International Referred Research Journal,August, 2011. ISSN- 0974-2832, RNI-RAJBIL 2009/29954;VoL.

III *ISSUE-31

Research PaperCommerce & Management

Consumers perspectives towards Credit Card

* Jajoo Rupa Dwarkadas
* Research Scholar, Swami Ramanand Teerth Marathwada University, Nanded A B S T R A C T
The demand for credit cards is growing over time. The total number of credit cards in the system is at around the 25 million mark. This number was on 31st march 2009 stood at around 11 million while debit cards were at more than 20 million The distribution has increased with local banks becoming more aggressive. However, duplication of users is a concern for the industry which can exaggerate the number of active users. Since the business is largely concentrated in the metro cities, the average user holds 2 to 3 cards.This research has been carried out to understand the card industry that includes the types of providers, types of cards, features of cards, acceptability of the card among the Indian consumer. It also involves finding consumer's perception towards different providers. Questionnaire has been used. People from different age groups, occupation and income level were selected for the study. A comparison of various card providers has been made through graphical representation on a list of parameters, like credit period, credit limit, penalty charges, provided, security of money, cost involved and number of ATM's. The inferences were drawn for two banks ICICI Bank and State Bank of India. The above research concluded that that public bank like SBI scores on factors like low cost, penalty charges and long credit periods but a bank like ICICI is being considered as costly, but definitely provides better and efficient service in terms of additional features and benefits Keywords: Credit card, Perception & Consumer behavior.

August , 2011

INTRODUCTION: The Indian payment card market is displaying tremendous potential both in terms of issue and usage of cards. Higher disposable incomes, exposure to new products and services, increased travel and growth of the entertainment sector has had an impact on the growth of the payment card industry. The growth in debit cards does not mean that the purchase through these cards is higher. Market forces indicate that debit cards are used more as ATM cards (to withdraw cash). While expenditure by credit cards is estimated at Rs.50, 000 crore, consumer spending by debit cards is only between Rs.500 crore to Rs.1, 000 crore. Acceptance is a major driver for the market and the opening up of newer categories such as transactions at petrol pumps and telephone payments through cards is resulting in new card subscribers. The potential is enormous. While the number of cards in the country is growing at 55 per cent, spending through cards is witnessing a growth of 35 per cent. So, it has become very important for the card providers to determine how a consumer feels about the services provided with card. How much importance do various features /attributes carry in minds of consumer? Does a consumer differentiate between various card providers like private and public bank? CREDITCARD: A credit card is referred to as 'plastic money'. Carrying a lot of cash can be cumbersome, risky and sometimes, you run short of it, just when you most need it. A credit card is the smart solution to these problems. It is a safe

and convenient alternative for cash. Most people associate a credit card with a prestige, and it also says that the customer have taken the onus of being responsible - to be extended credit. Credit card therefore can be considered as a good substitute for cash or cheques. REVIEWOFLITERATURE: Credit Cards vs. Debit Cards: Joseph Kenny, Credit cards have become ever-present in the wallets of American consumers. However, debit cards give credit cards a run for their money. The poll has showed that debit card use by women is now twice as high as it was in 2003. About 43 of age women use debit cards routinely. While credit card issuing has historically provided substantial revenues to financial services providers, recent changes in a variety of consumer behaviors-including a continued shift to debit cards and growing adoption of prepaid cards-are creating a more challenging revenue environment, according to research by Tower Group entitled in The Cards: Issuers Face Revenue Challenge. Issuers must devise a strategy that manages and secures the consumer transition to debit, while educating them on the continued benefits. In inflationary times a card in the wallet is always more convenient than a wheelbarrow and so, the future of money is undoubtedly plastic. The limiting factor is that plastic money is most often a synonym for credit cards and Indians-also perhaps most other Asians-have a psychological aversion to debt. "Research shows consumers still feel threatened by credit cards. The primary reason is the fear of overspending," says marketing head of ICICI personal finance services B Madhivanan. He points out that the credit card is "looked upon more
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International Referred Research Journal, August, 2011. ISSN- 0974-2832, RNI-RAJBIL 2009/29954;VoL.III *ISSUE-31

as a status symbol and a sign of extravagance than a convenience tool or an alternative mode of payment. Since, using a debit card is quicker than making a trip to the bank, more convenient than writing cheques and safer than carrying cash, a debit card may soon replace cash and cheques," says Visa International's executive vice-president (South-East Asia and Greater China). OBJECTIVES: 1) To understand the trends in Cards Industry in India. 2) To find the consumer perception and state reasons for differences if any. 3) To study the satisfaction level for current card holders. 4) To do a comparative analysis for private and nationalized bank cards. RESEARCHMETHODOLOGY: The objective is to have an understanding of the credit card industry and identify the various credit card providers and the services provided by them and to know the perception of consumer towards the various services. This research is conducted for following reasons: 1) To design a questionnaire to ascertain the perception of consumers towards various features of credit cards provided by banks. 2) To determine the attributes of various credit cards. SAMPLEDESIGN: Sample Size is 200 (Covering people from both the genders, diverse occupations and across different age groups including students, businessmen, and professionals from Nanded city in Maharashtra State. DATACOLLECTION: Primary data was collected through Questionnaire and Secondary data through Annual Reports Magazines, Newspaper, Books, journals and Websites. ANALYSISTECHNIQUES: The source of analysis is the data provided by the questionnaires. Then a comparative analysis is done in order to determine perceptions of credit card services provided by SBI and ICICI Bank. Bar Charts / Pie diagrams are made to make graphical representation of the data collected from questionnaire. On this basis, comparative analysis for two banks namely State bank of India and ICICI banks is done. DATAANALYSIS: This includes the analysis of the questions, which were put to a sample of 200 respondents. The sample selected was from different age groups, income levels and occupation, area etc. The basic objective behind the selection of the sample was to have a perception of consumers with different interest, so as to have a holistic view of Indian consumers with special reference to Nanded city, towards credit cards. Out of 200 samples 82 of the respondents were women and rest 118 were men. Almost equal numbers of three occupations have been covered in the survey; in which student forms maximum

number and then business and finally Service. Occupation helps in understanding what kind of a card would the consumer opt for and his usage pattern. In case of Businessmen they generally own credit cards with higher credit limits, whereas the student would go for a debit card due to non regular income, or less income stream. And service people prefer cards with no frills and benefits and longer credit periods. SURVEYRESULTS: The sample Bank chosen for their search were as followsSr. Bank Numbers of Customers No out of 200. 1 ICICI Bank 86 2 HDFC Bank 25 3 SBI 70 4 HSBC 10 5 UTI 5 6 Others 4 The Survey results revealed the following: 1. The respondents own cards from different providers & there is a high increase in the usage cards by ICICI. The reasons being that it caters to a greater need as compared to others. This trend is followed by SBI. 2. The income level is scattered across different income levels. This is presented with the help of following chart; Figure 1 No. of People opting Credit cards.
100 80 60 40 20 0 IC IC I HDFC SBI H SBC A X IS O th e rs

3. The questionnaire contained a question relating to the purpose for which the credit card is used mostly? Credit card is being used mostly for withdrawal of money. This can be attributed to the students and service who like going to ATM's to withdraw money, rather than carrying it with them thereby serving as a convenient mode of holding cash, but in credit card it is mostly done for shopping and bill payments. 4. The respondents recognize the following facilities that are provided by these banks? Discount tops the list which shows consumer priority for it, closely followed by insurance auto alerts, rewards, etc. These are the factors which help in attracting customers by providing value added facilities. Apart from this a facility which give cash back offer attracted consumers for usage of cards. 5. The choice relating to preferences towards banks for additional credit card, In future which credit card would you opt for?

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International Referred Research Journal,August, 2011. ISSN- 0974-2832, RNI-RAJBIL 2009/29954;VoL.III *ISSUE-31

SUMMING-UP: The socio economic variables such as gender, age, educational qualification, Occupation, area, withdrawal withdrawal monthly income, marital status were analyzed. The 53% shopping shopping analysis reveals that out of 200 respondents, 59% were 34% Bill payment males and 41% were females. It shows that majority of others credit card users were males. The reason for the low usage of credit card among women is lack of awareness among them. After others Bill payment the survey it reveals that perception was positive and 13% 0% satisfaction among card holders was average. So the The table given below makes it clear: card division of various banks should adopt right marBank Consumer keting strategy and assess their customer's needs and Private bank (ICICI) 92 expectation for promoting their customers satisfactions Public bank (SBI) 86 and future growth of sales. Others 22 The ability to perceive the credit card is deTotal 200 pending upon the services provided by issuing bank. ICICI Bank cards were preferred because of: As outcome of the results it is found that cardholder are * Low credit limit, using private bank's card and satisfied with the ser* Location of Branch / ATM, vices. * Facilities provided, like special affinity cards, rewards, The issuing bank should take necessary step discounts, insurance benefits (family insurance, hospi- to improve their cardholder's awareness and satisfactalization benefit, baggage insurance), value for money tion. Varieties of banks card and their services were cards, preferred by them. Services like wider acceptability, * Wide Acceptance of cards, discount on purchase and quick processing, popularity * Online purchase and and convenience services of bill payments opting have * Net banking. to be increased for further satisfaction. Therefore it is SBI cards were preferred because of: clear that satisfy the cardholder the issuing bank should * Wide Number of ATM'S, adopt suitable marketing strategy, to create better sat* Long credit period, and isfaction and future growth of credit cards in market. * Penalty charges are low. COMPARITIVEANALYSIS OF ICICI & SBI BANK COULD BE STATEDATAGLANCE: Parameters SBI ICICIBANK 1. Security money Considered safe Considered safe 2. Cost involved Perceived as low Perceived as high 3. Additional features and benefits No features provided Additional features and ben efits provided 4. Credit period Long credit period Short credit period 5. Credit limit High credit limit Low credit limit 6. Number of ATM's Very large network of ATM's Very large network of ATM's 7. Penalty charges Charges are low Charges are High

R E F E R E N C E
* Kothari C R "Reseach Methodology Methods and Techniques, 2nd Edition, (2009) New Delhi, New Age International (P) Limited. * Dash Priya Ranjan (April 17, 2008) "Your Credit Card Under Watch" Financial Chronicle, Chennai. * RBI Report, 2008-09. * RBI, Money and Banking, May 2009. * Gordon E and Natarajan K, (2006), Financial Markets and Services, New Delhi, Himalaya Publishing House. * http://en.wikipedia.org/wiki/credit_card.

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