A PROJECT ON

"A STUDY ON CREDIT CARD"

(THE PLASTIC MONEY)

Submitted in partial fulfillment of the requirement of

Master of Business Administration, Distance Education,
Guru Jambheshwar University of Science &
Technology, Hisar

Supervisor: Submitted by:

)

SESSION :- 2005-2007

Submitted to:
DIRECTORATE OF DISTANCE EDUCATION
GURU JAMBHESHWAR UNIVERSITY
OF SCIENCE & TECHNOLOGY, HISAR
(INDIA)
 ACKNOWLEDGEMENT

A project gains a lot of relevance as it on time activity

serving a definite object. Practical experience in undertaking a

project teaches many things which would otherwise elude

observations.

I am very indebted and obliged to have Ms. Amita

(lecturer) project guide and whose scholarly guidance and

sustained interest in the progress of my project have been the

major contributing factor in preparation of this project report.

I am also placed my sincere thanks to all respondents and

concerned people to this project.

 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 1950’s 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 today’s

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

member’s 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 taken the onus of being

responsible - to be extended credit! So, when you get yourself a

card, remember that, because your bank does!

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.
 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.

 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.

 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 co-branded card to sell Aviance beauty

products. SBI-GE Capital has a co-branded 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 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.

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 what’s

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 issuer’s

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.

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.

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 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 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.

India’s fastest growing credit card company - SBI Cards 2.5 lakh

credit cards…25 cities…16 months. The joint venture between

India’s largest bank – State Bank of India and one of the world’s

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 India’s payment card industry.

SBI Cards & Payments Services attributed this success to SBI’s

enormous brand equity, and unparalleled retail branch network

coupled with GE Capital’s 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 cash advance network for India’s 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 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 doesn’t 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 cant buy. These

machines are called ATMs, and are helpfully scattered all over the

city/country/world). Having more ATM outlets in Thailand

wouldn’t 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

it’s 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 Women’s 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 co-branded card. This entitles the cardholder to lots of

freebies, prizes, discounts on co-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. What’s 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) haven’t 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 Pond’s 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 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.

 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.

 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

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

 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:

 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.
 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 Gold Visa International

With the credit card truly becoming an international citizen, issuers

have begun highlighting the value-added features offered along

with the basic product. While 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.

TIP’S 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.
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.

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.

Digital wallets

Digital wallets, or e-wallets, are extensions of a consumer's credit

cards. Basic e-wallets 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 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.

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.

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

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!
 CONCLUSION

Whenever Internet transactions are discussed, immediately the

thought of credit card comes to everybody’s 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;

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:

 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.

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, shopper’s requirements, banking practices prevalent in our

country.
 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.

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

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

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

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

 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

 CIA library

 Google search

 Yahoo search

 AltaVista search
 MSN search

 India infoline.com

 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

 Financial times

 Times of India

 Hindustan times

 Indian express

 The Hindu

 Home trade search

 Strategic management: P.K.Ghosh

 Brand management: Y.R.Morthi

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

customer’s 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.

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.
INTRODUCTION
TYPES OF
CARDS
SALIENT
FEATURES
OBJECTIVES &
SCOPE OF THE
STUDY
 RESEARCH
METHODOLOGY
 EXECUTIVE
SUMMARY OF
CREDIT CARD
INDUSTRY
INDIAN CREDIT
CARD
SCENARIO
DECIDING ON
THE RIGHT
CREDIT CARD
ANALYSIS
COMPARISON
OF CREDIT
CARDS
 LIMITATIONS
OF THE STUDY
SUGGESTIONS
OF THE STUDY
CONCLUSION
RECOMMENDATION
BIBLIOGRAPHY
QUESTIONNAIR
E