CONTENTS

EXECUTIVE SUMMARY OF CREDIT CARD INDUSTRY

INTRODUCTION
TYPES OF CARDS
SALIENT FEATURES
OBJECTIVES & SCOPE OF THE STUDY
RESEARCH METHODOLOGY
INDIAN CREDIT CARD SCENARIO
DECIDING ON THE RIGHT CREDIT CARD
ANALYSIS
COMPARISON OF CREDIT CARDS
SUGGESTIONS OF THE STUDY
LIMITATIONS OF THE STUDY
CONCLUSION
RECOMMENDATION
BIBLIOGRAPHY
QUESTIONNAIRE

INTRODUCTION
ORIGIN
The credit card had its beginning in an embarrassing incident that took place in the
early 1950s in America. The story goes that Mr. McNamara; a New York
businessman took his friends out to dinner. At the end of meal he discovered that he
had forgotten his wallet at home, the proprietor was kind enough to allow him a later
settlement of bill. As McNamara stepped out of the restaurant he had the brainwave
for the introduction of credit cards - system of availing instant credit upon
confirming the identity of cardholder. Thus was born the Diners Club Cards, the
pioneer of todays multibillion-dollar plastic money business.
Diners Club adopted a promising approach by recruiting various hotels and
restaurants to act as member establishments for accepting the cards. Not only did
these establishments pay a commission on members purchases but the members also
paid an annual subscription fee. Diners Club vetted its members for credit worthiness
and guaranteed payment to participating establishment. Thus was born the first
Travel and Entertainment Card. It was followed by American Express, which is
now a dominant force in the Travel and Entertainment cards industry, and by 1959 by
Carte Blanche, after many vicissitudes is now a part of Citi Bank Empire Together
With Diners Club. In the present time American Express leads the travel and
entertainment (T&E) card industry.

The next great leap-forward came from Bank of America, which in other banks. Such
cardholders could use their card 1966 offered to license its successful blue, white and
gold Bank America card to at any accepting merchant establishments around the
globe. Later in 1977 all the national and international Bank America licenses were
pulled together under the single name of Visa.
Not to be outdone, a rival group of American Banks came together in 1966 under the
name of Interbank, later renamed Master Charge and later still Master Card. Ever
since Master Card and Visa and their affiliates have carved the world credit card
market.
In the 1980s credit card concept was launched in India through the Diners Club card,
and soon, within a couple of months both Visa and Master card entered into the
Indian market.
What is a Credit Card?
Credit Cards - It's credit to you!
A Credit Card is referred to as 'plastic money'. Carrying a lot of cash on you can be
cumbersome, risky and sometimes, you run short of it, just when you most need it.
(Remember the SALE at your favorite ready-mades store?). A Credit card is the
smart solution to these problems. It is a convenient and safe alternative for cash.
Besides, it says things about you. Most people associate a credit card with a prestige,
which it most certainly bestows on you, but more importantly, it says that you have
Etc.
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Before i go any further, why not become familiar with the various terms and
jargons used by the credit card industry.
Credit Card A credit card is a financial instrument, which can be used more than
once to borrow money or buy products and services on credit. Banks, retail stores
and other businesses generally issue these.
Credit limit The maximum amount of charges a cardholder may apply to the
account.
Annual fee A bank charge for use of a credit card levied each year, which ranges
depending upon the type of card one possesses. Banks usually take an initial fixed
amount in the first year and then a lower amount as yearly renewal fees.
Revolving Line Of Credit - An agreement to lend a specific amount to a borrower
and to allow that amount to be borrowed again once it has been repaid. Most credit
cards offer revolving credit.
Personal Identification Number (PIN) - As a security measure, some cards require
a number to be punched into a keypad before a transaction can be completed. The
cardholder can usually change the number.
Teaser Rate - Often called the introductory rate, it is the below-market interest rate
offered to entice customers to switch credit cards.
Joint Credit - Issued to a couple based on both of their assets, incomes and credit
reports. It generally results in a higher credit limit, but makes both parties
responsible for repaying the debt.
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TYPES OF CARDS
MasterCard MasterCard is a product of MasterCard International and along
with VISA are distributed by financial institutions around the world.
Cardholders borrow money against a line of credit and pay it back with interest
if the balance is carried over from month to month. 23,000 financial
institutions in 220 countries and territories issue its products. In 1998, it had
almost 700 million cards in circulation, whose users spent $650 billion in more
than 16.2 million locations.
VISA Card VISA cards are financial institutions around the world
distribute a product of VISA USA and along with MasterCard. A VISA
cardholder borrows money against a credit line and repays the money with
interest if the balance is carried over from month to month in a revolving line
of credit. Nearly 600 million cards carry one of the VISA brands and more
than 14 million locations accept VISA cards.
Affinity Cards - A card offered by two organizations, one a lending
institution, the other a non-financial group. Schools, non-profit groups, pro
wrestlers, popular singers and airlines are among those featured on affinity
cards. Usually, use of the card entitles holders to special discounts or deals
from the non-financial group.
Standard Card It is the most basic card (sans all frills) offered by issuers.
Classic Card Brand name for the standard card issued by VISA.
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 Gold Card/Executive Card A credit card that offers a higher line of credit
than a standard card. Income eligibility is also higher. In addition, issuers
provide extra perks or incentives to cardholders.
Platinum Card A credit card with a higher limit and additional perks than
a gold card.
Titanium Card A card with an even higher limit than a platinum card.
Secured Card A credit card that a cardholder secures with a savings
deposit to ensure payment of the outstanding balance if the cardholder
defaults on payments. It is used by people new to credit, or people trying to
rebuild their poor credit ratings.
Smart Card Smart cards, sometimes called chip cards, contain a computer
chip embedded in the plastic. Where a typical credit card's magnetic stripe
can hold only a few dozen characters, smart cards are now available with
16K of memory. When read by a special terminal, the cards can perform a
number of functions or access data stored in the chip. These cards can be
used as cash cards or as credit cards with a preset credit limit, or used as ID
cards with stored-in passwords.
Charge Card fall between a debit and credit card. Works like the latter and
you don't have to be an accountholder. Just pay up in full when the bill
arrives with the mail. No outstanding are allowed, in other words, no
revolving credit facility either. American Express and Diners are providers.
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 Rebate Card This is a card that allows the customer to accumulate cash,
merchandise or services based on card usage.
Co-Branded Card This is a marriage of convenience between two service
providers who want a trade-off with the other's strengths. Specific facilities
are made to members through these tie-ups. So, Times Bank and Citibank
have a co-branded card that allows concessional rates for add-on cards or
telephone banking. Stan chart and Hindustan Lever Limited have a cobranded card to sell Aviance beauty products. SBI-GE Capital has a cobranded card for retail loans.
Cash Card Cash cards, similar to pre-paid phone cards, contain a set
amount of value, which can be read by a special cash card reader.
Participating retailers will use the reader to debit the card in increments until
the value is gone. The cards are like cash -- they have no built-in security, so
if lost or stolen, they can be used by anyone.
Travel Card these works mostly as debit cards for the limited purpose of
travel. Citibank Dollar Card, American Express, Bob card Global and Hong
bank Thomas Cook International Card are among the players in this section.
Debit Card It is the accountholder's mobile ATM. Open an account with a
bank that offers a debit card, and payments for purchases are deducted from
your bank account. The retailer swipes the card over an electronic terminal at
his outlet, you enter the personal identification number on a PIN pad and the

money is immediately debited at the bank. Citibank and a few domestic

banks like Times Bank offer this.

SALIENT FEATURES
Annual Fee:
All credit card issuers charge an annual fee which is payable at the start of the year.
The start of the year, of course, is your membership year, and not the calendar year.
So, if you got yourself a card in March, you can expect to be billed the annual fee
every March until you cancel your card. As a privilege, this fee is sometimes waived
the first time. When the time comes for renewal of your card, you can even use the
reward points you have accumulated from using the credit card over the year to settle
your annual fee.
Forwarding Balance (or Revolving):
The most attractive feature of a credit card is that you need not pay off your dues in
whole. You can opt to pay 5% of the total amount on or before the due date, every
month, the rest is carried forward. But there's a price to pay for this extended credit interest! Normally, interest varies between 2.5% and 3% per month.
APR or Annual percentage Rate:
The interest rate that reflects the yearly cost of the interest the outstanding on your
card is called the annual percentage rate. This rate is charged to the cardholder on the
amounts carried forward beyond the due date for the payment of balances. Most card
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issuers will tell you their monthly rate of interest. It might sound low at 3%, but
when you look at the interest rate over the year, it turns out to be as high as 43%.
Cash Advance:
An important feature - lets you withdraw cash from designated ATMs using your
credit card. Use discretion when withdrawing cash on your credit card because the
charges for this facility are high, around 2.5% to 3% per transaction!
BENEFITS:
Credit:
When you use a Credit card to pay for anything, you get an interest-free period of
45 days. Billing cycles are structured in such a way that you definitely get at least
30 days out of these as clean credit time, which is especially beneficial to salaried
people. Better still, you can opt to pay your bill in full when you receive it or you
can carry forward your payments by paying as little as 5% of the total amount on
or before the due date, every month. You can spend now , pay later.
Convenience:
With a credit card on you, you don't need to run the risk of carrying a lot of cash.
Cash Advance:
Another advantage of a Credit card is that you can use it as an ATM card too! But
remember, there's a fee to it. It typically starts with a flat fee going up to a
percentage-based fee on the amount of the withdrawal.
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DRAWBACKS:
Greed!
Just because you have credit being extended to you doesn't mean that you should go
on a rampage! Use your card with discretion and caution. Remember, it is an
extremely expensive way to borrow money! View it as a convenient and safe way to
carry cash, a timely help in an emergency or taking advantage of an opportunity that
you would have otherwise lost out on, like an investment!
Do's & Dont's
Do not leave your Credit Card lying around the house or on your desk at
work.
If your card is lost or stolen, or you suspect it is being used fraudulently,
report it immediately to your bank.
Hold on to receipts from your transactions. In fact, keep your receipts filed or
in one place - you'll find them easily, should the need arise. And when you
want to throw them away, don't just thrash into the bin, shred or tear them
before you do.
Never give your Credit Card number over the phone, unless you've made the
call, and it is to your bank or someone you trust, and you really, really need
to!

EXECUTIVE SUMMARY OF CREDIT CARD INDUSTRY

The credit card industry in India has registered an encouraging growth in recent
times, but the usage pattern of credit cards remains a point of conc0ern, those in the
industry say. There has been a seven-fold increase, with the number of cardholders
touching over 38 lakh. These figures point towards the fact that the credit card
industry in India is growing at a brisk annual rate of 30 per cent and is expected to
grow at a similar rate in the coming years.
While issuing the cards may seem to be easy, the challenge for the banks lies in
being able to manage their portfolios by keeping the delinquency levels at the lowest
and customer satisfaction levels at the highest. Customer satisfaction is the key to
success. You want customers to be happy with the products and services you
provide. If they feel they have received good value for their money, your business
will prosper. Getting your customers to tell you whats good about your business,
and where you need improvement, helps you to be sure that your business measures
up to their expectations.
Apart from attracting potential card users, customer retention is also one of the most
important factors influencing a card issuers success. ----. With the influx of new
financial institutions in the card market, people have started using cards on a more
regular basis. The level of services provided by these organizations is increasing day
by day. In order to ensure that the existing customers stay loyal, Organization has to
ascertain whether its existing customers are satisfied with its current service
offerings.
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This research has tried to study the satisfaction levels of a sample of 100 credit card
holders. These respondents each hold credit cards, which may be of different kinds.

INDIAN CREDIT CARD SCENARIO

The credit card industry in India has registered an encouraging growth in recent
times, but the usage pattern of credit cards remains a point of concern, those in the
industry say. Seven years back, India had a base of around five lakh credit cards.
There has been a seven-fold increase, with the number of cardholders touching over
38 lakh. These figures point towards the fact that the credit card industry in India is
growing at a brisk annual rate of 30 per cent and is expected to grow at a similar rate
in the coming years. This fortifies the view that conservative purchasing ideas are
giving way to the big in-thing. But it is the usability that raises doubts.
According to a survey by the Credit Card & Management Consultancy (CCMC), 71
per cent of first time credit card applicants in the country have expressed the need for
advice on appropriate card selection despite the plethora of cards available in the
market. Through this survey it has come to realize a long felt need of potential and
existing cardholders for advice on suitable selection of a credit cards. The whole idea
behind the introduction of the credit cards was to increase the purchasing capacity of
the cardholder. With this in mind, the foreign banks launched a credit card blitzkrieg
on the Indian customer.
The innovations have already begun to show their effect. The Standard Chartered
Bank has seen its credit card base shoot up after the launch of its Global Rupee Card
in March last year.
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It has seen the fresh issuance of global card increase by more than one lakh, and the
bank now has a base of more than half a billion. But the real challenge for the banks
is to make the holder spend more on the card. Going by estimates, India has a long
way to be anywhere near the matured markets. The markets like the United States
and England have an average annual card spend of 1,300 and 3,600 dollars
respectively.
The credit card players will have to think about simplifying the foreign exchange
transactions. When one uses the card, it is entirely his responsibility to make sure
that exchange controls have been complied with. The banks that issue the cards have
made it abundantly clear that one has to look out for him. It is upon him to find out
the facts of regulatory life. The real point of worry is the spending on the credit
cards. According to estimates, the average card spending in India is even less than
that in Indonesia. Those in the credit card business say that per capita credit card
spending in India is about five hundred dollars (Rs 21,500), whereas in Indonesia, it
is about 678 dollars (Rs 29,154). At present there are over a dozen players in the
credit card market in India, and the fact is the foreign banks are clearly the leaders.
The leaders will surely be identified by the innovations for the card users.
But the alarm has been raised for the banks by the figures that show that while the
average usage in Malaysia is 27 times annually, in India it is only 11 times. Some of
the key factors impacting the cards business in India are limited credit, wide
geographical spread, limited telecommunication infrastructure and emerging
regulatory controls. The other players feel that the card acceptance base in India has

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to be widened. Suggestions include credit card usage at petrol pumps and railway
bookings.
They also point out that though the cards business has been in the country for long,
but even today the insurance premium cannot be paid by card. Though LIC is talking
about the introduction of this facility to customers, but its turning into reality may
take time. There is talk of widening the card business with new features, but the
present scenario does not paint a positive picture, with many loopholes remaining to
be plugged.
Of the twenty million taxpayers in India, more than ten per cent of them are
cardholders. Those in the industry point out that this figure is not bad, considering
the fact that; the cards business is still in its initial stages. However, the players feel
that the business has not reached an optimum level to say that they are making
money. Even the largest player in the Indian market does not still have the economies
to make the card business really profitable in India, despite the fact that it has more
than one million credit card holders. Less than two per cent of private consumption
spending in India is done on cards.
While issuing the cards may seem to be easy, the challenge for the banks lies in
being able to manage their portfolios by keeping the delinquency levels at the lowest.
Huge investments in systems and infrastructure are, therefore, a necessity. The
increase is being attributed to new ideas such as round-the-clock functioning of card
issuing banks and pulling out all stops even at a loss, to grab a sizeable share of the

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expanding pie. Not to be left behind in this race, even the big brother, the State Bank
of India in association with GE Capital entered the card business.
The spurt in the card business has gathered momentum during the past couple of
years. For instance, the Hong Kong & Shanghai Banking Corporation (HSBC), was
in the credit cards business since seven years, but from 50,000 card holders in 1997,
it has about three lakh card holders now.
Indias fastest growing credit card company - SBI Cards 2.5 lakh credit cards25
cities16 months. The joint venture between Indias largest bank State Bank of
India and one of the worlds leading financial services companies GE Capital, SBI
Cards & Payment Services (SBI Cards) has issued 2.5 lakh credit cards across 25
cities (the largest distribution network in the payment card industry) within 16
months. Thereby achieving the target in the fastest period seen in Indias payment
card industry.
SBI Cards & Payments Services attributed this success to SBIs enormous brand
equity, and unparalleled retail branch network coupled with GE Capitals payment
card process and technology expertise. He also highlighted Speed, Simplicity and
Service as the key drivers of growth for the SBI Card. Speed Unique and exclusive
14-day average turnaround time, coupled with availability of the SBI Card in 25
cities in just 16 months. Simplicity Simple application process with minimum
documentation. Service 24 hours a day/7 days a week local call access to the SBI
Card Help line across 25 cities. As a result of the focus on the Speed, Simplicity and
Service growth platform, SBI Cards today offers the largest distribution and widest
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cash advance network for Indias middle class customers. SBI Cardholders can
access cash for emergency purposes from over 158 SBI branches across 68 locations
in India.

INTERMEDIARIES:
In their attempt to increase their market share, credit card companies are opting for
Direct Sales Agents. These DSAs are paid a flat rate against the approved
applications. The DSA team comprises aggressive salesmen who visit different
organizations and professionals. They collect filled forms and produce them to the
bank for approval. After cards are issued they also deliver the same to the
individuals.

DECIDING ON THE RIGHT CREDIT CARD

How much is the joining fee and the annual fee?
Generally, a card with a higher annual fee enjoys more benefits like higher credit
limit, higher accident insurance cover, accessibility to airport lounges, travel
discounts etc. OF at least the used to be the case. With cutthroat competition between
the card issuing banks, players are ready to waive joining fees and also one-year
membership fees for anyone. Grab these offers, or negotiate this for yourself.

How much is the Add-on card fee?

If you are interested in buying add-on cards for your children, spouse or friend, ask
for the add-on card fee. Remember that you will be settling the bills on the add-on
15

card that you so touchingly gift to someone dear to you - the statement will come to
you, and the responsibility for payment is yours (as far as the credit card company is
concerned)

What is the interest rate?

This is actually a question that you should be asking fairly soon in the discussion.
Remember, while the up front one off fees are bread and butter for the credit card
Company, this is the jam! If you are the sort who forgets to pay on time, or likes to
live it up and live off credit, the interest rate would be of paramount importance.
Most credit card companies charge anywhere between 2% to 3 % per month. (Read a
whopping 35% to 43% per year). That's where they make their gravy, and that's
where you pay! It is always advisable to pay off the entire amount on due date, or, if
you have a large bank balance, look for card companies that provide the transfer
balance facility. The balance transfer rate is lower for a certain period (say six
months) and then the normal rates apply. But again this is a temporary solution to a
chronic problem.

4. What is the reach?

Not an important question - most outlets in India accept both the Master card and the
Visa card, and most credit card companies provide Visa or Master cards. So its fairly
simple, and doesnt need much head scratching - they're all more or less the same.
One thing you could do is to check out for the Automated Teller Machines nearest to
your house or work place (ATMs - almost all credit card companies now provide you
the facility of withdrawing cash from machines - I guess for things that cards just
16

cant buy. These machines are called ATMs, and are helpfully scattered all over the
city/country/world). Having more ATM outlets in Thailand wouldnt be of any
relevance to a person who rarely travels abroad, though it may certainly be a goal to
work towards after buying the card. Please also remember that Amex credit cards are
not part of the Visa/ Master chain, and have a separate chain of outlets where its
accepted.

5.Is it a Global card?

Now this could be useful to you if you are an overseas traveler. A Global card can be
used for paying expenses in foreign currency just like you use a credit card to pay in
rupees. Nowadays, a Global card is being issued at the same cost as for a similar
domestic one. It is better to have a global card, especially if there is no premium
attached.

6.How useful are branded or affinity cards?

A partnership between a card issuer and the non-profit, social or lifestyle association
is what results in an affinity card. This is for providing financial rewards to the group
or association. E.g. Citibank Womens card, Citibank WWF cards. Citibank WWF
Visa card donates a percentage of the transaction value made through the card to the
WWF fund for its environmental conservation activities. A subscription to such cards
helps ease the conscience though it provides no monetary value.
A partnership between a bank card issuer and a commercial partner result in a cobranded card. This entitles the cardholder to lots of freebies, prizes, discounts on co17

branded products. Logic: If a customer is loyal to one brand, he will want to

purchase the other. So if you were loyal to a particular brand, it would make sense
going for those co-branded cards. e.g. Citibank and IOC, Bank of India and Taj
group of hotels etc.

7. Whats the lost card liability?

Most Card issuers mention in the brochures that lost card liability is Rs 1000. Be
careful, that is actually AFTER it is reported to the Bank. The liability is actually
unlimited before reporting (in cases like this, you would actually thank the credit
limit because though the liability is unlimited, the ceiling should logically be your
credit limit, and the outlets accepting your stolen card should actually check that you
(or the person who stole your card) havent exceeded your credit limit). Avoid banks
that make you liable for card misuse for a single minute after reporting it.

8. Are there any freebies?

Citibank gives a Ponds gift hamper free on subscription to its Citibank Women card.
Personal accident insurance for Air, Road or Otherwise is packaged along with the
subscription. Also Baggage cover, Purchase Protection cover and credit shield is
bundled free of cost along with the card. If you feel one these parameters are
important, and then settle for the one that gives a higher cover.

9. Is immediate cash withdrawal possible?

Check out if the Bank has any ATMs near your house or workplace. This surely helps
in times of emergency. The cost component for a cash withdrawal could be classified
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as follows: Service fee (transaction fee) each time you pull out money, and Interest
rate for the period for which you have used the money - until settlement date. If you
are going to withdraw cash frequently, better watch out for this cost.

10. How long is the free credit period?

The days of credit one gets depends on the statement date and the date of transaction.
On an average, you could assume you'd get around 20 days of free credit. However,
if you buy just after the statement date, you could end up getting unto 50 days of
credit. Look for cards that give you the highest free credit period!
11. Is a Helpline available?
A 24-hour Helpline service from the Card Company helps the cardholders during the
non-banking hours. Reporting of theft, checking of available credit limit and other
enquiries can be made by the cardholder round-the-clock. In the end, like everything
else in life, the card you want is really up to you - what matters the most to you credit, reach, the freebees, international reach or a combination of parameters. Use
our card category on the left bar to simply list out the names of the cards, or choose
by bank name and see the cards they offer. Or look for cards offering the lowest
interest rate. Of the lowest charges on cash withdrawal (believe me, it gets to be a
serious consideration as one goes along). Go to our shortlist card section, and search
for cards based on any criteria that you want. Happy hunting, and stay careful - you
may like to use our section on how to use the card carefully to minimize the chance
of its misuse by someone else.

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OBJECTIVES OF THE STUDY

Study is the one of the important parts of any study. Following are the objectives
of the study:

To find the scope of the credit cards industry in India.

To know the customer awareness regarding credit cards.

To analysis the benefits of credit cards.

To know how it is beneficial to manage the cash risk.

To understand the market potential of credit card in Delhi.

SCOPE OF THE STUDY

The study on Credit card- increase the volume of profit of this industry. We
have considered geographical Unit of Delhi. It in we analysis the comparison of
different credit cards and their detail reports their branches and values.

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RESEARCH METHODOLOGY
Confining our study to the geographical limits of Delhi, we chose a sample of
100 people - 50 cardholders and 50 non-card users, using the probability sampling
technique where every individual fulfilling the above criteria had an equal chance of
being selected for the survey. Following are some of the facts that were revealed
through the survey.

Sources and Method of Data Collection

The data on the present study will be collected by the investigator himself.
It's customary to distinguish data between primary and secondary.

Collection of Primary Data:

The collection of primary data done with the help of personal meet with the
Managing Director and Supervisory and Official Staff after Securitization of records
maintained.
A personal survey and surprise check are prompt to be carried out to ascertain
the fact on the basis of survey of credit card at personal interest.

Collection of Secondary Data:

News papers,

Press Media

Magazines

Telecommunication

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Research Tools:

Research design :

Exploratory

Sampling Unit

Area of Delhi

Sampling Size

100 people- 50 Cash holder, 50

non- cash user

Sampling technique :

Probability Sampling

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ANALYSIS
It was found that for the frequent travelers acceptability was the most important
criteria and was given the highest weightage
Following attributes have been analyzed as per the consumer survey conducted
The attributes are as follows:
ACCEPTIBILITY
CREDIT LIMIT
CREDIT PERIOD
MEDICAL AND HOSPITAL SERVICES
OTHERS

PROMOTION STRATEGIES
The changing trends in the payment systems are global and even in India revolve
around the change in customer needs and the evolution of financial markets.
Traditionally Indians like to pay in cash or at the most avail the services of a bank.
As a result credit card companies had to educate the consumers and spread
awareness of the uses of its products. The companies have tried to address this issue
through promotional campaigns:

23

 Placing of take away firms of credit card at more than a thousand merchant
establishments.
Appointing of DSAs
Using business magazines and newspapers for advertisement.
Mailing of forms along with contests to professionals and middle
management executives etc.
Tapping the get member route
Reducing their minimum eligibility criteria and changing income
documentation structure.
Introduction of photo cards.
Tying up with durable consumer goods manufacturer ( e.g. Onida, 0Philips )
to sell their products.
Providing ATM facility to their card holders
Travel assistance via tele-banking.

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COMPARISON OF CREDIT CARDS

Card Issuers

Brand

Card Type

Acceptance

Citibank NA

Gold/Preferred

Master

International

Citibank NA

Gold/Preferred

Visa

International

Citibank NA

Indian Oil

Master

Domestic

Citibank NA

Silver/Classic

Master

International

Citibank NA

Silver/Classic

Visa

International

Citibank NA

Women

Visa

Domestic

Citibank NA

WWF

Visa

Domestic

ICICI

Solid Gold

Visa

International

ICICI

Sterling Silver

Visa

Domestic

ICICI

True Blue

Visa

Domestic

SBI

Classic

Visa

Domestic

Standard Chartered Classic

Master

International

Standard Chartered

Visa International

Gold

With the credit card truly becoming an international citizen, issuers have begun
highlighting the value-added features offered along with the basic product. While
25

some of them are offering attractive interest rates, others are luring customers by
their reward schemes. With a plethora of choices on offer it is not easy to come to a
decision on any particular card.

TIPS FROM CITIBANK TO SAVE CHARGES

Fee-heavy foreign transactions
Many major credit card issuers charge a fee for card transactions in foreign countries.
The cost of cash advances is particularly onerous. When traveling abroad, carry a
mix of plastic, cash, debit cards and traveler's checks.

Want a better rate?

Just ask for Acquiring new credit card customers is expensive and time-consuming,
so issuers don't want to lose creditworthy individuals. If you've had a year of on-time
payments, call your credit card issuer and ask for a cut on your interest rate.

Cut credit card costs

Make payments on time, avoid cash advances and don't exceed your credit limit.
Cash advances are more costly as there's no grace period, so you pay interest from
the day you take the money.

26

Identity theft
The No. 1 identity theft is credit card fraud. New card accounts are opened or
existing accounts are taken over. The Federal Trade Commission offers a hotline and
Web site for advice and tips.

Save stress with less debt

The stress of credit card debt has been directly linked to physical problems like heart
attacks, insomnia, explosive emotions, smoking, overeating and lack of
concentration.

Shop online without the worry

Credit card companies are switching to zero liability. If your credit card is misused
on the Internet, you won't be liable for online transactions charged by an
unauthorized user. But zero liability doesn't mean zero responsibility -- you'll have to
meet certain requirements.

Fraud alert
Placing a fraud alert on your credit files prevents an imposter opening credit in your
name. The downside is that you give up the convenience of "instant credit." You can't
sign up for a new credit card and go shopping with it three minutes later.

27

Teen consumers
Credit card companies are targeting the increasingly powerful teen consumer. Teens
get the credit card and the bill, but parents are legally responsible. Nonprofit
organizations caution that teens lack personal finance teaching, and aren't ready for
plastic.

Be careful when you do the card hop

Changing credit cards for a better deal may net attractive teaser rates, but many cards
now deter balance transfers with tough terms and high costs. Read the fine print
carefully.

Silencing phone solicitors:

You can pull the plug on telemarketers calling your home. The Telephone Consumer
Protection Act requires telemarketers to record your 'do-not-call' request and refrain
from dialing you for 10 years.

Credit score
During and after a divorce, you need to make a clean financial break to keep your
credit report accurate. A first step is to cancel credit card accounts, even if you were
only an authorized user, and reapply for new accounts.

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Digital wallets
Digital wallets, or e-wallets, are extensions of a consumer's credit cards. Basic ewallets store cardholder information, filling in account and personal information at
cyber stores. They are convenient, secure solution to shopping online.

Don't fill up on gasoline credit cards

Gas company cards offering rebates on purchases can be worthwhile when gas prices
are high. But the annual percentage rate and the annual fee charged are higher than
normal cards. People who carry a revolving balance will find these cards much less
rewarding.

Credit union cards

Credit unions usually have lower interest rates and fees than banks, though they tend
to have fewer choices than bankcards.

Student credit card choices

Students and their families looking for the best student credit card need to focus
primarily on annual fees and interest rates. Generally, students with a work and credit
history will find a regular credit card is the best deal.

Variable-rate cards
The cost of using credit cards has increased. Variable-rate cards, the most common
type in the nation, tend to rise in step with the prime rate. The prime rate has gone in
29

the Fed's efforts to cool the red-hot economy, but spending hasn't been significantly
reduced.

Financing vacations
Most people finance vacations with their credit cards. Even the average credit card
interest rate can turn your vacation into a financial strain if you spend above your
means and take up to a year to pay it off.

30

Emerging credit
Tweeners people with emerging credit or recovering credit -- can find good credit
card deals. To get the best deal they need to compare annual percentage
rates, grace periods, credit limits, and fees, and avoid credit cards with
hefty application and processing fees.

Affinity credit cards

Affinity credit cards (aka "charity" cards) may give you a sense of purpose to your
spending, but can cost more than your actual donation. Affinity cards
carry high interest rates and annual fees. They have more value if you
don't carry a card balance.

Paying for vacations

You can enjoy that vacation even after it's over by limiting your credit card use.
Consider planning ahead, setting a budget and saving for your vacation.
If you're still short-funded, a home-equity loan offers a better interest
rate than a credit card.

Student loan debt

Graduating college students face an average loan debt of more than $35,000, and it
needs to be attacked aggressively. First, concentrate on paying down
credit card debt, and then tackle your student loan debt.

31

Citibank s credit cards debt elimination strategies

In addition to encouraging credit card competition through promoting the most
attractive cards in the country, Citibank help consumers cope with credit card debt by
teaching various debt reduction strategies. We hope that you find the following tips
beneficial.

Interest Rate Awareness:

We cannot stress enough the importance of being aware of interest rates when using
your card(s). Please utilize the lists above!!! High rate cards can be put a BIG dent in
your pocketbook. To illustrate our point again, a cardholder with an average balance
of $2,500 and a 19.99% purchase rate will pay $1000.00 in interest alone in just two
years! The same cardholder would pay only $400.00 in interest if the rate were
lowered to 8.00%, a difference of $600.00! Also, be aware of cash advance rates.
Cash advance rates are typically much higher than purchase rates and usually there is
no grace period for cash advances (not to mention cash advance fees). Therefore,
avoid cash advances if at all possible.

Taking Advantage of Promo Rates

While introductory or "teaser rates" are generally short lived and are intended strictly
to entice consumers, savvy consumers can benefit a great deal from promotional
rates. Look for cards that offer longer term introductory rates and longer term
promotional rates on balance transfers (6-12 months). Some cards even offer very
attractive long term promotional rates on balance transfers...rates that are good until
32

the dollar amount transferred is entirely paid off! Consumers that have more than one
card with available credit can transfer balances between cards in order to take
advantage of promo. Transfer rates (a ploy known as "card dumping"). Finally, when
the promo. rate period ends (for transfers), it is a good idea to call the card company
and request an extension of the rate. Consumers with a good payment history often
get extensions. You must be aggressive when dealing with credit card companies! You
can also negotiate to have your regular interest rate lowered. Threatening to pay off a
given card often puts consumers in a bargaining position when dealing with credit
card cos.

Avoiding the Minimum Payment Pitfall:

One of the greatest card pitfalls is making only the minimum payment each month.
Make every effort to pay over the minimum each month, even if it is only a few
dollars over. The long-term impact of making "just the minimum payment" is
devastating. According to Consumer Credit Counseling Services, paying the $60
minimum payment on a $3,000 credit card balance would take eight years to pay off
and would translate into $2,780 in interest! By paying only $50 more a month,
however, the debt would be paid off in three years and result in a savings of $1,800
in interest charges!

Graceless Grace Period:

Avoid cards that begin computing their grace period at the time of purchases, rather
than billing. Only a few cards still use this method of interest computing, but there
are still some out there. Keep your eyes peeled!
33

CONCLUSION
Whenever Internet transactions are discussed, immediately the thought of credit card
comes to everybodys mind. This is because in US the payments by credit a card is
quite common. Even before online purchases have become popular, normally
purchases are made through credit cards only. Therefore in US there was no problem
in making people to switch over to online purchases as this mode of payment is
already in vogue. Even in US, much discussion is going on as to how to avoid frauds,
misappropriation, etc of credit cards once the card number is given online to a
merchant. Encryption technologies. Secure socket layers, etc are being introduced to
avoid such things In spite of all these measures, still reports keep coming regarding
credit card frauds here and there. In other words, there is no 100% foolproof to make
credit card payment a safe mode of payment.
In other countries, where credit cards payment system is not as

popular as US,

online shopping through credit cards resulted in great failures. At least in Singapore,
a mega shop had experienced a fraud of huge magnitude and decided to suspend
immediately their online business. Similar stories are not uncommon in other
countries too.

Scenario in India
In India the situation is far from satisfactory to use the credit cards as a means of
making payments for online purchases for the following reasons;

34

1.Use of credit cards is popular to only a few thousands of executives, businessmen,

etc from big cities.
2.That any person using credit card is liable to declare IT made many people
surrendering their cards. In other words if credit card is made the payment
mechanism, only IT payers will be eligible to buy goods online.
3.Still many leading credit card companies are yet to install their infrastructure to
process the online payments.
4.Then there is the question of sales tax laws Each State has its own rate of tax
structure for each and every commodity. How to charge tax when a transaction takes
place online and at what rate will pose problems of billing.
5.Many establishments do not like to offer credit card facility

due to the

service charges to be paid to cr card companies. They get the payment only after a
certain period of time once the goods are sold. Both of them make the profit margin
less.
As mentioned earlier, the fraud element is applicable to India also. In view of all
these factors, in India; Use of credit cards cannot be expected to boost the sales of
online sales, particularly business to customer

Then what is the way out?

There are other methods of payments for Indian online business, which are given
below:

35

 Payments by electronic cash/ cheque may be made legally valid including

electronic signature .I believe once the cyber laws are passed by GOI, this is
possible.
Each merchant/shopper can allot a secret code number to the existing clients
(customers). On receipt of this code number, the goods can be dispatched by VPP
and other modes of dispatch, which will ensure collection of payment against
delivery. However, this facility can be extended only to existing customers.
Banks should be asked to immediately create necessary facilities for any of the
a/c holders to operate the a/c through online. Once a purchase is made, the a/c
holder can transfer the required amount to the merchant A/C online. The
MERCHANT BANK CAN INTIMATE the shopper about the transaction. All
these activities can be carried out instantly though proper programming. Activity
can be made part of the ordering activity.
Large organizations can issue authorization letters to each of their employee who
wants to avail the online purchasing facility and device a mechanism through
which the company itself pays the merchant his dues. This would require
installation of transaction servers in the companies or can be integrated with their
online business activity.

36

Similarly all government establishments can device a mechanism to enable their

employees make online purchases. These are all some of the ideas to making the
online purchases easier and smoother without affecting the payment due to the
shoppers.
They may look difficult to achieve but with proper programming techniques and the
use of appropriate servers, they can be easily achieved. In conclusion, payment
through credit cards will not result in increasing the online shopping as generally
believed. We need to device different mechanisms taking into account Indian laws,
shoppers requirements, banking practices prevalent in our country.

37

RECOMMENDATIONS
HOW TO PROTECT The following are my recommendations. There may be other options available as
well.
1. Never give your credit card to the company. Make payment by cheque

instead.

2. Monitor your credit card statements.

3. If there is an unauthorized charge, report it to Micro Forecasts immediately and
demand a charge reversal. Wait several days and then check with your credit card
company to see if you received the credit. Do not wait for your next statement to see
if the credit appears.
4. If the refund is not there, call Micro Forecasts again. Most importantly, deny the
charge immediately with your credit card company.
For this to be effective, it must be done in writing, and must be done within 60 days
from the date you received the statement on which the disputed charge appeared.
This time frame is as per federal law. I believe you are much more likely to get your
money back if the credit card company is involved.
5. Report your credit card as lost/stolen so that no further charges can occur. You will
get a new card within a couple of week. Many people have done this, including
myself.

38

6. Report the problem to authorities as per the next section is?

Very likely
Somewhat likely
Not sure
Somewhat unlikely
Very unlikely
To what extent does credit card service exceed your expectations?
Very great extent
Great extent
Some extent
Little extent
Very little extent
Which of the following statements, according to you most representative of your
credit card service provider?
They are Helpful and Friendly.
They are polite, cheerful and are knowledgeable operators
In tune with the needs of its clients
39

Prompt in dealing with customer complaints

Unwilling to go the extra mile for its customers
Poor customer phone support
You are often put on hold for a long time
How satisfied are you with the efficiency of call handling when placing calls to
credit card service provider?
Very satisfied
Somewhat satisfied
Neutral
Somewhat dissatisfied
Very dissatisfied

Credit card service provider understands my service needs.

Strongly agree
Agree
Neutral/Not sure
Disagree
40

Strongly disagree.
What are the added benefits you wish to acquire from the card?
Acceptability
Longer credit period
Higher credit limit
Lesser charges
Better offers
Please rank the services of the following card issuers in order of your preference.
Citibank
HSBC
Bank of Baroda
Bank Of India
Standard Chartered
ANZ Grindlays
Times card
ICICI
SBI
41

Personal details:
Age:
Profession
Income:

15,000-25,000

25,000-40,000

40,000-60,000

Above 60,000

Thank you for taking the time to complete this survey

42

BIBLIOGRAPHY
Marketing management: Philip Kotler
Financial Management: Khan & jain
Business Statistics: K.K.Khanna & Jagjit Singh
Annual report SBI
Annual report ICICI
Annual report Citibank
Annual report FICCI
PhD. House library
JAMIA MILLIA ISLIMIA library
Google search
Yahoo search
AltaVista search
MSN search
India infoline.com

43

 MAMA search
Citibank.com
Sbi.com
Icici.com
Indiatimes.com
A&m.com
Business today
Business week
Times of India
Business world
Business India
Outlook
India today
A&m magazine
Strategic marketing magazine
Economic times
44

 Financial times
Times of India
Hindustan times
Indian express
The Hindu
Home trade search
Strategic management: P.K.Ghosh
Brand management: Y.R.Morthi

45

SUGGESTIONS OF THE STUDY

The banks battle today is more with cash than with other banks. Considering the
huge potential of the Indian market, it is in the interest of the issuers to educate the
consumers about the benefits of holding credit card. The campaigns must also be
convincing enough to clear the myth that credit cards increase spending. Focus
should be on changing non-card related spending to card related spending. The
issuers must focus on service and pricing and must recognize the importance of the
billing and payment process to retain credit card holders.
The credit cards schemes would be successful only if they meet the customers
requirement of wider acceptability rather than fringe benefits like non-crisis credit or
prestige proposition. Emphasis should be on offering a wider basket of services
through credit cards enabling purchases for a wide variety of products along with
ATM usage, backed by much more comprehensive merchant establishment network.
The banks must also increase the number of cardholders by reducing the initial-one
time subscription fee.
The banks should step up advertising that will help to build a brand image and create
a higher brand recall like that of Citibank. With more and more people willing to
adopt to credit cards, banks should undertake innovative strategies to increase card
spends. Simultaneously, to cater to high net worth customers and those with niche
needs, banks should provide more of premium plastic and CO-cards that piggyback
on the existing infrastructure, but provide holders with exclusive add-ons.

46

Future promotions could include: Telemarketing, direct sales, direct mail,

promotional advertising through media, common ATM services between banks (to
reduce cost of operations), schemes like card carnival and sales executives contests
and a plethora of augmented services should be introduced to induce greater number
of people to adopt to plastic money.

LIMITATIONS OF THE STUDY

The study is confined to NCR only.

Most of the information is subjective data collected through personal interaction

with people transacting in the plastic money market. As a result the personal
biases of individuals could affect the study. However, to counter this the data has
been verified from a number of different sources to give it a measure of
authenticity.

Study was constrained by limited availability of data. Not all banks could reveal
their confidential marketing strategies and statistical information.

47

INTRODUCTION

48

TYPES OF
CARDS

49

SALIENT
FEATURES

50

OBJECTIVES &
SCOPE OF THE
STUDY

51

RESEARCH
METHODOLOGY

52

EXECUTIVE
SUMMARY OF
CREDIT CARD
INDUSTRY

53

INDIAN CREDIT
CARD
SCENARIO

54

DECIDING ON
THE RIGHT
CREDIT CARD

55

ANALYSIS

56

COMPARISON
OF CREDIT
CARDS

57

LIMITATIONS OF
THE STUDY

58

SUGGESTIONS
OF THE STUDY

59

CONCLUSION

60

RECOMMENDATION

61

BIBLIOGRAPHY

62

QUESTIONNAIR
E

63