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Credit Card

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Some of the key takeaways from the document are that credit cards provide credit facility without normal formalities, Indians are not very receptive to credit cards due to cultural differences from Americans, and there are still risks for consumers in the credit card market like deferred interest.

It discusses that while credit cards have become essential in modern times, they have also become more expensive for consumers due to high interest rates and hidden charges imposed by credit card companies. Regulators have allowed excessive fees and costs.

Some suggestions provided include paying the full balance each month, reviewing statements carefully, using credit only for emergencies, limiting the number of cards, paying on time to avoid fees, and not ignoring bills.

CONTENTS

NAME PAGE NO.

CHAPTER -1 02-10
INTRODUCTION 03
NEED FOR THE STUDY 04
SCOPE OF THE STUDY 05-06
OBJECTVES OF THE STUDY 07
METHODOLOGY OF THE STUDY 08-09
LIMITATIONS OF THE STUDY 10

CHAPTER-2 11-13

BANK PROFILE 12-13

CHAPTER-3 14-44

THEORETICAL FRAMEM WORK 15-44

CHAPTER-4 45-52
ANALYSIS&INTERPRETATIONC 46-52

CHAPTER-5 53-61
SUMMARY 54-56
FINDINGS 57-58
SUGGESTIONS 59
CONCLUSION 60
BIBLIOGRAPHY 61
CHAPTER-1
INTRODUCTION
Credit is an age old problem which is made in an innovative waythrough credit cards.
Credit cards are a new means of extending credit by the card issuer to the card holder. The issuer,
be it a banking institution, as in us inmost cases, or a business concern, as in a few cases, extends
a credit facility without normal formalities involved in extending credit, the card holder. The
cardholder draws money from the issuer of the card or its agencies. Also he buys thing sor
services from approved merchant establishment using the card. The latter simply accept charge
bills signed by the card-holder. Credit cards made of high grade plastic or plastic like substance,
bears the names of the issuer and cardholder, the number assigned to the latter and details as to
time and place validity. Carrying the card tantamount to having cash. But Indian mentality is not
very respective to the concept of a credit card because Indians live on yesterday's money unlike
Americans, who live on tomorrow's money. A large percentage of Americans are one pay-check
away from bankruptcy. It is not in our nature to buy thing on credit or to live beyondour means.
That is why credit cards have not picked up in India. Credit cards are central to the financial lives
of most American consumers. Credit cards represent a key medium for U.S. consumer spending.
In the first six months of 2015 alone, there were some 14.5 billion U.S. general purpose credit
card transactions accounting for more than trillion in purchase volume.1 Credit cards are also a
major driver of consumer indebtedness. As of the end of the second quarter of 2015, there were
some by credit card loans outstanding, behind only housing debt, automobile debt, and education
debt as a component of overall household liability.2 The credit card marketplace is among the
largest, most diverse, and most complex market of any consumer financial product. How and
why consumers acquire and use credit cards, and the myriad of benefits and risks they pose to
consumers, is a central market monitoring focus for the Consumer Financial Protection Bureau
(“CFPB” or “Bureau”).Overall, the credit card market is a success story for consumers. Since the
recession, by almost all metrics, the market has recovered for consumers across the credit
spectrum. Costs are lower than they were, and many of the most prominent forms of back-end
pricing have declined in prominence or vanished altogether. Approval rates and credit lines are
both increasing. However, there are still risks for consumers in this market. Deferred interest, in
particular, is not working equally for all consumers. Below, we discuss the background of this
report and our major findings in more detail.

NEED FOR STUDY

It may seem very difficult to get by without them in this day and age, but the fact of the
matter is it's becoming more and more expensive to live with them. That’s because credit card
companies have managed to stack the deck in their favors, thanks to obliging lawmakers and
regulators who have allowed them to gouge consumers for exorbitant fees and unconscionable
interest rates In present use of credit cards is becoming very popular. Because of the services
provided through credit cards is continuously increasing like from dine at restaurants to petrol
filling payment of every transaction can be done by credit cards? But the problem here is that the
credit card service providers claims that they are not charging not any extra charges but in actual
it is not At the time of issuing credit card they say that it is free of cost but in actual they charge
for certain factors like Balance transfer, fees Inactivity charges, Late payment fees, so what they
communicate they doesn’t perform. They claims that they charge nominal interest but doesn’t
tells about the hidden charges so there is a need for that what are the expectations of the credit
card holders and in return what are the services provided by the banks means what are the
service quality gaps and how these gaps can be filled because credit card service providers
doesn’t disclose all the facts at the time of issuing credit cards so, that is the need for research.
SCOPE OF THE STUDY

The Scope of the study is confined to Ludhiana city the time period of the study is
restricted to nearly 4 months i.e. December 2006 to Date of completion of study. The reason
for choosing such time period is simply due to nature of study i.e. Services provided by the
banks to the credit card holders and reasons for not fulfilling their expectations. This study on
completion is likely to be great help to banks and all companies providing credit card
services.
RESEARCH METHODOLOGY

Nature of research

The study will be Exploratory and Descriptive. This study is mainly concerned about an
existing problem and its basic nature cause and effect. It is concerned with discovering and
testing certain variables with respect to their services. The study will focus on the various
problems faced by credit card holders and how these gaps can be filled

Data Collection

For this study a data of selected banks would be taken. For the purpose of this study
both primary and secondary data will be used.

Primary Data: - Structured Questionnaire will be used that will cover the following areas

 Purpose or reasons for using credit card.


 What are the expectations of credit card holders?
 Preferences to determinants of service quality through servqual
 How service quality gaps can be plugged?

Secondary Data: - Data will be collected from various Banks websites credit card section
published reports, newspapers, and journals etc. These are mentioned in Bibliography.
Sampling Plan:

Sampling technique

Stratified sampling technique will be used in this project


Universe
For the purpose of the study the universe is all banks in Ludhiana providing credit card
services. Five banks will be selected as sample from Private and Public sectors bank the ratio of
two banks from Public Sector and three banks from Private sector banks operating in India. The
selection of the sample has been done on the basis of their respective market Capitalization.

Sampling Unit

1. Credit card Holders of Banks

The data will be collected from approximately 100 respondents (preferably 20 customers
from each bank) from the selected sample. The respondents will be the customers holding credit
cards of this selected bank only. Even though customers might have more than one credit card
but credit card of only one bank is considered for research.

Data analysis and Interpretation

The response will be gathered through structured questionnaires. There would be two
questionnaires for gathering the information. First questionnaire is to know that what are the
gaps and second questionnaire is to know that how the gaps can be plugged. Apart from that one
servqual is also get filled to know the customer’s expectations further analysis of the data
through application of appropriate statistical tools that is percentage & mean.
Limitations of the Study

 The selected sample may or amy not be considered as a true representative of the whole
population.

 It is difficult to interpretate from the data about the whole of the indian credit card
industry.

 Only five bank’s data has been taken for making a judgement which might not be enough
to do so.

 Credit card holder might be having different opinion towards the credit card of other bank
if he or she is having more than one credit card.

 Execive calculations has to be done for the statastical measures which is the biggest
constrian for the reasearch work.

 There might be chances of ambiguities in the analysis of data.

 Data may not be fully reliable as it is also secondry in nature.

 Best afforts were made to consider all important variables of the study.chances of some
of the variable not appearing in the study is also not ruled out.
REVIEW OF LITERATURE

Daniel Levine (1994) SAN FRANCISCI BUSINESS TIMES (SFBT) India would have
second largest number of credit cards in issue after America by 2000. Visa believes that while
the India card holding is still relatively small the potential is huge. It estimates a market size of
40 million (that’s less than 4.5% of the present population of India) Indians with annual income
of over and 30,000. It estimates that the sheer number represents the level of affluence which is
far greater than many developed nations. Visa estimates that over one million cards are in
operation in India. They are interested in targeting the top consumers- the upper middle class and
high net worth individuals. Their assessment is that the market is between 3 & 5 million and
could reach over 10 million in four years.

Fernand L (Sept 1994) Card issuers have a set of criteria that they use to judge credit
worthiness. Checklist for card issuers: Credit evaluation: Does the customer is paying his bills in
time? Is he living with his means? A bad credit history will make it difficult to obtain a credit
card. A good credit may mean additional credit when one needs. However if one does not have a
credit history, many banks will provide a basic low-limit credit card. Responsible use of ones
first card is a good way to start building a positive credit record, capacity: Does one have
capacity to repay? One will receive a credit limit according to his income to help him manage
spending. Capital: The assets one owns will also be taken into a/c. Home, Car, bank accounts in
investments are favorably considered.

Mahanta V (1997) Co branding cards is just a partnership between the card issuer & the
commercial entity. The benefits are to both the partners. The card issuer increases its customer
base & builds loyalty & utility or the merchant establishment gains in terms of brand image &
business that might otherwise have not come its way. One should opt for the co branded card that
offers true value of money.
Mehta V (1998) The market for credit cards also offers opportunities for foreign players
like Citibank & Morgan Stanley. All are busy trying to broaden their financial service franchises.
For these foreign institutions that take deposits, such as Citigroup cards are a lucrative way to
recycle. and to establish their brand in India.

Vijayshankar N (1998) For the efficient use of credit cards & trying to maximize one’s
investments it is also necessary to keep an eye on increasing savings potential. In order to
achieve the savings targets we set for ourselves, it is important to plug away unplanned expenses
& to insure against possible incidence of contingent expenses such as medical expenses.

Visa International (1999) Defining the working of credit card this research states that a
credit card is a safe, secure & convenient financial management tool that offers many benefits.
Its important to remember that owning a credit card carries many responsibilities. When used
improperly credit card can get you in trouble. When used wisely, it is safe, practical &
convenient

Credit card & management consultancy (2000) – India’s first card consultancy service
for both card issuers/banks and card customers. Currently, there are 3.8 million cards in
circulation in India. 71% of ‘first time credit card applicants’ in India expressed the need for
advice on appropriate card selection, amidst the plethora of credit cards available in the Indian
Credit cards market. 57% of single credit card holders ‘wanting something more on a card’ felt
the need for assistance in choosing a suitable credit card for themselves.

Singh Sukhmeet (2001) Prospects of credit cards in Ludhiana. He said that 82% of the
respondents were possessing credit cards & 15% respondents responded positive to own a credit
card in future. He concluded from the study that only those persons who earlier had faced with
problem of overspending had quitted credit cards. Its just psychology that makes them to think so
otherwise the benefits of credit cards are highly appreciated. Some customers are financially
sound but don’t possess a credit card because they are not a income tax assess or they don’t have
any business i.e. mainly they have land & assets against which credit card is not issued.
Visa International (2003) According to Visa Internationals latest data, average Indian
cardholder uses his card 9.3 times, spending about Rs. 14,700 per year. A number of card owners
do not use their cards and almost 20 – 30 % cards are inactive (less than one usage every
quarter). An important fact that should be observed is that it is only in the past few years that the
Indian customer is beginning to accept ‘Credit’. The Indian culture doesn’t promote credit, and it
is this outlook change which is the most important development for the credit card industry.

HSBC (2003) As per the research conducted, major problem is low awareness level
among consumer. The credit card market in India is about 3 million with a value turnover of
around Rs.2500 crores. The market is expected to grow by 30% p.a. This would still be a very
low penetration of a potential market of 60 million cardholders. The credit card business is a
low-margin, high volume business. Thus, given the low income per card and the high initial
investments by the bank, large volumes in terms of cards issued and the transactions financed are
required to make the operations profitable.

Chakravorti Sujit (2003) Credit cards provide benefits to consumers and merchants not
provided by other payment instruments as evidenced by their explosive growth in the number
and value of transactions over the last 20 years. Recently, credit card networks have come under
scrutiny from regulators and antitrust authorities around the world. Focusing on interrelated
bilateral transactions, several theoretical models have been constructed to study the implications
of several business practices of credit card networks

Oikos (2004) The underlying evolutionary mechanisms of urban bird populations have
hardly been studied. High food density and low predation risk serve to explain the global pattern
of extremely high urban bird population densities. Both these bottom-up and top-down effects
are paradoxical since the per capita amount of food is small due to competition, and domestic
predator density is high in cities. The bottom-up paradox can be resolved by taking into account
the high food resource-predictability in cities. Concerning the top-down effect, recent studies
suggest that at least when it comes to nest predation the effect of cats is minor. I suggest that the
combination of high food predictability and low predation risk in cities alter bird foraging
behaviour, which in turn affects population dynamics. In terms of density, the result is that bird
populations exceed the carrying capacity of the urban environment, costing heavily on body
condition and/or life span. Under such conditions the population should consist of a few winners
and many losers. Only the winners have sufficient access to food resources and the opportunity
to reproduce. The highly predictable continuous input of food in the urban environment allows
them to "live on their credit". They may trade off between offspring body condition and clutch
size. In the lack of predation, the losers among the fledglings may survive for a relatively long
period, getting just enough energy to survive. Though they may never become healthy enough to
reproduce, they will have a major contribution to the observed population density. Results of
several case studies seem to support the credit card hypothesis and suggest that it can serve as a
general rule for the evolution of animal populations and communities in highly predictable
human managed environments.

J Y Umranikar (2006) In India, credit card fraud is mostly limited to the physical space.
Online con jobs make up just about 1% of the total numbers here, unlike 40% in the developed
world. But, as consumers graduate to the shop-easy internet and pay with their cards, instances of
fraud are bound to rise While consumer organizations TOI spoke to had little information about
online fraud, 60% of online card fraud occurs only while buying an air ticket one way out is to
insist on customer identity at the time of actually boarding a flight. For safer transactions, an
advanced card such as Verified by Visa and MasterCard Secure Code comes in handy. Here, a
consumer requires a password during a transaction to validate his identity

Sarbajeet K. Sen. (2006) India is shining for Visa. There are roughly about 33 million
Visa cards in India. Visa market share in India by purchase volumes is 70 per cent against
MasterCard. If American Express cards are also Included, Visa market share would be about 64-
65 per cent. The volume of transaction as on September 2005 was $1.2 billion. The number of
Visa cards has been growing at about roughly 77 per cent compounded annually during the last
four years. In terms of purchase volume, the compounded annual growth is roughly about 50 per
cent .The only other country that could possibly be growing at a faster rate than India is China.
India is also pretty much an incubator of new ideas and innovations. Some of these innovations
like Visa Bill-Pay or Visa money transfer that allows transfer of money to any visa card in India
Economic Times (2006) India has now become the third biggest card market for Visa
International in Asia Pacific after Japan and Korea. But the country has a long way to go in terms
of card spend, where it lags behind a number of countries in the region. Visa is supposed to be
the market leader in both credit and in India. As on March 31, ’06, Visa saw a 36% growth in the
number of cards issued. The current number of credit cards stands at 12m. The total number of
credit cards issued in India as on the period is estimated to be at around 47m and 18m
respectively

Vyas Mohan (2007) In the case of credit cards, it is better to go to bed without supper
than rise in debt. If you cannot afford it, do not buy a credit card. Be aware that most banks
charge additional fees and higher interest rates for late payments of credit card dues. Hence, use
a credit card only if you are sure of making payments within a realistic period making the most
out of your card starts with picking the right card to suit your need and then minimizing costs,
including interest payments. For those who are of the kind to clear the outstanding balance each
month within the due date, interest costs on the card would not be a matter of concern. In such
cases, it is better to go for cards that carry rewards. Reducing interest payments on your card to
the maximum possible extent is the best way of using it. If possible, pay the entire outstanding
amount before the due date on your statement or at least the minimum payable amount.

Financial Express (2007) Credit card holders in India, who pay the highest rates of
interest in the world, have been ripped of Rs 6,000 crore as 'extra charges' by banks in a span of
ten years, according to a rights group. The banks have already extracted around Rs 6,000 crore in
the name of late fee, cash advance fee, billed finance fee, over-limit fee, cash withdrawal fee,
cheque pick up fee and service taxes on all these fees CV Gidappa, General Secretary of Credit
Card Holders' Association of India (CCHAI), said in Chennai quoting a study conducted by his
group said banks charge more for credit card transactions as they foresee higher risk of default
due to the insecure nature of transactions. Further, credit cards are more convenient tools for
easy borrowing. As part of the study, the association went through the balance sheets and Loss
and Profit statements of all private as well as nationalized banks, checking their interest income
and non-interest income since 1992 after the introduction credit cards in India, Gidappa said the
average interest rates on the card transactions and loans in India are highest in the world, he said.
Mehta (2007) The new credo of credit card marketing is platinum. Move over plain-vanilla
or co-branded options. Credit card companies are doling out bundled benefits in their cards to woo
the affluent Indian. Dining, health & wellness, travel and complimentary signing-in offers galore
when the cardholder picks up the card, some for free, but most at a premium. Currently, the
privilege card universe comprises 2% of the 22-million credit card market in India. Now, higher
margins and lower operating costs (since the base is low) are enticing marketers to go platinum.
Marketers are drumming up the ‘platinum’ card to carve a piece of the growing affluent
population. With growing consumerism, this card is getting more prestigious and its utilization is
also growing says These cards present a higher credit limit to their patrons.

Indiainfoline (2007) According to the survey, in general, women are less likely than men to
say they pay off the full amount each month (34 percent versus 41 percent). Also, those who do
not save regularly are significantly less likely than their male counterparts to report they pay the
full amount on their credit cards each month (18 percent versus 47 percent). 37% say they
generally pay the full amount of their credit card bill(s) each month. 13% say they usually pay the
full amount but not always 24% say they pay as much as they can but usually leave a balance 11%
report that they usually pay the minimum but not much more13% said they did not have any credit
cards

"Service Quality Gap Model in Credit Cards”


(A study of selected banks in Ludhiana)

Objectives:
 To study the problems faced by the credit card holders.
 To study how to these service quality gaps can be plugged.
 To study the expectations of the consumers and in return services given by banks to
credit card holder.
CHAPTER-2
INTRODUCTION OF CREDIT CARDS

What is credit?
The word credit basically means giving someone time to pay. Whenever you sell
something to another person and they promise to pay you back later, you are giving them credit.
In effect, you are loaning a sum of money, which will be repaid to you some time in the future.
The word credit actually comes from Latin, the old Roman language. The Roman word credere
meant trust. In other words, when you sell something to another person but give them time to
pay, you trust them to pay you back. In many cases, the person loaning the money or giving
credit will make a small charge - usually a percentage of the total - each month or each year until
the money is repaid. This fee is called interest.
Access to consumer credit in the form of a credit card has grown rapidly to become one of the
most frequently held financial instruments by households. Credit cards offer the convenience of
cashless transactions and also allow for purchases over the telephone and increasingly, via the
internet. Credit card also offers consumers the flexibility of deferring payment to a future date, and
thus can allow consumers to smooth spending over temporary liquidity shortfalls. However invoking
a credit card’s revolving credit option typically results in paying high rates of interest not only on the
existing balance but also on any new charges made on the card as well, and thus is a fairly costly
form of credit, especially if the revolving credit feature is used frequently.
How did people use credit?
Until the end of the 19th century, only wealthy people had easy access to credit. Most
people had to pay for things in cash. If they did need to borrow money, people had to turn to
moneylenders and pawnbrokers. But this was often an unreliable form of credit, with high
interest rates and often difficult arrangements for repayment. Other forms of credit were
available to ordinary people but there was nothing like the network of banks and credit facilities,
which we have today. In local shops, it was possible for people to buy things on the slate or tab
and pay for them on a monthly basis.
Higher levels of both education and income contribute significantly and importantly to
the probability of ownership of either type of credit card, even controlling for other household
characteristics. The difference between the coefficients on having a high school degree but no
further education and having a college degree or higher3 implies an effect about as large as the
difference between an income between $10,000 and $24,999 (in 2001 $) and an income of at
least $50,000; both these effects are about twice those of the difference in age from less than 35
to aged 50-65. As would be expected, a higher level of financial wealth also contributes
positively to card ownership, although the relative contribution of this variable is less notable
than that of increased income or education.
What it is credit card?
Credit Cards introduce financial flexibility into modern consumers' lives. For those who
always pay off their balances, credit cards eliminate the need to carry cash or obtain check-
cashing approval. For those who carry a balance, credit cards allow acquisition of goods and
services that cannot be paid for in full when purchased

A plastic card having a magnetic strip, issued by a bank or business authorizing the holder to buy
goods or services on credit

A credit card allows consumers to purchase products or services without cash and to pay
for them at a later date. To qualify for this type of credit, the consumer must open an account
with a bank or company, which sponsors a card. They then receive a line of credit with a
specified dollar amount. They can use the card to make purchases from participating merchants
until they reach this credit limit. Every month the sponsor provides a bill, which tallies the card
activity during the previous 30 days. Depending on the terms of the card, the customer may pay
interest charges on the amount that they do not pay for on a monthly basis. Also, credit cards
may be sponsored by large retailers (such as major clothing or department stores) or by banks or
corporations (like VISA or American Express).

History of credit cards

Many of us use credit cards, but only a few know its history and its existence. An
informative piece on how and when people started the use of credit cards. In 1950s more
flexible, form of credit was available. Credit cards had emerged in America in the 1950s,
developed by organizations like Diners Club and American Express. For the first time, credit
cards offered people a form of 'unsecured' credit that was widely available and easy to use.
Credits cards are a relatively recent development. The VISA Company, for example, traces its
history back to 1958 when the Bank of America began its BankAmerica program. In the mid-
1960s, the Bank of America began to license banks in the United States the rights to issue its
special BankAmerica. In 1977 the name Visa was adopted internationally to cover all these
cards. VISA became the first credit card to be recognized worldwide. The Consumer Credit Act
of 1974 superseded all previous credit legislation and still governs the granting of consumer
credit today.

In 1983, 65 percent of U.S. households had a credit card of some kind, including store-specific
cards and gas cards. Only 43 percent of households had a bank-type credit card such as a Visa or
Mastercard; that is, a card that is accepted at a broad range of retail establishments, and after
making a minimum required payment allows the consumer to revolve the balance if so desired.
By 1992, 62 percent of the U.S. population had a bank-type credit card, and by 2001 that
percentage had risen to almost 73. Over the same period, the percentage of households with any
type of credit card increased much less, and in 2001 that percentage was 76 percent, only slightly
higher than the percentage with a bank-type card. There has also been an increase in the number
of bank-type credit cards owned per household: in 1983, households with a bank-type card
typically held only one such type card. By 2001, one-third of card-holding households still had
only one bank-type card, one-third had two, and about one-fourth had three or four. A little more
than 7 percent had five or more.

Credit Cards:
Credit cards in India are gaining ground. A number of banks in India are encouraging
people to use credit card. Diners Club and American Express used the concept of credit card in
1950 with the launch of charge cards in USA. Credit card however became more popular with
use of magnetic strip in 1970. Credit card in India became popular with the introduction of
foreign banks in the country.

Some facts of credit cards


 The first card was issued in India by Visa in 1981.
 The country’s first Gold Card was also issued from Visa in 1986.
 The first international credit card was issued to a restricted number of customers by
Andhra Bank in 1987 through the Visa program, after getting special permission from the
Reserve Bank of India.
The credit cards are shape and size, as specified by the ISO 7810 standard. It is generally of
plastic quality. It is also sometimes known as Plastic Money

The choice between debit and credit cards


Debit cards are a more recent medium than credit cards, but their use is spreading fast,
and they are overtaking credit cards as the most prevalent form of electronic payment at the
point of sale. Part of the usual motivation for debit cards is that they limit the potential for
overspending associated with credit cards. Debit card transactions can either be made online,
using a PIN, or off-line using a signature and a process very similar to credit cards. Off-line
debit transactions have been aided by the Visa and Mastercard logo, and it is not an
exaggeration that debit and credit cards enjoy comparable levels of acceptability today. Use of
debit cards is not allowed only for items such as car rentals and some on-line purchases over the
internet. Moreover, debit and credit cards now offer essentially identical fraud protection. A
major advantage of debit cards is that they do not allow over-borrowing, as funds are
immediately withdrawn from the account linked to the debit card (or withdrawn within three
days in the case of offline purchases). Debit cards appear to be a natural way of solving self-
control problems of relatively impatient and impulsive shoppers. It seems possible to impose
discipline on a shopper by replacing the credit card with a debit card and limiting the funds
available in the linked account. Indeed, observed usage of debit cards seems to reinforce this
idea.
Still, use of debit cards is not a costless way of coping with a self-control problem. Debit
card users forego the free-float offered by credit cards, since funds are (almost) immediately
withdrawn from the linked account. Interest costs are not limited to those implied by absence of
free floating, but also include the cost of keeping available balances in low-interest linked
checking accounts, instead of in higher-rate accounts and withdrawing funds only to cover the
monthly payment on a credit card. This process can be quite complicated, especially if the debit
card holder is not flush with liquid financial resources and tries to avoid overdraft costs and
penalties associated with the linked account. Very often, credit card issuers offer additional
rewards to credit card users but not to debit card users, such as frequent flier miles and other
bonuses. Thus, using debit cards as instruments of self control is costly, although probably less
so than revolving credit card debt to reduce the available credit line.
The usual motivation for use of credit cards based on self-control considerations.
Investigation proves whether choice of debit versus credit cards at the point of sale is in fact
consistent with the relative cost of charging an extra Rupee to the credit card relative to paying
with the debit card. A key factor determining such relative costs is whether the consumer
already revolves credit card debt, in which case new purchases cannot benefit from the grace
period and are thus subject to high interest rates.
Zinman formulates three testable hypotheses generated by a “canonical”model of
consumer choice without self-control considerations. First, credit card debt revolvers should be
more likely to use debit than those who do not, as they cannot take advantage of the grace
period for new purchases. Second, revolvers who face binding credit constraints should be more
likely to use debit than credit, e.g. because they are likely to be close to full utilization of the
credit card line. Third, nonrevolving bank card holders should be less likely to use debit than
those without bankcards. The main rationale for this third prediction is increased likelihood that
card holders will want to take advantage of the free float. Using data from the 2001 and other
Surveys of Consumer Finances, Zinman finds economically and statistically significant effects
on debit use of revolving status and of credit limit constraints in particular, supporting mainly
the first two predictions of the canonical model.
However, these results and some stylized facts about debit card use may also be
consistent with behavioral models. For example, results also seem consistent with the
accountant-shopper model described above. Since credit card debt is revolved mainly as an
instrument of self-control in that model, debt revolvers are more likely to exhibit self-control
problems and to use debit cards as an additional measure to discipline impulsive shoppers. The
same holds a fortiori for those with nearly binding credit card limits. To the extent that these
arise from a desire to limit the resources available to the shopper, they will also be associated
with a greater likelihood of encouraging the shopper to use a debit card for purchases. Zinman
illustrates problems of distinguishing between standard and behavioral explanations of debit
card use using the Prelec and Loewenstein (1998) model of mental accounting. In that model,
the act of paying produces cognitive transactions costs and incentives to decouple payments
from consumption. The optimal decoupling strategy tends to favor delayed payment for
durables, but prepayment for instantaneous consumption. Credit cards serve as a decoupling
device, because they delay payment and they also lump payments together. If there are
convexities over losses associated with each distinct payment, both features attenuate “payment
pain”. Debit provides relatively instantaneous payment and thus less decoupling than credit.
This additional decoupling motive in credit versus debit card use could rationalize, for example,
the finding of Reda (2003) that debit cards tend to be used for smaller transactions involving
instantaneous consumption, while credit cards are used for larger transactions of more durable
items. While it may be difficult to distinguish between traditional and behavioral models of
credit versus debit card use by using solely data on choices at the point of sale, distinctions can
be facilitated by reference to portfolios of credit card debt revolvers. Traditional models fail to
explain co-existence of high-interest credit card debt with often substantial holdings of low-
interest liquid assets. The existence of such “arbitrage” opportunities goes against the logic of
models that stress rational calculation of interest and other transactions costs: if consumers are
so careful about comparing costs of using debit versus credit for each purchase, how do they
miss the interest cost of not paying off their outstanding balances? And if debit card use is
motivated by nearly bindin credit card limits, how is it optimal to keep enough money in the
low-interest linked account to finance purchases rather than using these funds to make more of
the credit line available to the shopper and to take advantage of points, miles and other
advantages of credit card purchases? All in all, it seems that the shortcomings of standard
models become apparent when these models are confronted with portfolios of credit card
revolvers rather than simply with the payment margin between credit and debit cards.
How Credit Cards work

A user is issued a credit card after an account has been approved by the credit provider
(often a general bank, but sometimes a captive bank created to issue a particular brand of credit
card, with which the user will be able to make purchases from merchants accepting that credit
card up to a pre-established limit. When a purchase is made, the credit card user agrees to pay the
card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of
the card details and indicating the amount to be paid or by entering a PIN. Also, many merchants
now accept verbal authorizations via telephone and electronic authorization using the Internet,
known as a customer not present (CNP) transaction

Other variations of verification systems are used by e-commerce merchants to determine


if the user's account is valid and able to accept the charge. These will typically involve the
cardholder providing additional information, such as the security code printed on the back of the
card, or the address of the cardholder.

Each month, the credit card user is sent a statement indicating the purchases undertaken
with the card, any outstanding fees, and the total amount owed. After receiving the statement, the
cardholder may dispute any charges that he or she thinks are incorrect (Otherwise, the cardholder
must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher
amount up to the entire amount owed. The credit provider charges interest on the amount owed
(typically at a much higher rate than most other forms of debt). Some financial institutions can
arr\ange for automatic payments to be deducted from the user's accounts. Credit card issuers
usually waive interest charges if the balance is paid in full each month, but typically will charge
full interest on the entire outstanding balance from the date of each purchase if the total balance
is not paid.

The credit card may simply serve as a form of revolving credit, or it may become a
complicated financial instrument with multiple balance segments each at a different interest rate,
possibly with a single umbrella credit limit, or with separate credit limits applicable to the
various balance segments. Usually this compartmentalization is the result of special incentive
offers from the issuing bank, either to encourage balance transfers from cards of other issuers, or
to encourage more spending on the part of the customer
Low interest credit cards or even 0% interest credit cards are available. The only downside to
consumers is that the period of low interest credit cards is limited to a fixed term, usually
between 6 and 12 months after which a higher rate is charged.

Grace period

A credit card's grace period is the time the customer has to pay the balance, before
interest is charged to the balance. Grace periods vary, but usually range from 10 to 55 days
depending on the type of credit card and the issuing bank
Standard segregation of credit cards:
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. People new to credit,
or people trying to rebuild their poor credit ratings use it.
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 special terminals, 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 – Falls 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. Stanchart 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 work mostly as debit cards for the limited purpose of travel. Citibank
Dollar Card, American Express, Bob card Global and Hong bank Bank Thomas Cook
International Card are among the players in this section.
. 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 requires 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.
Who Gets Its and Who Doesn’t:
The criteria used by banks to issue a credit cards are:
Place of residence: Applicant is given full priority if he lives in a standard (rich) area. But it
would suffice if he own his flat and don’t pay rent for it. But if he is paying rent he could just
change his habitat (as if it’s so easy to move on these days). However, the longer applicant has
stayed in your rented accommodation, the better are your chances.
Telephone: It can of great help to you; since it implies that a person can be tracked down to his
residence.
Profession: Before issuing a credit card the banker also inquire about the profession of
applicant. It is must, as they need to know the financial position of the person. Credit limit is
fixed in accordance to the income of the person & there is income level below which one
cannot apply for credit card. ..
Place of work: Card issuers will normally check the reputation of the company
Applicant work in, the number of years you have put up there and your designation.
Age: Only adults can apply. One has to be above 18 years of age if he wants to have a credit
card. If he is young and raring to go at his first job, chances are that banks will tread cautiously.
Other than these broad sets of factors, issuers will also like to check the number of dependents of
the applicant, whether he/she is servicing a loan and whether the applicant has another credit
card. If a person possesses more than one credit card, one’s credit history can easily be verified
and depending on the record issuers will think of giving you another card or not. It is important
to remember that issuers don’t look at any of these factors in isolation and the sum total of all is
deduced to judge whether the applicant is worthy of a credit card or not.

Advantages
Cash is always riskier to carry, besides the limit to the amount you can carry in your
wallet. That's where credit cards come handy. Not only can you spend upto your given credit
limit without having to worry about carrying cash, nowadays you can also issue cheque against
your card limit and order drafts over the phone. Credit cards entitle you to other benefit like
discount at shops, restaurants and airline tickets. Most credit cards also offer personal accident
cover, lost baggage cover, etc. You get interest free money for 45 to 50 days. A global card
assures you of spending in any currency and settling your dues in your home currency. But for a
shop-a-holic, a card could be akin to a drug. The hard fact is that a credit card can only postpone
payment, not waive it! The charges for carrying over the outstanding balance amount over and
above the free credit period can touch around 36% on an annualized basis.

The following are some of the plus features of credit card in India
 Hotel discounts
 Travel fare discounts
 Free global calling card
 Lost baggage insurance
 Accident insurance
 Insurance on goods purchased
 Waiver of payment in case of accidental death
 Household insurance

Precautions taken after receiving credit card:


To Avoid:
 Bending the Card.
 Exposure to electronic devices and gadgets.
 Direct exposure to sunlight.
 Be cautious about disclosing your account number over the phone unless you know
you’re dealing with a reputable company.
 Never put your account number on the outside of an envelope or on a postcard.
 Draw a line through blank spaces on charge or debit slips above the total so the amount
cannot be changed.
 Don’t sign a blank charge or debit slip.
 Tear up carbons and save your receipts to check against your monthly statements.
 Cut up old cards – cutting through the account number – before disposing of them.
 Open monthly statements promptly and compare them with your receipts. Report
mistakes or discrepancies as soon as possible to the special address listed on your
statement for inquiries. Under the FCBA (credit cards) and the EFTA (ATM or debit
cards), the card issuer must investigate errors reported to them within 60 days of the date
your statement was mailed to you.
 Keep a record – in a safe place separate from your cards – of your account numbers,
expiration dates, and the telephone numbers of each card issuer so you can report a loss
quickly.
To Do:
 Please sign on the signature panel on the reverse of the Card immediately with a non-
erasable ball-point pen (preferably in black ink). This will ensure that the benefits of
membership are yours and yours alone.
 Keep the Card in a prominent place in your wallet. You will notice if it is missing.
Choosing the best Card:
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 decide on any particular card. However, a
comparison on the basis of a few basic parameters is will help us make an informed choice.

Credit Limit: First, there’s the credit limit. All banks have different limits set for customers
depending upon the type of card in their possession. Even within a particular type of card, limits
may vary depending upon the credit worthiness of the individual. This depends, among other
things, on the gross income of the individual and the period for which he/she is using the card.
However, some banks like Citibank and American Express have cards which have no set credit
limit.
Lost card liability: A second criterion could be the lost card liability. If one is traveling and has
lost his/her credit card then reporting the loss will not be much of a problem. If there is no
liability for the user and he is getting back the credit card quickly then user should opt for that
credit card
Acceptability: The card should be acceptable at most of the establishments

Rewards: Nowadays, almost all cards come with various goodies attached. These include airline
ticket booking and insurance benefits on lost luggage and accidental deaths. The latest in line of
value added features are the rewards programs. Here a cardholder earns a certain number of
points by spending a particular sum of money.
Interest rate: The Annual Percentage Rate (APR) is the yearly interest rate or percentage rate
that you pay on an outstanding balance in the form of interest. These charges will determine the
costs you pay on your card over time. Lesser the Interest rate better the card is.

Global players in credit card market:


VISA Card:
VISA a card is a product of VISA USA and along with MasterCard is distributed by
financial institutions around the world. 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. 1.55 billion Visa cards in circulation Over 20,000
member financial institutions .In 2006, total card sales volume accounted for US$4.6 trillion.
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.
American Express:
The world’s favorite card is American Express Credit Card. American Express operates
in over 130 countries and it is poised to be the world’s No. 1 card in the near future. In a
regressive US economy last year, the total amount spent on American Express cards rose by 4
percent. American Express cards are very popular in the U.S., Europe and Asia.
Diners Club International:
Diners Club is the world’s No. 1 Charge Card. Diners Club cardholders reside all over
the world and the Diners Card is an all time favorite for corporates. There are more than 8
million Diners Club cardholders. They are affluent and are frequent travelers in premier
businesses including Fortune 500 companies and leading global corporations.
JCB Cards:
The JCB Card has a merchant network of 14.05 million in approximately 190 countries.
It is supported by over 320 financial institutions worldwide and serves more than 59 million
cardholders in eighteen countries worldwide. The JCB philosophy of “identify the customer’s
needs and please the customer with Service from the Heart” is paying rich dividends as their
customers spend US $62.7billion annually on their JCB cards
Basis for selection of banks:

The banks have been taken on the basis of Highest Market capitalization. Market capitalization
of the banks is given as below.
Market capitalization ( in crores)

ICICI Bank 77,867.79

SBI 58,169.31

HDFC Bank 32,774.20

PNB 15,872.20

AXIS BANK 13,177.93

About ICICI BANK:

ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$
56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended
March 31, 2006). ICICI Bank has a network of 741 branches (including 48 extension counters)
and over 3300 ATMs in India and presence in 30 International locations. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries. ICICI Bank set up its
international banking group in fiscal 2002 to cater to the cross border needs of clients and
leverage on its domestic banking strengths to offer products internationally. ICICI Bank is the
most valuable bank in India in terms of market capitalization. ICICI Bank was originally
promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned
subsidiary. After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards universal
banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI
with ICICI Bank would be the optimal strategic alternative for both entities In October 2001, the
Boards of Directors of ICICI and ICICI Bank approved the merger.

ICICI Bank Credit Cards:

ICICI Bank Credit Cards give card holders the facility of cash, convenience and a range
of benefits, anywhere in the world. These benefits range from life time free cards Insurance
benefits, global emergency assistance service, discounts, utility payments, travel discounts and
much more. These benefits are according to the credit cards you choose and benefits of ICICI
bank credit cards are mentioned as in next pages.

Eligibility Criteria

Cards Eligibility Criteria

Salaried Self Employed

All ICICI Bank Silver Credit Card Rs. 60000/- p.a. Rs. 50000/- p.a.

All ICICI Bank Gold Credit Card Rs. 120000/- p.a. Rs. 100000/- p.a.

ICICI Bank AMEX Gold Credit Card Rs. 250000/- p.a. Rs. 250000/- p.a.

Age Criteria

Minimum Age Maximum Age

Salaried 18 70

Retired N/A 70

Self Employed 18 65
ICICI Bank Buzz Credit Card:
Special Features
 Up to 5% cash back scheme
 Zero Cash Withdrawal Limit
 Discounts on dining outlets at 555 restaurants
 Life Time Free Credit card - No joining, annual or renewal fee
 Tie-ups with Youth Lifestyle Brands for discounts and offers

ICICI Bank Preferred Gold Credit Card:

Special Features
 0% fuel surcharge at select HPCL outlets
 Life Time Free Credit card - No joining, annual or renewal fee.
 3.5% discount on air tickets (both international and domestic) booked through BTI-SITA.
 Discount on Dining and room rents at more than 500 restaurants/hotels across India.
 Low interest charges of just 1.49% pm on all retail purchases for the first 6 billing cycles,
thereafter interest charges of 2.95% are levied

ICICI Bank Preferred Silver Credit Card

Special Features
 0% fuel surcharge at select HPCL outlets
 Life Time Free Credit card - No joining, annual or renewal fee.
 Low interest charges of just 1.69% pm on all retail purchases for the first 6 billing cycles, thereafter
interest charges of 2.95% are levied.
 Discount on Dining and room rents at more than 500 restaurants across India.

CICI Bank - HPCL Silver Credit Card


Special Features
 Life Time Free Credit card - No joining, annual or renewal fee.
 Get cash back on your fuel purchases.

Monthly fuel spends at HPCL Cash


outlets Back

0-499 Nil

500 – 1499 1%

1500 – 2999 1.50%

3000 and above 2.50%

ICICI Bank - HPCL Gold Credit Card

Special Product Features


 Life Time Free Credit card - No joining, annual or renewal fee

 Get cash back on your fuel purchases.

Monthly fuel spends at HPCL outlets Cash Back

Till Rs. 500 Nil

Above Rs. 500 up to Rs. 1500 1%

Above Rs. 1500 up to Rs. 3000 1.50%

Above Rs. 3000 2.50%


About HDFC Bank:
The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995. This is India’s second largest private sector bank.
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank's risk appetite. HDFC Bank's business philosophy is based
on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

HDFC Credit Cards:

All-purpose credit card

The HDFC Bank Silver Credit Card can be used for all requirements of the customer, be it
shopping, eating out, holidaying and fuelling up your vehicle, railway ticket reservations - just
about any financial requirement, planned or on impulse. This means it can solve your all
purposes and is suitable to everybody.

HDFC Value Plus Credit Card

It's power packed with a host of unmatched features that provides Credit card holders
family with true Value and savings. No like the name suggests, the Value Plus Credit Card
brings you added value unlike any other card. It is a Guaranteed Cash Back card which enables
you to earn up to 5% Cash Back on your spends

HDFC Bank Health Plus International Credit Card


Introducing the - India's first health Care Credit Card with a free inbuilt Cashless
Mediclaim. This card issued by HDFC Bank in association with the United India Insurance
Company (UIIC), one of the leading insurance service providers. This card is designed keeping
our good health in mind. It brings us unique features like the Cashless Mediclaim facility and
discounts at leading hospitals which make it an unmatched product.

HDFC Bank International Gold Card

 Up to 5% cashback on air ticketing

 5% cashback on train ticketing

 Discounts on hotel tariff

The HDFC Bank Platinum Plus Credit Card

India's only Platinum Plus Credit Card offering exclusive travel and preferential benefits.
The HDFC Bank Platinum Plus Credit Card is the best Platinum offering in the market. This card
is especially for the persons who travel a lot.

HDFC Gold Business Card:

Petro Surcharge Waiver

Credit card holders can have full waiver of the fuel surcharge across all fuel pumps.

Higher Credit Limits

Credit card holders can get higher credit Limits Up to 10 lacs as credit limit on the card basis.
Rewards with your Card

Benefits of exciting rewards Programme. Customer can earn 1 Rewards Point for every
Rs.200 spent on your Card. By accumulating these, customer can redeem them into, gift cards
and host of exciting gifts and offers

Spend Based Interest Rates

This the spend based Interest Rates credit card you pay lesser rate of interest when you
spend more on the Gold Business card. The card offers a unique benefit of spend based interest
rates. I.e. the more you spend on the card in a month the less interest you accrue. For e.g. The
interest rates are 2.75% for spends upto Rs.10,000 in a month and 2.35% for spends more than
Rs.10,000 on incremental spends.

Save on Business spends

Save on your business related spends with bank’s extensive partner tie-ups. Hdfc Bank
partner tie-ups are across office and business equipment, services and supplies, Travel services,
Telecommunications & Security System and Services with leading brands including HP Laptops,
Tata AIG, Airtel Blackberry, Godrej, AFL Wiz and many more.

Business Insurance
The card offers inbuilt insurance to cover your business office premises towards fire and burglary for
up to 2 lacs.

Travel Insurance Covers

 Air Accident Cover - 10 Lacs.


 Rail / Road Accident Cover - 3 Lacs.
 Purchase Protection - 50,000.
 Hospitalization Cover - 50,000.
About State Bank of India:
State Bank of India (SBI) was nationalized in July 1955 under the SBI Act of 1955.
Seven banks of SBI formed subsidiary and was nationalized on 19th July, 1960. The State Bank
of India is India's largest commercial bank and is ranked one of the top five banks worldwide. It
serves 90 million customers through a network of 9,000 branches and it offers either directly or
through subsidiaries a wide range of banking services. The State Bank of India has been, over the
years, the flagship of Indian banking. State Bank of India is the largest bank in India in terms of
profits, assets, deposits, branches and employees. With a network of over 9,000 branches in India
and 51 foreign offices in 32 countries, the Bank commands about one-fifth of the total deposits
and loans in all scheduled commercial banks in the country. Over the years, the Bank has
expanded rapidly. The Reserve Bank of India is the single largest shareholder of the Bank (with
59.73% stockholding followed by 14.1% NRI/FIIs, 11.8% financial institutions, 11.1%
individuals and remaining with mutual funds and corporates). SBI's shares and bonds are listed
for trading on all the major Indian stock exchanges. Its GDR is listed on the Luxembourg Stock
Exchange

SBI Credit Cards:

The SBI Credit Card offers a Classic VISA card duly acceptable in India and Nepal. It
transfers all the advantages provided by the VISA Card. The present eligibility for applying for
the SBI Credit Card is Rs. 75,000 for salaried and Rs. 60,000 p.a. for businessmen SBI Credit
Card is acceptable over 1,05,000 merchants in India and Nepal. The SBI Credit Card is accepted
to 117 cash point locations in 57 cities from Leh to Port Blair. The daily withdrawal limit is Rs.
10,000. SBI Credit Card comes with an insurance of Rs. 2 lakhs on road and Rs. 4 lakhs by air.
Year 1998 saw a new vista opening for the Indian credit card users. GE Capital Services, the
largest issuer of private label credit cards in the world and State Bank of India, the largest Indian
bank created two companies to address the market: namely, SBI Cards and Payment Services
Ltd. (SBICPSL) and GE Capital Business Process management Services ltd. (GECBPMSL). The
joint venture was set up to leverage the brand equity, customer relationship and the unparalleled
network of SBI and the technological processes and service capabilities of GE Capital to offer
products that are value for money and supported by quality and service.
Special Features of SBI credit cards:

World Wide Acceptance

SBI credit card is accepted across the globe at over 24 million VISA outlets including
110,000 VISA outlets in India. Just look for the VISA sign of acceptance and present your card for
payment. Also there is no place in the world you cannot access money from. Over 30 million
VISA outlets worldwide and 110,000 VISA ATMs accept this card.

Balance Transfer Facility


Credit card holders can now enjoy high savings with low interest rate. If they transfer the
balances from their other Bank Credit Card to their SBI Credit Card and enjoy Balance Transfer
Plans as suited to their financial needs & avail of a low-rate of interest. To avail this facility, the
amount transferred should be a minimum of Rs 5,000 or upto a maximum of 75% of your
available credit limit on the SBI Credit Card, whichever is higher.
Flexipay

With the convenient installment scheme, Flexipay SBI credit cardholders can choose
their own installment plan, to take care of your expenses all this at a lower rate of interest in
affordable monthly installments. So this card caters to everybody according to their needs
Get cash anytime, anywhere
With SBI credit card you now have the unique privilege of withdrawing 100% of your
credit limit as cash. So when you are on vacation or traveling or if you face an emergency you
can now use your SBI Card to withdraw cash up to 100% of your credit limit. With the SBI
Card, you can withdraw cash from over 810,000 VISA ATMs spread across the globe. In India,
the cash network spans over 251 SBI Card Cash Points in 100 cities and 5500 VISA ATMs
across the country. You can also use the SBI Card to access cash from 4400 plus SBI ATMs.
Fill it Up

SBI card offers Card holders a tank full of advantages. Just use your card to purchase
fuels and other lubricants for amounts exceeding Rs. 400 up to Rs. 2000, each time, at designated
Indian Oil & IBP petrol pumps and save transaction fee.
Protection Plus

Protection Plus is an Insurance cover to provide customer complete protection through


Personal Accident Insurance: Enhances the Free Accident cover by an additional Rs. 6 lacs in
case of Accidental Death or Disability for as little as Rs. 24 per month and Credit Shield:
Protects the outstanding on customer’s SBI card, for a maximum of Rs. 1 lac, in the event of
Death or Disability (due to any cause)...for a premium as low as 0.1% (i.e. Re.1 for every Rs.
1,000) of the outstanding on your card. All this at a nominal Administration charge of Rs. 18 pm.

Book your Railway Tickets Online

SBI Card offers you the unique convenience of booking Railway Tickets Online and
getting them delivered at your doorstep.

Personal Concierge

 Car Rental
 Limousine Booking
 Hotel Reservations
 Restaurant Reservations
 Movie Tickets
 Flower and Gift Delivery

Medical SOS

 Emergency and Routine Medical Advice from a Coordinating Doctor


 Doctors, Hospitals & ambulance contacts at your disposal
 Appointment confirmations & accommodation arrangements
 Emergency Message to family & employer in an emergency
 Medical Expense Payment for Out Patient & In-Patient bills
 Medical Evacuation, Aid on way to the nearest hospital
Interest Free Credit for up to 50 days

Get up to 50 days of interest free credit on your purchases through SBI credit card, on
payment of your current bill statement in full. Further, use your cards extended credit facility,
and just pay a minimum of 5% of the total outstanding.

Travel Benefit

As a cardholder, you get great discounts and benefits with AVIS (AVIS Group operates
the worlds second largest general-use car rental business) all over the world. With SBI card you
will get an AWD (AVIS Worldwide Discount) number which will entitle you to discounts in
Europe and USA (25%), Africa, Middle East, Asia, Canada and Latin America (15%), India
(15% on chauffeur-driven and 20% on self-driven cars).

SERVICE

A service is any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may not be
tied to a physical product. It is difficult to generalize services because of the varying goods to
service mix. Services may either be equipment based (vending machines) or people based
(Education services). Further people based services may vary depending upon whether they are
provided by unskilled, skilled or professional workers. Some services require the client's
presence. If the client must be present, the service provider has to be considerate of his or her
needs, e.g. they can invest in their shop's decor, play background music, etc. Service also differs
as to whether they meet a personal need or a business need; Service providers typically develop
different marketing programs for personal and business markets. Finally, service providers differ
in their objectives (profit or non-profit) and ownership (private or public). Marketing objectives
for each of these types differ.

MAJOR CHARACTERISTICS OF SERVICES (THE 41'S)

Services have four major characteristics that greatly affect the design of marketing programs.
1. Intangibility: unlike physical products, services cannot be seen, tasted, felt, heard or
smelled before they are bought. The person getting a face-lift cannot see the exact result
before the purchase and the patient in the psychiatrist's office cannot know the exact
outcome. To reduce uncertainty, the buyers look for signs of evidence of the service
quality. They will draw inferences about the quality from the place, people, equipment,
communication material, symbols, and price that they see. Therefore the service
provider's task is to "manage the evidence", to "tangibles the intangible."
2. Inseparability: We can’t separate the services from place of product .Services are
typically produced and consumed simultaneously. This is not true of physical goods,
which are manufactured, put to inventory, distributed through multiple resellers, and
consumed later if a person renders the service, and then the provider is part of the service.
3. Variability: since they depend on who provides them and when and where they are
provided, services are highly variable. Some doctors have excellent bedside manner:
others are less patient with their patients. Some surgeons are very successful in
performing a certain operation: others are less successful. Service buyers are aware of
this variability and often talk to others before selecting a service provider.
4. Perishability: services cannot be stored. Unlike products, the services cannot be
produced and stored in advance of their demand. The Perishability of services is not a
problem when demand is steady. When demand fluctuates, service firms have problems.
For example, public transportation companies have to own much more equipment
because of rush hour demand than if demand were even throughout the day. Some
doctors charge patients for missed appointments because the service value existed only at
that point.

SERVICE ORGANIZATION
An organization providing intangible services rather than tangible goods is termed as
Service organization. In the standard industrial classification, service organizations include
hotels, restaurants and other lodging and eating establishments, barber shops, beauty parlors and
other personal services, repair services, motion picture, television and other amusement and
recreational services, legal services and accounting, engineering, research/development,
architecture and other professional organization. It also includes educational organizations,
banks, insurance companies and other financial institAXISons. Also government agencies and
most other non-profit organizations are service organizations.

CHARACTERISTICS OF SERVICE ORGANISATIONS

Quantity Measurement

It is easy to keep track of the quantity of tangible goods, both during the production
process and when the goods are sold, but it is not easy to measure the quantity of many services.
We can measure the number of patients that a physician treats in a day, for example, and even
classify these visits by type of complaint, but this is by no means equivalent to measuring the
amount of service that the physician provides to each of these patients. For many services the
amount rendered can be measured only in a crude terms, if at all.
Absence of inventory

Goods can be held in inventory and this inventory is a buffer that dampens the impact on
production activity of fluctuations in sales volume. Services cannot be stored. If the services
available today are not sold, the revenue from these services is lost forever. Resources available
for sale in many service organizations are essentially fixed. In the short run, a hotel can't
increase the number of rooms that it offers for rent and it does not reduce costs substantially by
closing down some of its rooms. These facts cause a great stress to be placed on planning for an
amount of available services that is not in excess of what can be sold currently and on marketing
efforts to sell these resources each day. The loss from unsold services is such an important factor
that it normally is a key variable in service organizations of all types

Quality Measurement

The quality of tangible goods can be inspected, and in most cases the inspection can be
performed before goods are released to the customer. If the goods are defective there is physical
evidence of the nature of the defect. The quality of a service can't be inspected in advance at best
it can be inspected during the time that the service is being rendered to the clients. Judgments as
to the adequacy of the quality of the most services are subjective measuring instruments and
objective quality standards do not exist. An accounting firm can measure the number of hours
spent on an audit, but not the thoroughness of the work done during those hours. A consulting
firm has no objective way of appraising the soundness of its recommendations.

SERVICE QUALITY & ITS ASSESSMENT

There are a number of different "definitions" as to what is meant by services quality. In its
simplest form service quality is a product of the effort that every member of the organization
invests in satisfying customers. In its broadest sense service quality is defined as superiority or
excellence as perceived by the customer. More especially service quality has been defined as:

 The delivery of excellent or superior service relative to customer expectations.

 Quality is behavior - an attitude - that says you will never settle for anything less
community, your stockholders or colleagues with whom you work every day.

 When we want to be effective - delivering good quality to the customer - we must


produce services that meet "as much as possible" the needs of the consumer.

 Quality is providing a better service than the customer expects.

One that is commonly us defines services quality as the extent to which a service meets
customer's needs or expectations. Today the most popular model of service quality in use is
service quality gap model and the by Parsuraman et a1.Zeithaml et a1. (1988) defined
perceived service quality in their model as the difference between consumer expectations
and their perceptions.
CHAPTER-3
DATA ANALYSIS AND INTERPRETATION

1. Please specify the bank of which you are a credit cardholder

BANK Number of Respondents %age


SBI 20 20
PNB 20 20
UTI 20 20
ICICI 20 20
HDFC 20 20
%age of Respondents

20 20 SBI
PNB
UTI
20 20 ICICI
HDFC
20

Interpretation:

Survey is done on the customers of all these banks by taking twenty respondents from each bank.
The banks have been selected on the basis of their market capitalization from higher to lower.
Only one credit card is considered even if a respondent has more than one credit card.
2. For how long are you using credit card?

Duration Number of Respondents %age of Respondents


Less than 1 year  39 39
1-2 years  40 40
2-5 years  15 15
More than 5 years  6 6
Total 100 100

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40
35
30
25
%age of 39 40
20
Respondents
15
10 15
5 6
0
Less than 1 1-2 years  2-5 years  More than
year  5 years 
Duration

Interpretation:
The above table shows that most of the respondents are having credit card from the duration less
than two years as the trend of using credit card is increasing since the people are becoming aware
about its benefits slowly.
3 Who persuade you to get the credit card?

Persuading Factors Number of Responses %age of Responses


Friends 65 34.45
Print Media 23 12.16
Electronic Media 52 27.51
Bank employees 49 25.92
Total 189 100

Percentage
34.45
40 27.51 25.92
30
%age of 12.16
20
Responses
10
0
Friends Print Media Electronic Bank
Media employees
Persuading Factors

Interpretation:

The above data shows that friends are the most persuading factor while purchasing the
credit card and apart from that electronic media because of its promotional schemes and bank
employees persuade by having face to face interaction for the sale of credit card.

4. For what purposes are you using credit card?


Purposes Number of Responses %age of Responses

Shopping 94 53.12

Petrol 33 18.64

Traveling 43 24.29

Any other 7 3.95

Total 177 100

53.12
60
50
40 24.29
%age of
30 18.64
Responses
20 3.95
10
0
Shopping Petrol Travelling Any other
Purposes

Interpretation:

The above table clearly shows that the main motive for having the credit cards is
shopping as credit card is accepted in all stores from grocery to big shopping malls. Other
purposes for using credit card are traveling and fuelling of vehicles.
5. Is the bank working towards satisfying your needs and expectations?

Options Number of Respondents %age of


Respondents
Yes 71 71

No 29 29

Total 100 100

71
80
60
%age of 29
Respondents
40
20
0
Yes No
Options

Interpretation:

Most of the respondents said that the bank is working towards managing their needs and
expectations but still there is a lot of scope for improvement from the side of bank while taking
care of needs and expectations of customers.
5(a). If, yes then by which method?

Methods Number of Responses %age of Responses


Face to Face interaction  54 41.22
Through seminar  20 15.26
Through postage 24 18.33
Customer care Centre 33 25.19
Total 131 100

41.22
50
40 25.19
%age of 30 18.33
15.26
Responses 20
10
0
Face to Face Through Through Customer
interaction  seminar  postage care Centre
Methods

Interpretation:

Most of the banks try to satisfy the needs and expectations through face to face
interaction by bank employees though word of mouth is the most effective way to satisfy the
customers and there personal needs.
6. How much efforts are made by your bank to know your expectations?

Rating Number of respondents Total


1 8 8
2 7 14
3 10 30
4 8 32
5 20 100
6 19 114
7 14 98
8 8 64
9 4 36
10 2 20
Total 100 516

Mean = Rating * Number of respondents


Total Respondents

= 516 = 5.16
100

Interpretation:

The above data shows that most of the respondents’ banks are not making enough effort
to work according to the respondents expectations that’s why most of the respondents rating lies
in the middle of the scale so there is space for improvement for banks keeping this factor in
view.
7. Do you face any problem regarding credit card as compared to the standards?

Options Number of Respondents %age of Respondents


Yes 82 82

No 18 18

Total 100 100

82
100
80
%age of 60 18
Respondents 40
20
0
Yes No
Options

Interpretation:

Due to high gap in standards of the service and actual service given, most of the
respondents agree that they face problems what is earlier told to them and what eventually is
provided.
7 (a) If yes, what type of problems do you face while dealing with your bank?

Type of Problems Number of Responses %age of Responses


Hidden Charges 69 42.33
Long processing time. 34 20.85
Documentation. 28 17.17
lack of proper interaction 32 19.65
Total 163 100
% ag e o f R e sp o n s es

45 42.33
40
35
30
25 20.85 19.65
17.17
20
15
10
5
0

Type of Problems

Interpretation:

Hidden charges is the major problem for most of the respondents, most of the banks
charges high as compare to what earlier told to their customers.
8. Can you recall any advertisement of your credit card and what was the message?

Options Number of Respondents %age of Respondents

Yes 100 100

No 0 0

Total 100 100

100
100
80
%age of 60
Respondents 40
20 0
0
Yes No
Options

Interpretation:

Every respondent is aware of the advertisement of their credit card because at the time of
issue or purchase of credit card they are influenced by the electronic media or pamphlets of the
credit card showing various features of the credit card. Most of them said that the message was
about cash bags and various facilities given by them.
9. Are you getting the same benefits or information as given in the message?

Options Number of Respondents %age of Respondents

Yes 26 26

No 74 74

Total 100 100

74
80
60 26
%age of
Respondents 40
20
0
Yes No
Options

Interpretation:

Almost three fourth of the respondents agree that what actual benefits or information are
shown in the advertisement, do not get it finally. So there is complete mismatch between the
services shown and actually given

10. Do you think your bank provides all the facilities promised at the time of issuing credit card?
Options Number of Respondents %age of Respondents

Yes 32 32

No 68 68

Total 100 100

68
80
60 32
%age of
40
Respondents
20
0
Yes No
Options

Interpretation:

Two third of the respondents said that they are not getting the facilities promised like full
details, prompt service, reasonable charges, up to date equipments and proper interaction by
employees at the time of issuing credit card.
11. In how many major commercial establishments, your credit card services are available?

Options Number of Respondents %age of Respondents


All 15 15
Many 51 51
Fewer 17 17
Very Less 17 17
Total 100 100

60 51
50
40
% age of
30 17 17
Respondents 15
20
10
0
All Many Fewer Very Less
Options

Interpretation:

The above table and graph shows that for most of the credit cards, credit card facility is
acceptable at most of the commercial establishments but in some cases there is a problem of
wider acceptability of credit cards.
12. How quickly does your bank respond regarding cancellation or reissue if the credit card is lost?

Service Number of Respondents %age of Respondents


Very Quick 10 10
Quick 20 20
Fair 46 46
Slow 12 12
Very Slow 12 12
Total 100 100

50 46
40
%age of 30 20
Respondents 20 10 12 12
10
0
Very Quick Fair Slow Very
Quick Slow
Service

Interpretation:

For most of the people, the service appears to be fair in case of cancellation or reissue of
credit card if the credit card is lost, the major reason behind that is there can be chances of
misuse of credit card in a big way.

13. Is your bank providing security against misuse of credit card in case of online transactions?
Options Number of Respondents %age of
Respondents

Yes 73 73

No 27 27

Total 100 100

73
80
60
%age of 27
40
Respondents
20
0
Yes No
Options

Interpretation:

The above figure shows that most of the respondents said that their bank is providing security
against misuse of credit card which is spreading rapidly and police is taking serious actions
to prevent this kind of misuse. So banks have to follow strict regulations in case of online
transactions.
14. What is the rate of interest charged monthly if time limit of payment exceeds?

Options Number of %age of Respondents


Respondents
1.5-2.0%   4 4
2.0-2.5%  18 18
2.51-3.0%   41 41
Fixed charges + interest 37 37
Total 100 100

50 41 37
40
%age of 30
18
Respondents 20
10 4
0
1.5- 2.0- 2.51- Fixed
2.0%   2.5%  3.0%   charges +
interest
Interest Rate

Interpretation:

In most of the cases, the interest rate is between around three percent or bank charges
interest plus fixed amount in case of exceeding of time limit which comes out to be more than
36% annually which is very high. So there is a need of decrease in interest rate.
15. Are you satisfied with the services provided by the bank?

Options Number of Respondents %age of


Respondents
Yes 53 53

No 47 47

Total 100 100

53
54
52
%age of Respondents

50
47
48
46
44
Yes No
Options

Interpretation:

As half of respondents is satisfied with the services provide and many are still not so
there is a lot of scope for all the banks to improvise on there services like wide acceptability
prompt service less interest rate and defined standard services.
1. How should a bank satisfy customer’s needs and expectations?

Methods Number of %age of Respondents


Respondents
Marketing Research 45 45
Upward Communication 10 10
Relationship 32 32
Feedback 13 13
Total 100 100

45
50
%age of Respondents

40 32
30
20 13
10
10
0
Marketing Upward Relationship Feedback
Reaearch Communication
Methods

Interpretation:

The above data shows that banks should stress on adequate marketing research and
relationship focus to satisfy the credit card holders’ needs and expectations as through marketing
research they would be able to know the expectation.
2. How management of the needs and expectation can be done?

Options Number of %age of


Respondents Respondents
Good service design   14 14
Defining standards 57 57
Adequate training to 29 29
employees
Total 100 100

57
60
50
%age of Respondents

40 29
30
20 14
10
0
Good service design   Defining standards Adequate training to
employees
Options

Interpretation:
As most of the respondents do not get the services what actually told to them earlier and
they are also charged high so most of them are in the favour of defining the standards and also
imparting good training to employees.
3. What should be done to fill the gap between standard performance and actual performance?

Options Number of Respondents %age of Respondents


Proper interaction   41 41
System and technology 32 32
Human resources policies  19 19
Other 8 8
Total 100 100

50 41
40 32
%age of Respondents

30
19
20
8
10
0
Proper interaction   System and Human resources Other
technology policies 
Options

Interpretation:

Most of the respondents assert on the proper interaction followed by system and
technology which according to them is the major factor to fill the gap between standard
performance and actual performance. Factors like human resource policies and other also
constitute the minority.
4 What should be done to fill the gap between actual services given and the advertisement?

Options Number of %age of Respondents


Respondents
No over promising            19 19
No ineffective management 18 18
Penalties to the bank 55 55
Ensure performance levels 8 8
Total 100 100

60 55
50
40
%age of Respondents

30 19 18
20 8
10
0
No over promising No ineffective Penalties to the bank Ensure performance
           management levels

Options

Interpretation:

Most of the respondents agreed on the viewpoint of penalties should be charged to bank
for not fulfilling the promises. Some of them are in the favour of no over promising and no
ineffective management of customers’ expectations.
5. How the discrepancies between customer’s expectations and their perceptions on the
service delivered can be removed?

Options Number of Respondents %age of Respondents


Personal needs      41 41
Prompt service            24 24
Communication 23 23
Trained workforce 12 12
Total 100 100

50 41
40
30 24 23
%ageof Respondents

20 12
10
0
Personal needs      Prompt service            Communication Trained workforce
                   
Options

Interpretation:

Respondents in majority believe that bank should take care of the personal need of the
customers followed by the prompt service issue, communication with the customer about the
services. Some respondents emphasis the need of the trained workforce inside the organisation
too.
6. How customers can be made more satisfied?

Options Number of %age of Respondents


Respondents
Surveys 22 22
Personal interaction   19 19
Customer care centre 22 22
No hidden charges  37 37
Total 100 100

40
35
%age of Respondents

30
25
20 37
15
10 22 22
19
5
0
Surveys Personal interaction   Customer care centre No hidden charges 

Options

Interpretation:

Maximum respondents assert on the no hidden charge concept which is charged by


almost every financial institution. There is also an equal need of surveys, customer care centre
and personal interaction according to the respondents.
CHAPTER-4
SERVQUAL Analysis &Interpretation
Tangibility factors (From E1-E4): Total of Ranks

Ranks E1 Total E2 Total E3 Total E4 Total


1* 0 0 1 1 0 0 1 1
2* 0 0 6 12 4 8 10 20
3* 2 6 9 27 5 15 7 21
4* 21 84 20 80 25 100 18 72
5* 24 120 24 120 22 110 21 105
6* 25 150 17 102 24 144 25 150
7* 28 196 23 161 20 140 18 126
Total 100 556 100 503 100 517 100 495

Tangibility (E1 to E4) Total Mean


E1. They should have up-to-date equipment. 556 556/100 = 5.56
E2. Their physical facilities should be visually appealing. 503 503/100 = 5.03
E3. Their employees should be well dressed and appear neat 517 517/100 = 5.17

E4. The appearance of the physical facilities of these firms 495 495/100 = 4.95
should be in keeping with the type of services provided.

Total 2067 2071/400 = 5.17

Interpretation:

The above table shows that almost every statement or factors of tangibility have equal
importance for respondents because mean for all the statements is almost same as they give equal
importance that banks should have up to date equipment and appealing physical facility and
stress on well dress employees also physical facilities of the services provided. So overall mean
for tangibility factor is 5..17 that shows respondents are moving toward strongly agree point with
all these statements so all these factors should be taken care of. But the most important statement
on which they strongly agree that bank should have upto date equipment.

Reliability factors (From E5-E9): Total of Ranks

Ranks E5 Total E6 Total E7 Total E8 Total E9 Total


1* 0 0 0 0 0 0 0 0 2 2
2* 1 2 5 10 3 6 5 10 3 6
3* 4 12 4 12 9 27 5 15 4 12
4* 19 76 20 80 22 88 18 72 13 52
5* 25 125 24 120 24 120 23 115 33 165
6* 26 156 26 156 24 144 24 144 22 132
7* 25 175 21 147 18 126 25 175 23 161
Total 100 546 100 525 100 511 100 531 100 530

Reliability (E5 to E9) Total Mean


E5. When these firms promise to do something by a 546 546/100 = 5.46
certain time, they should do so.
E6. When customers have problems, these firms 525 525/100 = 5.25
should be sympathetic and reassuring.
E7. These firms should be dependable. 511 511/100 = 5.11
E8. They should provide their services at the time 531 530/100 = 5.39
they promise to do so.
E9. They should keep their records accurately. 530 530/100 = 5.30
Total 2651 2643/500 = 5.28

Interpretation:

The above data shows that overall respondents put stress almost on each factor equally of
reliability. They are keener that firm should do fulfill their promises on time as this is most
important factor of reliability and firm should reassure while solving their problems. They also
put stress on accurate records so that they should get proper information. Overall each and every
statement of reliability given above should be given special care to enhance their performance.
The overall mean of all the reliability factor comes out to be 5.3 which shows that respondents
are strongly agree on all the statement of reliability and most important statement is that bank
should provide services on time.
Responsiveness factors (From E10-E13): Total of Ranks

Ranks E10 Total E11 Total E12 Total E13 Total


1* 13 13 13 13 18 18 12 12
2* 31 62 27 54 30 60 27 54
3* 23 69 17 51 22 66 20 60
4* 18 72 25 100 13 52 17 68
5* 11 55 13 65 14 70 16 80
6* 4 24 4 24 3 18 4 24
7* 0 0 1 7 0 0 4 28
Total 100 295 100 314 100 284 100 326

Responsiveness (items E10 to E13) Total Mean


E10. They shouldn't be expected to tell customers exactly 295 295/100 = 2.95
when services will he performed.
E11. It is not realistic for customers to expect prompt 314 314/100 = 3.14
service from employees of these firms.
E12. The employees don’t always have to be willing to 284 284/100 = 2.84
help customers.
E13. It is okay if they are too busy to respond customer 326 326/100 = 3.26
requests promptly.
Total 1219 1219/400 = 3.04

Interpretation:

The above data shows that customers have given ranks on the lower side of scale. This
means their weight is more on the strongly disagree point. Specially if the employees are not
willing to help customers, they are also strongly disagree on this statement and other statement
like whether they should not expect from the bank about when the services will be performed.
The overall mean of responsiveness factor comes out to be 3.04 which shows most of the
respondents are not agreed with the above statements and out of these statements most important
statement for them on strongly disagree point is that employees are not willing to help customers.
Assurance factors (From E14-E17): Total of Ranks

Ranks E14 Total E15 Total E16 Total E17 Total


1* 0 0 0 0 0 0 1 1
2* 4 8 0 0 0 0 1 2
3* 8 24 1 3 0 0 1 3
4* 18 72 15 60 4 16 6 24
5* 32 160 26 130 23 115 27 135
6* 21 126 30 180 35 210 32 192
7* 17 119 28 196 38 266 32 224
Total 100 509 100 569 100 607 100 581

Assurance ( E14 to E17) Total Mean


E14. Customers should be able to trust employees of 509 509/100 = 5.09
these firms.

E15. Customers should be able to feel safe in their 569 569/100 = 5.69
transactions with these firms’ employees.
E16. Their employees should be polite. 607 607/100 = 6.07
E17. Their employees should get adequate support 581 581/100 = 5.81
from these firms to do their jobs well.

Total 2262 2266/400 = 5.66

Interpretation:

The above table shows that respondents are moving towards strongly agree point they
like to have facilities like politeness of the employees, safe transactions and trust of employees.
The overall mean is 5.66which is on the higher side of the scale and most important agreed point
for respondents are that employees should be polite.
Empathy factors (From E18-E22): Total of Ranks

Ranks E18 Total E19 Total E20 Total E21 Total E22 Total
1* 16 16 40 40 35 35 30 30 42 42
2* 29 58 28 56 35 70 38 76 31 62
3* 17 51 13 39 16 48 12 36 15 45
4* 19 76 13 52 12 48 13 52 8 32
5* 13 65 6 30 1 5 5 25 2 10
6* 5 30 0 0 1 6 1 6 2 12
7* 1 7 0 0 0 0 1 7 0 0
Total 100 303 100 217 100 212 100 232 100 203

Empathy (items E18 to E22) Total Mean


E18. These firms should not be expected to give 303 303/100 = 3.03
customers individual attention.
E19. Employees of these firms cannot be expected to 217 217/100 = 2.17
give customers personal attention.
E20. It is unrealistic to expect employees' to know 212 212/100 = 2.12
what the needs of their customers are.
E21. It is unrealistic to expect these firms to have their 232 232/100 = 2.32
customers’ best interest at heart.
E22. They shouldn't be expected to have operating 203 203/100 = 2.03
hours convenient to all their customers.
Total 1166 1167/500 = 2.33

Interpretation:

The above table shows that respondents have given lower ranks to almost every statement
of empathy factor. They are strongly disagree for not giving individual attention, personal
attention and they are also strongly disagree on not knowing that what are customers’ needs.
Overall mean is 2.33 that is the sign of strongly disagree on all the statements by the respondents
and most important statement from strongly disagree point of view for respondent is the
expectation of convenient hours for all the customers.

CHAPTER-5
FINDINGS

 For most of the credit card holders are having credit card from less than two years that
shows the awareness about credit cards is increasing in India.

 Friends, bank employees and electronic media are the main persuading factors for having
the credit card.

 Most of the banks are not making enough efforts for satisfying credit card holders’ needs
and expectation.

 The biggest problem credit card holders are facing is hidden charges and most of them
are not getting the same facility promise at the time of issuing credit cards.

 Interest rate for late payment of outstanding dues varies between 2% to 3%.

 Credit card holders’ want that there should be set standard of services provided and
adequate marketing research should be done to know their expectations.

 Penalties to the bank and proper interaction with the customers by the employees of the
bank are the best way to fill up the gaps between actual and standard services provided.

 Customers need that banks should have proper upto date equipments and they should
provide services on time and all factors of reliability are important for them.
 There is still lot of space for improvement because a lot of customers are not satisfied
with the services banks provide them.
SUGGESTIONS

1. Stop using the credit card until the balance is paid in full. It is a loan that must be repaid.

2. Don't throw away your receipts until you compare them to your statement. Review your
monthly statement for accuracy.

3. Use credit card to withdraw cash only in emergencies. You have to pay cash advance fee at
the rate of 2 to 2.5% besides the regular interest rate of 3%. 

4. Number of credit card in the name of an individual should be limited.

5. Conditions for eligibility should be relaxed. and improvement in wide acceptability should
be their.

6. If you are withdrawing money using credit card from some other bank's ATM, then the
cash advance fee will be much more than usual. With this, your free credit period also ends
and interest meter starts from the day one.

7. Don't ignore a credit card bill. Pay on time without any delay. Sometimes late fees are as
high as 30-40% of the outstanding amount. You become a defaulter if you don't pay
consecutively twice. The company can block your further transactions.

8. Sometimes customers pay the minimum payment and opt for credit revolving facility. You
are a loser in that case. You lose on the 50-day credit period. If you don't pay on time,
whatever you buy next time on the credit card, interest will be charged on the purchases
from day one.
CONCLUSION

As there is a huge potential in Indian credit card industry so there is a need to create
awareness among Indian public about credit cards. Though consumer base for the credit cards in
India is continuously increasing but most of them are still not satisfied with the services provided
to them. The major reasons for that high interest rates and second lot of hidden charges Interest
rates are very high in India as compared to rest of the world which should be cut down to some
extent. Credit card issuers have not been able to know the expectations of the customers. Apart
from this credit card holders are not getting the same benefits and facilities as shown to them at
the time of issuing credit card to them means there is difference between standard and actual
services given. So there is a need for improvement to solve these problems. For this purpose,
adequate research, defining standards for services and proper interaction with customers is the
best way. Customers can be more satisfied by not charging any hidden charges and to solve this
problem there is a need that government should build some regulation and impose some penalties
to the banks in these cases. There should also be protection against misuse of credit cards. The
credit cards issuers should make enough efforts to satisfy needs and expectations of credit cards.
In India, large number banks are providing the services of credit cards and a lot of customers are
attracting towards but the need of time is that there should not be any gap between standard
services and services actually given to satisfy the customers.
BIBLIOGRAPHY

Daniel Levine (1994)


Levine D. (Aug, 1994) Issue of India’s business opportunities

Mehta V (1998)
http://www.indiainfoline.com/pefi/crca/glos.html

Vijayshankar N (1998)
www.naavi.com/creditcards

Credit card & management consultancy (CCMC, 2000)


www.capitalmarket.com/personalfinance/cc

(Visa International, 2003) Average Indian cardholder uses

http://www.foolonahill.com/adhsbc.html

(HSBC, 2003) 

http://www.foolonahill.com/adhsbc.html

(Oikos, 2004)

http://www.blackwell-synergy.com/doi/abs/10.1111/j.00301299.2004.13159.x?
cookieSet=1&journalCode=oik

(J Y Umranikar .2006).

http://infotech.indiatimes.com/Enterprise/Security/
Online_credit_card_fraud_A_growing_reality_/articleshow/2076513.cms

(Sarbajeet K. Sen.2006)

http://www.blonnet.com/2006/01/27/stories/2006012702030600.htm

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