
against superior competitors; each company must identify the parts of the market that it
can serve best and more profitably.

Thus, most companies are being choosier about the customers with whom they wish to
build relationships. Most have moved away from mass marketing and inclined towards
market segmentation and targeting-identifying market segments, selecting one or more
of them, and developing products and marketing programs tailored to each. Instead of
scattering their marketing efforts, firms are focusing on the buyers who have greater
interest in the values they create best.

Companies have not always practiced market segmentation and targeting. For most of
the past century, major consumer products companies held fast to mass marketing-
mass-producing, mass-distributing, and mass-promoting about the same product in
about the same way to all consumers. Henry ford typified this marketing strategy when
he offered the model T Ford to all buyers; they could have the car ³in any color as long
as it is black.´ Similarly, coca-Cola at one time produced only one drink for the whole
market, hoping it would appeal to everyone.

These companies argued that mass marketing creates the largest potential market,
which leads to the lowest costs. This in turn, can translate into either lower prices or
higher margins; however, many factors now make mass marketing more difficult. For
example, the world¶s mass markets have slowly splintered into a profusion of smaller
segments- the baby boomers here, the Gen Xers there; here the Hispanic segment,
there the African American segment; here working women, there single parents; here
the Sun Belt, there the Rust Belt. Today, marketers find it very hard to create a single
product or program that appeal to all of these diverse groups.´  ï

ð

5. Credit card companies were also in to mass marketing in the past years as they
were offering the same services to all types of customers but now as the competition is
high, they should provide services according to needs of different type of customers as
students have different needs in terms of use of credit cards as compared to business
men or a housewife.

What is Consumer behavior?

Consumer behavior depends on some basic points

= The psychology of how consumers think, feel, reason, and select between
different alternatives (e.g., brands, products, and retailers);
= The psychology of how the consumer is influenced by his or her environment
(e.g., culture, family, signs, media);
= The behaviour of consumers while shopping or making other marketing
decisions;
= Limitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome;
= How consumer motivation and decision strategies differ between products that
differ in their level of importance or interest that they entail for the consumer; and
= How marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.

There are four main applications of consumer behaviour:

= The most obvious is for u 


  
ii.e., for making better marketing
campaigns. For example, by understanding that consumers are more receptive
 to food advertising when they are hungry, we learn to schedule snack
advertisements late in the afternoon. By understanding that new products are
usually initially adopted by a few consumers and only spread later, and then only
gradually, to the rest of the population, we learn that (1) companies that introduce
new products must be well financed so that they can stay afloat until their
products become a commercial success and (2) it is important to please initial
customers, since they will in turn influence many subsequent customers¶ brand
choices.
= A second application is @@ . In the 1980s, Accutane, a near miracle cure
for acne, was introduced. Unfortunately, Accutane resulted in severe birth
defects if taken by pregnant women. Although physicians were instructed to warn
their female patients of this, a number still became pregnant while taking the
drug. To get consumers¶ attention, the Federal Drug Administration (FDA) took
the step of requiring that very graphic pictures of deformed babies be shown on
the medicine containers.
= ›  u 

involves getting ideas across to consumers rather than selling
something. Marty Fishbein, a marketing professor, went on sabbatical to work for
the Centres for Disease Control trying to reduce the incidence of transmission of
diseases through illegal drug use. The best solution, obviously, would be if we
could get illegal drug users to stop. This, however, was deemed to be infeasible.
It was also determined that the practice of sharing needles was too ingrained in
the drug culture to be stopped. As a result, using knowledge of consumer
attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of
needles in bleach before sharing them, a goal that was believed to be more
realistic.
= As a final benefit, studying consumer behaviour should make us better
consumers. Common sense suggests, for example, that if you buy a 64 liquid
ounce bottle of laundry detergent, you should pay less per ounce than if you
bought two 32 ounce bottles. In practice, however, you often pay a size premium
by buying the larger quantity. In other words, in this case, knowing this fact will
 sensitize you to the need to check the unit cost labels to determine if you are
really getting a bargain.

Consumer satisfaction

In order to understand the consumer behavior one should consider the concept of
consumer satisfaction too. Consumer satisfaction is that area of consideration that
attracts all the efforts of an organization. At the end of the efforts to save the products
long term loyalty can be achieved if consumers are satisfied. It¶s not an easy concept to
conclude because there are many factors leads to consumer satisfaction. To
understand the concept one should consider all aspect of the topic area. Researchers
agree on the concept that it¶s a wide area that is not easy to conclude, basically
satisfaction part.

³A basic definitional inconsistency is evident by the debate of whether satisfaction is a

process or an outcome (Yi 1990). More precisely, consumer satisfaction definitions
have either emphasized an evaluation process (e.g., Fornell 1992; Hunt 1977; Oliver
1981) or a response to an evaluation process (e.g., Halstead, Hartman, and Schmidt
1994; Howard and Sheth 1969; Oliver 1997, 1981; Tse and Wilton 1988; Westbrook
and Reilly 1983). From a general definition perspective, process definitions are
problematic in that there is little consistency in the satisfaction process. From an
operational perspective, process definitions are plagued by antecedent constructs
included in the conceptual definition; thus, there is an overlap between the domains of
the determinative process constructs and the consumer satisfaction construct.

Most definitions have favored the notion of consumer satisfaction as a response to an

evaluation process. Specifically, there is an overriding theme of consumer satisfaction
as a summary concept (i.e., a fulfillment response (Oliver 1997); affective response
(Halstead, Hartman, and Schmidt 1994); overall evaluation (Fornell 1992);
psychological state (Howard and Sheth 1969); global evaluative judgment (Westbrook
1987); summary attribute phenomenon (Oliver 1992); or evaluative response (Day
1984)). However, there is disagreement concerning the nature of this summary concept.
Researchers portray consumer satisfaction as either a cognitive response (e.g., Bolton
and Drew 1991; Howard and Sheth 1969; Tse and Wilton 1988) or an affective
response (e.g., Cadotte, Woodruff, and Jenkins 1987; Halstead, Hartman, and Schmidt
1994; Westbrook and Reilly 1983). Furthermore, operational definitions may include a
behavioral dimension of satisfaction (e.g., "I would recommend the school to students
interested in a business career." (Halstead, Hartman, and Schmidt 1994),although
conceptual definitions are void of a behavioral orientation.

Feelings, values and attributes of customer which encourage them to purchase and use
the same product, service or brand again and again means customer loyalty to that
product. They are built on the foundation of understanding customer needs and wants.

A five-level hierarchy of customer behavior can be developed on the basis of this

information. It suggests that customer satisfaction ± as determined by, among other
things, whether a customer¶s expectations are met or exceeded in an individual
transaction or a longer-term relationship ± is the lowest level of this hierarchy. Of
course, we know that it supplies the preconditions under which customer loyalty ± in
which a customer devotes an increasing ³share of wallet´ to repeat purchases from the
same supplier ± may be developed (Heskett, 2002).

Customer satisfaction is considered to be one of the most important outcomes of all

marketing activities in a market-oriented firm. The obvious need for satisfying the firm's
customer is to expand the business, to gain a higher market share, and to acquire
repeat and referral business, all of which lead to improved profitability (Barsky, 1992).
Studies conducted by Cronin and Taylor (1992) in service sectors such as: banking,
pest control, dry cleaning, and fast food; found that customer satisfaction has a
significant effect on purchase intentions in all four sectors. Similarly, in the health-care
sector, McAlexander
  (1994) found that patient satisfaction and service quality
have a significant effect on future purchase intentions.
Literature identifies a number of factors that reflects image in the customer's mind.
Image is considered to influence customers' minds through the combined effects of
advertising, public relations, physical image, word-of-mouth, and their actual
experiences with the goods and services (Normann, 1991). Similarly, (Selnes, 1993),
using numerous researches on service organizations, found that service quality was the
single most important determinant of image. Thus, a customer's experience with the
products and services is considered to be the most important factor that influences
his/her minds in regard to image.

Differences of consumer behavior in UK and IndiaV

Consumer¶s behavior on usage of credit cards is very variant in UK and India. Investors,
manufacturers, retailers, banks and government agencies use various assessments of
consumer confidence in planning their actions. The ability to predict major changes in
consumer confidence allows businesses to gauge the willingness of consumers to make
new purchases. As a result, businesses can adjust their operations and the government
can prepare for changing tax revenue. If confidence is dropping and consumers are
expected to reduce their spending, most producers will tend to reduce their production
volumes accordingly. For example, if manufacturers anticipate consumers will reduce
retail purchases, especially for expensive and durable goods, they will cut down their
inventories in advance and may delay investing in new projects and facilities. Similarly,
if banks expect consumers to decrease their spending, they will prepare for the
reduction in lending activities, such as mortgage applications and credit card use.
Builders will plan for the decline in home construction volumes. The government will get
ready for the reduction in future tax revenues. On the other hand, if consumer
confidence is improving, people are expected to increase their purchases of goods and
services. In anticipation of that change, manufacturers can boost production and
inventories. Large employers can increase hiring rates. Builders can prepare for higher
housing construction rates. Banks can plan for a rise in demand for credit products.
Government can expect improved tax revenues based on the increase in consumer
spending. The relevance of a consumer confidence index for a country like India is
evident from the fact that Consumption Expenditure accounts for over 60% of India¶s
GDP.

According to the study done by Chitra krishnaswmay (Sarawak,2008) the diffusion of

credit cards is very slow in India compared to the international scenario. The total
universe of plastic cards issued - credit and debit is just over 30 million in India.
Regarding the age of adopters of credit cards in India most (40%) of the adopters is in
the age group of 46 to 55 years. The low cardholding rate in the Indian market shows
that the country still has untapped potential to be explored.

The 'buy now, pay later' concept is yet to catch on with most consumers in the nation.
While Asia Pacific as a whole is clearly dominant in the pay later card markets, India
leads the way in debit in terms of card transaction value. Many Indian consumers still
prefer to use debit cards linked to salary accounts when spending their money. The total
value of card transactions in India grew to INR6,524 billion (E96.4 billion) in 2008

On the other hand spending on credit and debit cards in the UK rose at a near double-
digit rate during the past year, challenging suggestions that consumers are tightening
their belts. People spent 9.2% more on their cards during August than they did in the
same month of the previous year, according to Barclaycard.

The group said autumn sales, discounts in shops, and back-to-school spending had
helped keep the retail sector buoyant during the month, while the rising cost of food and
cotton may also be starting to filter through into prices, further boosting spending levels.V
Stuart Neal, head of Barclaycard UK Payment Acceptance, said: "With leading retailers
warning that the Government austerity drive will keep the economy in the doldrums and
hit consumer confidence hard, it is good to see a fourth month of increased spending.

According to the research done by ³Morgan Stanley /*-Group´, Britons are turning in to a
credit card dependent society at a fast clip .Credit cards are being used for every day
bills as the customers are becoming very plastic concisions. Most of the daily use items
are being bought with the use of credit cards. Mr. Patrick Muir (Marketing Director of
Morgan Stanley Consumer Banking), the trend for using credit cards for daily use items
continuing to grow. As per their research on 2000 consumers ,it is found that 38% of
overall credit card holders use their credit cards to purchase groceries, where as 45%
use them for essentials like petrol and car expenses .

MOTIVATING FACTORS OF USAGE AND OWNERSHIP

Recognizing the case that credit card usage patterns of emerging markets in which
India takes place largely differ from those of well-developed markets such as UK¶s
market, understanding attitudes and credit card usage behavior may affect the
development of marketing strategies of credit card companies. Equipped with this kind
of knowledge, credit card companies may be able to change consumer attitudes
towards using and owning credit cards (Kurtulus. and Nasir, 2006). Such factors can be

Population Factor

The population of India is a lot more than UK but the use of credit card as a mode of
expenditure is very high in UK as compared to India. Credit card issuers now finding
different ways to attract customers in UK by adding different facilities to the cards
according to the needs of the card holders. 

Technological Factor

Major changes have been done in UK for the plastic money people keep in their
pockets and wallets, for not only are credit card companies taking tentative steps to
ensuring the material the cards are made of is more environmentally friendly, but there
are moves to make the cards easier and quicker to use. Barclaycard revealed the brand
name of its three-in-one payment card ± One Pulse The card will be the only one in the
UK to combine Transport for London's Oyster card with a credit card facility. So these
types of cards are very useful for salary class consumers. Meanwhile, Master card is
looking to introduce a similar product in the UK, initially in partnership with fast-food
chain McDonald's (MW April 7). These "wave and pay" or "contactless" cards aim to
make life easier for consumers.

Culture and Society Factor

Culture is the total of learned, socially transited costume, knowledge, material objects,
and behavior. Culture includes the ideas, values and artifacts of groups of people. In
sociological terms, culture does not refer solely to the fine arts and refined intellectual
taste. Culture consists of all objects and ideas within society, including ice cream cones,
rock music and slang words.

A fairly large number of people are said to constitute a society when they live in the
same territory, are relatively independent of people outside their area, and participate in
a common culture. A society consists of people who a common heritage and culture.
Members of the society learn this culture and transmit it from one generation to the next.

According to the research done by ³Morgan Stanley Group´, Britons are turning in to a
credit card dependent society at a fast clip .Credit cards are being used for every day
bills as the customers are becoming very plastic concisions. Most of the daily use items
are being bought with the use of credit cards. Mr. Patrick Muir (Marketing Director of
Morgan Stanley Consumer Banking), the trend for using credit cards for everyday items
are continuing to grow. People in UK use credit cards for daily grocery or for petrol in
car or to pay for a drink in the pub where as the culture in india is totally different
,people still use cash as main mode of payment for daily use things .Some people don¶t
use credit cards due to religious values like in muslim religion its not allowed to take or
give any interest on money.
A fairly large number of people are said to constitute a society when they live in the
same territory, are relatively independent of people outside their area, and participate in
a common culture. A society consists of people who a common heritage and culture.
Members of the society learn this culture and transmit it from one generation to the next.

Having a common culture also simplifies many day to day interactions. For example,
when you buy an airline ticket, you know you don¶t have to bring along a hundreds of
pounds or thousands of rupees in cash. You can pay with credit card. Most of the big
brand stores in UK like Tesco or Argos who provide service of online shopping sitting at
home take the payment from cards and having a good response from customers of
online shopping because it makes their life comfortable and easy and saves a lot of
time, So using credit cards which is an easy and safe mode of payment which saves
time of withdrawing cash from bank or keeping cash with you all the time has become
an important part of daily life of UK based customers. This assumption reflects basic
values, beliefs, and customs of the culture of United Kingdom.

Language is a critical element of culture that sets human apart from other species.
Members of a society generally share a common language, which facilitates day to day
exchanges with others. Language can be a barrier in india for global companies
because in all 28 states of India people speak different languages and to provide them
complete knowledge about the product or taking exact feedback from them can be only
possible in their own language. English is the main language which is used all over
world however, a term can have a number of different meanings, even within the same
society. For example, in United States, grass signifies both a plant eaten by grazing
animals and an intoxicating drug.

³Cultural, subculture, and social class are particularly important in buying behavior.
Culture is the fundamental determinant of a person¶s want and behavior. The growing
child acquires a set of values, perceptions, preferences, and behaviour through his or
her family and other key institutions. Each culture consists of smaller subcultures that
provide more specific identification and socialization for their members. Subcultures
include nationalities, religions, racial groups, and geographic regions. When subcultures
grow large and affluent enough, companies often design specialized marketing
programs to serve them. Such programs are known as diversity marketing´. (kotlar
2004)

Based on the above statement of Philip kotlar- kotlar (2004) it is true that consumers are
heavily affected by the culture and subculture. In term of credit card usage it is true that
indian people still having conservative approach towards credit card proving
Kotlar¶s(2004) statement.

Awareness factor

Usage of credit card is depends on the awareness of the consumers of the product.
There is a huge number of service providers competing in the market working at
different levels. Awareness factors include the education and proper information about
the product, types of facilities available on the product and in terms of credit card most
important is the security of the credit card. Suitable deals, these days credit card
companies are providing insurance, free cash withdrawal facilities during festival times
etc.

As far as non usage of credit cards is concerned it is heavily depends on the thinking
and background of the consumer. In India this product is ruling the market for last 12 to
15 years, but still this concept is not acceptable to traditional people. From traditional
people we mean by the class of people who think that it is a wrong habits of spending
money without having money in hand. This is being seen as a kind of taking loan-which
is a big fear. In UK, it¶s being used and offered for many years back. Its simply because
of the kind of consumers. In UK consumers are well aware and aggressive and overall
education level is higher than in India. In India main revolution came after liberalization
of Indian economy in the year 1991.

In UK the cards being used from last few years comes with a chip and pin number
,Earlier the companies provide cards with magnetic strip on the back of the card and the
problem with the cards was that the details of the cards were easily traced by hackers
which was used to make fake or counterfeit cards to rob the actual owner. The cards
being used now adays with chip and pin are more secure and can be trusted by the
customers. In India, the credit card companies now started using the chip and pin
service in their cards as well. But people are still unaware of it yet.

 

 c

Secondary data could be raw data or could be published data, journal articles, reports
by government or financial institutes, books and internet is considered as major source
of secondary data for research. Reliability of secondary data depends on number of
factors, the most important factor is the source of data, Secondary data will be reliable if
source of data is reliable, for example World Bank reports. Reliability of data also
depends on the updated information. The more updated information will leads towards
more reliable data, this because of the changing nature of environment. General articles
are more reliable because they are more updated as compare to books. It took years to
bring books in markets. There are number of questions on the reliability of the
secondary data gathered on internet but it is still important if it is handled carefully. In
the case of corporate companies, the best source of secondary data is companies¶
performance reports. According to john in 2000 ³Secondary data is the data which
already used, which is collected by others for any reason, secondary data is used to get
a new look of the current research or can be used to compare currant work with author
(John, 2000). Numbers of ways are available to collect the secondary data; it could be
via journals and text books, written by well-known and qualified authors. Case studies,
news papers and internet portals can also be used
Secondary data can be collected in many ways such as via journals and text books
written by the qualified authors, case study relevant to the current work, newspapers
and articles which contains the recent information about current innovation activities.

Secondary data can be used in different ways:

= The data can simply report in its original format. It is most likely that the place for
this data will be in main introduction or literature review as support or evidence
for the argument.
= If it used (analyse it or re-interpret it) for a different purpose to the original then
the most likely place would be in the µAnalysis of findings¶ section of the
dissertation.

There are many sources of data and most people tend to underestimate the number of
sources and the amount of data within each of these sources.

Sources can be classified as:

= Paper-based sources ± books, journals, periodicals, abstracts, indexes,

directories, research reports, conference papers, market reports, annual reports,
internal records of organisations, newspapers and magazines
= Electronic sources± CD-ROMs, on-line databases, Internet, videos and
broadcasts.

The main sources of qualitative and quantitative secondary data include the following:

= Official or government sources.

= Unofficial or general business sources.

0  c

Most research requires the collection of primary data (data that you collect at first hand),
in primary data collection, the data is collected using methods such as interviews and
questionnaires. The key point here is that the data collected is unique to you and your
research and, until you publish, no one else has access to it.

There are many methods of collecting primary data and the main methods include:

= questionnaires
= interviews
= focus group interviews
= observation
= case-studies
= diaries
= critical incidents
= Portfolios.

Primary research entails the use of immediate data in determining the survival of the
market. The popular ways to collect primary data consist of surveys, interviews and
focus groups, which shows that direct relationship between potential customers and the
companies whereas secondary research is a means to reprocess and reuse collected
information as an indication for betterments of the service or product. Both primary and
secondary data are useful for businesses but both may differ from each other in various
aspects. Primary data is considered as a main data, which is mostly gathered by using
different tools like question are and interviews which could be structured or
unstructured. The usage of tools is depends upon what type of research method we are
using. There are two bas

Primary data is the main data which is gathered it is mainly consist of survey
questionnaire which is mixture of structured and unstructured questions. There are
different ways to get primary data, which depend upon the type of research and also
depends upon the findings we need. There are two basic approaches of research

= Qualitative research
= Quantitative research
.  !


Qualitative research is related to more about words not numbers. Qualitative research
can be called as investigative methodologies. This research is also considered an
inductive approach between theory and research. In qualitative research variables are
looked in the nature they exist. Generally open ended questions are part of the interview
in qualitative approach; interview is the main source of data gathering. In qualitative
approaches Interview is considered as an integral part for investigation (Jacob, 1988).
The major difference of qualitative research with quantities research is that quantitative
research is more formalized and qualitative research is less formalized. Qualitative
research could be called as deeper and is tends to understand the deep roots of the
data about the problems ³Qualitative research is less formalized than quantitative
research.´ Qualitative research is deeper and tends to have complete understanding of
the data or the problem. (Holme,Solvang 1991).

 0 
.  !


1) According to Flick U. (2002), the main concern of Qualitative research is

explaining a social phenomenon, rather than going for numerical results
2) Sponsorship is not a linear process, which means it can be change during
its operations, in qualitative research questions are mainly designed to
investigate the subject area of certain problem.

.  !


In quantitative research numbers are considered central unit for analysis, quantitative
research is mostly used for large scale research, in other words quantitative research is
more structured and more formalized as compare to qualitative research. Moreover
quantitative research treats the problem, in broad perspective and is mostly generalised
the situation (Holme, Solvang 1991). The result of quantitative research is mostly
measurable and easily understandable because of the numeric terms used in such type
of research. There are number of things which make quantitative research easy to
handle as compare to quantitative research. The most important reasons is less number
of variables in quantitative research as compare to qualitative research, and these
variables can be applied on large scale .

Quantitative research is divided into different steps, the first step is it starts with theory,
and the making of hypothesis, research design is next step, in the process of
quantitative research data is gathered and analyzed to find a solution of problem or to
prove hypothesis.

!
 

  6

Sample decisions hold the key to usefulness of a survey exercise. The population of this
study comprises of various individuals who bear at least one or more credit cards. A
sample must be large enough to give a good representation of the population, but small
enough to be manageable. In this section the two major types of sampling, random and
non-random, will be examined.

Ü !
 

In random sampling, all items have some chance of selection that can be calculated.
Random sampling technique ensures that bias is not introduced regarding who is
included in the survey.

Five common random sampling techniques are:

= simple random sampling

= systematic sampling
= stratified sampling
= cluster sampling
= multi-stage sampling
 Ü  
 

With simple random sampling, each item in a population has an equal chance of
inclusion in the sample.

The advantage of simple random sampling is that it is simple and easy to apply when
small populations are involved. However, because every person or item in a population
has to be listed before the corresponding random numbers can be read, this method is
very cumbersome to use for large populations.

Ü 
 
 

Systematic sampling, sometimes called interval sampling, means that there is a gap, or
interval, between each selection. This method is often used in industry, where an item is
selected for testing from a production line (say, every fifteen minutes) to ensure that
machines and equipment are working to specification.

The advantage of systematic sampling is that it is simpler to select one random number
and then every µIth¶ (e.g. 20th) member on the list, than to select as many random
numbers as sample size. It also gives a good spread right across the population. A
disadvantage is that you may need a list to start with, if you wish to know your sample
size and calculate your sampling interval.

Ü   
 

In stratified sampling, the population is divided into groups called strata. A sample is
then drawn from within these strata. Some examples of strata commonly used by the
ABS are States, Age and Sex. Other strata may be religion, academic ability or marital
status.

Ü 

 

It is sometimes expensive to spread your sample across the population as a whole.

Cluster sampling divides the population into groups, or clusters. A number of clusters
are selected randomly to represent the population, and then all units within selected
clusters are included in the sample. No units from non-selected clusters are included in
the sample. They are represented by those from selected clusters. This differs from
stratified sampling, where some units are selected from each group.

Ü
 7

 

Multi-stage sampling is like cluster sampling, but involves selecting a sample within
each chosen cluster, rather than including all units in the cluster. Thus, multi-stage
sampling involves selecting a sample in at least two stages. In the first stage, large
groups or clusters are selected. These clusters are designed to contain more population
units than are required for the final sample.

 


Sampling techniques used in this research is simple random sampling on the hotel
guest from India and UK. Researcher went to the Crown Plaza Hotel Birmingham (UK)
to pick 30 samples and same numbers of samples from New Delhi (India) were taken
with the help of an employee working in the hotel. Researcher chosen hotel because he
believe hotel is the right place to find professionals. So researcher went with simple
random sampling techniques. The Simple Random Sampling Method was used. The
selection probability of a case was equal to 30 guests (target sample). Every guest in
the hotel had an equal chance of being selected to avoid any bias. This characteristic of
probability sampling makes it much more desirable given our goal of generalizing to the
larger workforce population.


8

30 sample from India and 30 from UK has been taken as sample size for this study.



c 

A market research project is based on the data collection. It is on this collected data that
the researcher performs the analysis and arrives at the conclusion. Researcher referred
questionnaire as a tool to collect data from the primary source. Researcher chosen
questionnaire because researcher feels that this segment of the people who coming to
the 5star hotel is very high and intellectual so time could have been the limiting factors
and they would not allowed to conduct interview because conducting interview is time
consuming. Researcher saved respondents time so respondents can answer his
questions truly and comfortably without wasting too much of their precious time.

Data analysis and results

How many have a credit card and which gender is more in

numbers
About 95 people ask that how many of them have a credit card in both the countries. In
India usage of credit card is increasing steeply specially in youth as they think that
having a credit is status symbol. But women still are not encouraged to have one. Only
15 out of 95 have a credit card. 74 are male from total responders. On the other hand in
UK credit cards are equally famous in men and women but women use credit cards
more frequently. Almost 47 women and 45 men have a credit card from total
respondents.

How many don¶t have a credit card and why

Main reasons for not having a credit card, through choice, are a claimed preference for
using cash (44%) or a debit card (23%), fear of getting into debt (33%) and not being
interested (30%). In practice, it is possible these reasons may all be related to a fear of
debt, expressed in differing ways. Using cash may also include cheques and debit
cards, which are widely considered as µcash¶.
Don't know 1
Prefer to use charge card 2
Put off by complexity 4
Never thought about it 6
No need to borrow 11
Prefer to use debit card 23
Not interested 30
Fear of getting into debt 33
No need- Prefer to use cash 44

Some people regard having a credit card solely as a means of borrowing money
(11%).Those who work are much more likely to mention a preference for using cash
(53%) than those who do not work (33%).
 
 
   
One key reason why the minority who would like a credit card do not have one is that
they are too young and only just finding their feet financially. Another important reason
is low income. Although a small number in total, about half are aged 16 ± 24.

Don't know 7
Other 9
Indebted/ CCJ 5
Lack of credit history 7
Applied but been refused 10
Not bothered to apply -
think will be refused 14
Insufficient income
Too young/ recently 27
financially independent 28

Credit cardholders were asked how often they used their credit
card
On average, credit cards are used a little more than once a week, there is wide variation
in actual usage. Well over a third (36%) use it at least once a week and three in four
(74%) use it at least once a month.

Don't know 2
Varies from month to month 8
Less than once a month 16
Once a month 17
Not weekly; several times a month 19
Once a week 17
Not daily; several times a week 18
Daily 3

Credit card users ask how many of them have 2 or more cards
Although a majority of people have one credit card (63%), a significant minority have
two or more. When asked how many are in active use, the number with one increases
to three in four (73%).over a quarter of those with two or more only have one in active
use. It is therefore the case that at least one in ten credit cardholders have one or more
credit cards that have fallen into disuse but not been destroyed.

1 63
73

2 23 Total
19 In active

3 14
Or 8
More
There are five reasons for having more than one credit card people give
‡ to maximise the amount they want to borrow (22%)
‡ one came automatically with their bank account (18%)
‡ they offer different things - e.g. one gives low interest rate the other gives loyalty points
(16%)
‡ one is for everyday spending; one is for exceptional items ± e.g. a holiday (15%)
‡ one is for personal spending and one is for joint use with partner (20%).

Motivating factors when choosing a credit card

Credit Card holders were asked what factors persuaded them to choose their credit
card. Taking all answers into account, the interest rate, not surprisingly, is the choice
factor mentioned by the largest proportion of card holders (almost half- 48%). The brand
name/ reputation of the company issuing the card was also a key factor in choice of
card, mentioned by four in ten. The balance transfer interest rate (typically 0% for the
first 6 months) is a consideration with one in five (22%). Another one in five (19%) did
not so much choose their card as have it issued to them when they opened their bank
account. Similarly, another 9% say their bank offered it to them as an existing customer.
Points/reward schemes are a motivating factor with 18%. Along with these factor there
is one extra factor which only effects in India that is culture. Indian¶s have a great
influence of that in their lives and almost half of them are still so traditional in using
money instead of a card.

Don't know 3
Other 7
Free gift 5
To support a charity 4
Can use anyw here/ convenient 6
To consolidate debts 3
My bank offered me it 7
Timing (leaflet came at right time) 10
Cash back scheme 12
Extended w arrant/insurance benefits 13
Personal recommendation 11
Points/rewards scheme 18
Offered w hen opened bank a/c 20
Balance transfer interest rate 21
Brand name/reputation 41
Interest rate 46

The young (16-24) and the old (55+) are more influenced by brand/reputation perhaps
for different reasons. The young may be thinking more in terms of trendy brand image
while the old are thinking about reputability, trustworthy name.

Level of understanding
Card holders were asked whether they:-
a) Have a very good understanding of credit cards and what¶s on offer
b) Understand a fair bit about how things work and what¶s available
c) Have a limited understanding, or
d) Are not really interested in how credit cards work
Only one in five claim to have a very good understanding. The largest proportion claim
to understand them a fair bit (45%). However as high a proportion only three in ten
admit to having only a limited understanding. 10% are just not interested in how credit
cards work (in spite of having one).

Not really interested 10

Limited understanding 32
Understands a fair bit 45
Very good understanding 13

Credit Card agreement ± easy to understand information

Cardholders were asked whether they found the information in the credit card
agreement easy to understand. Only a quarter found it easy. This varies by
demographics with the 55+ less likely to find it easy. Only a minority within each group
find the credit card agreement easy to understand.

The main reasons for finding the agreement difficult to understand are as follows.
Multiple responses were accepted for this question:-
‡ Print too small (40%)
‡ Too much information (25%)
‡ Jargon (19%)
‡ Difficult to understand (14%)
‡ Looks complicated (12%)
‡ Confusing (9%)
‡ Figures need explaining (5%)
‡ Not laid out well (8%)
‡ Other (7%)
‡ Don¶t know (1%)

Awareness of other charges other than interest

When cardholders ask about charges other than interest they might be liable to pay, half
of them mentioned the late payment fee, almost four in ten, the cash withdrawal fee and
one in six, the fee for using the card abroad. 12% mentioned an annual fee and 11%, a
fee for replacement cards.

Late payment penalty fees 50

Cash withdrawal fee 36

Fee for using card abroad 15

Annual fee 10

Fee for replacement card 10

Fee for statement copies 8

Handling fee 5

Balance transfer fee 2

Other 2

DK/None 27

Just over half are aware that there is often more than one APR quoted on promotional
literature.

Advantages of having a credit card

Cardholders asked what advantages do they think the can have with a credit card.
There are different answers from a number of people. Like 2 out of six mentioned easy
payment (22). It¶s easy to carry a single card as compare to big amount of money 33
said. As mentioned in literature review above it easy to use, fast, flexible, safe,
Easy to use 22

Easy to carry 33

Fast 19
Flexible 17

Safe 20
Extra benefits 15

Helpfull in emergencies 12

Others 10
Dont know 2

Disadvantages of having a credit card

Just advantages there some disadvantages as well. When cardholders ask about them
they mentioned extra paybacks 3 out 5. Short term finance end up in a big loan 4 out 10
says and as mention above blow your budget, extra cost and most important is credit
card frauds.

High rates of interest 31

Out of budget 25

Cost 17

Extra expenses 18

Hidden charges 11

Frauds 16
Don¶t know 3

Conclusion
In 1951, Diners Club issued the very first credit card to 200 customers who could use it
at a selection of twenty seven restaurants in New York City. From that modest
beginning, credit cards have grown to become an indispensable part of modern life.
Now these cards are status symbol as well as a necessity of life. Even in the traditional
country like India the usage of credit card has increase steeply. Credit cards are
convenient way to pay for all kind of products. Many consumers regard them safer then
use of cash. Now it the time of online shopping from cloths to shoes, from air tickets to
gardening tools, groceries to toiletries and to buy all these things u need a card which
is an important essential of life now a days. Nowadays consumers rely on their credit
cards to help them achieve their lifestyle goals by letting them take advantage of special
bargains, spread payments out over several months, and provide cash in emergencies.
Credit cards have become so widespread that they are often accepted as a piece of
primary identification.

Everybody want a credit card today but according to a survey only 20% total consumers
have complete understanding to it all rest either have a bit or no understanding. This
thing put them in huge trouble. Little information or sometime no information mostly put
them in big amount of debt. Mostly people took out credit cards with one good offer and
don¶t even bother to get information about the rest things in it. Like APR, interest rate
service charges, annual fee, late fee charges and many other which can also make
great trouble for them in future.

One can buy anything he wants with a credit card which usually he don¶t even afford.
It¶s attractive till here but when it comes to paying back if he is not efficient it¶ll put him in
great problem. Short term finance can helps one in his bad time but high interest rate
can put him in debt as well.
It¶s easier and safer to carry a card instead of liquid cash but having a card in your
pocket makes you spendaholic as well. And extra expenditure makes you out of pocket.
And some time it¶s not that safe also if you don¶t use it carefully, it includes your
signature, giving information about your card to just anyone or on any website, not
checking your statement regularly and so on.

If one use his credit card wisely it never create trouble for him. Credit cards themselves
don't put people in debt. After all, a credit card is just a tool, and tools are only as
dangerous as the people who use them. To minimize the dangers to your financial
health, choose your cards wisely, think twice before using them and, most importantly,
don't carry a balance, pay your bills on time. If your credit card doesn't help you save
money or provide a useful reward at no cost to you, don't use it. There are plenty of
places where your credit card will come in handy just be sure that you dson't let the cost
of this convenience get out of hand.

All in all credit cards are essential to life now days but they need care and full
understanding. You need to use them wisely to have the full advantage of them and
stay away from the trouble.
 Recommendations

Here are some recommendations to get the most from your credit cards and stay away
from the problems it involves four main steps:

= 
  

 4

= 0 
 
4
= !   
  
= '  
4

Ë Ë








You need to follow these simple tips to get the most from your card.

0       
   4 This is the most important thing you can do to
preserve and enhance your credit rating. Always pay at least your minimum payment
and allow time for your payment to reach the company.



9   . If this is not possible, then make
as large a payment as you can comfortably afford. Paying off or paying down your
balance is a sound financial move that will save you money on interest charges.

 :   9
  



 4 Take time to step back and have a careful look at how much you earn
and how much you spend each month. A little budgeting can save you big money down
the road.

( 
 4 Review your statement carefully. Do all

the charges look correct? Have any required credits been applied? Are there any
unusual or unexpected charges? Your credit card company will correct legitimate errors,
but only if you bring them to their attention in a timely manner before you pay your bill.

   
4 If you have two or more
credit cards with outstanding balances, consider moving the outstanding balances to the
card with the lowest interest rate. You will save money each month and simplify your
record keeping by receiving only one bill.

"     4 If you have a good credit

history, you are a valuable asset to your credit card company. Call them and seek ways
to lower your interest rate. This is often possible, but never advertised. If the interest
rate you are currently paying is very high, imply you may cancel the card and go with a
competitor unless they adjust your rate downward. It doesn¶t hurt to ask, and you may
be surprised at the results.

Ë 
 

 
 

While credit card fraud is a problem, here are a few simple steps you can take to greatly
reduce the risk of becoming a victim.

=    
   4 When you receive you¶re new or replacement
card in the mail, sign it, in ink, right away. If it is a replacement card, destroy the
old card by cutting it into many small pieces.
=       
4 You can purchase an inexpensive paper
shredder at an office supply store. All old receipts with your credit card number
and any unneeded documents with your social insurance number or other
sensitive personal information should be shredded before disposal. This prevents
the common practice of criminals going through the trash to find receipts and
stealing your identity
= " 3     4 Your credit card number can lie for hours
in the fax basket at the other end. Anyone passing by can record your number
and begin to use your card number fraudulently. It is even possible for criminals
to intercept your credit card number while the fax is in transmission.
= 
                 
 4 Only give out your credit card number on telephone calls you
 initiate to business or organizations you trust. Never give your number out to
callers who call unannounced, no matter how legitimate the call sounds.
= #  9 (   


   
 
;;4 The ³s´
indicates that it is a secure connection and a small padlock symbol should
appear in the bottom right hand corner of your screen, indicating it is safe to
transmit your credit card number.
=        
   

 4 All credit
card companies have 24 hour lost and stolen help lines. If you lose your wallet or
purse or have it stolen, call without delay Much fraud happens within the first
hour or two, before the victim realizes the cards are missing. Your credit card
company will block your cards from being used and stop you from being
responsible for any charges.
= ( 
  
 
4 Many newer cards
have the option of including your photograph on the card. This is excellent
protection and is highly recommended.

Ë 





 

After you have obtained the best credit card, and are using it wisely, review your
credit history on a regular basis. This helps ensure your history is accurate and
that any issues have been resolved to your satisfaction.

When checking on your rating, be sure to contact all credit check bureau, as your
rating may be held on file at more than one bureau. Check the Yellow Pages,
under Credit to find the numbers in your area. And keep our self uptodate.

Ë 





With all the choices in cards available, chances are good, very good, you can
find a better card for your needs. Today¶s cards can save you money, offer better
features, and even support a cause you believe in. Here are some tips on finding
the right card and where to check that you have the best card for your needs
= Be alert for companies offering a great interest rate for transferring your existing
balance to their card. Usually these rates are only in effect for a short time, often
six months. At the end of this time, the rate can revert to a much higher
permanent rate. Keep your eye on the Annual Percentage Rate (APR); this is the
figure that counts in the long run.
= %
 read the fine print and find the Annual Percentage Rate (APR).
This is the interest rate the companies charge you if you carry a balance. You
want the lowest rate possible; as each percentage point drop will save you
money on the months you have an outstanding balance.
= '  
 Try for a credit card that does not charge an annual fee. Many
credit cards charge you a fee each year to use their cards. While this may be
offset by other benefits the card may offer, you can find cards that do not charge
this annual fee. Why pay for the privilege of using a credit card when you don¶t
have to?
= &3   
 Today¶s cards offer a wide range of excellent features,
including frequent flier points, programs that bank points toward a new car, and
cards that support charitable organizations. Other options worth having include
car rental insurance coverage, trip cancellation coverage, and extended warranty
coverage.
Referencing :

APACS (2006), UK Payment Statistics, Association for Payment Clearing Services,

London.

Lindley, J.T., Rudolph, P. and Selby, E.B. Jr (1989), "Credit card possession and use:
changes over time", Journal of Economics and Business, Vol. 41, pp. 127-42.

Slocum, J.W. Jr and Mathews, H.L. (1970), "Social class and income as indicators of
consumer credit behavior", The Journal of Marketing, Vol. 34, April, pp. 69-74.

Ankush Chibber cardline. New York: Mar 19,2010 Vol. 10, Iss. 12; pg. 5

Chibber, A. (2010). India's Rural Banks Asked To Offer 'No-Frills' Credit Cards. à 



 . 10 (27), 5.

Business Monitor International. (2010). India commercial Banking Report. 



 



. Third Quarter (3), p1.

Ausubel, L. (1991). The failure of completion in the credit card market. American
Economic Review, 81, 50-81.
Ausubel, L. (1999). Adverse selection in the credit card market. University of Maryland,
Working paper, 1-52.
Bi, L., & Montalto, C. P. (2004). Emergency funds and alternative forms of saving.
Financial Services Review, 13, 93-109.



›. 

)ý    
. Sumy: 2007. Vol. 4, Iss. 4; pg. 133, 12
pgs