Opinion of consumers towards credit card usage

A Study in Chandigarh

Submitted to: Dr.Tejinder Pal Singh

Submitted by: Amit Pandey MBA IB

Attitude of consumers towards credit card usage

1. INTRODUCTION
1.1 History
As far back as the late 1800s, consumers and merchants exchanged goods through the concept of credit, using credit coins and charge plates as currency. It wasn't until about half a century ago that plastic payments as we know them today became a way of life. 1.1a Early beginnings In the early 1900s (Ben Woolsey, 2011), oil companies and department stories issued their own proprietary cards, according to Stan Sienkiewicz, in a paper for the Philadelphia Federal Reserve entitled "Credit Cards and Payment Efficiency." Such cards were accepted only at the business that issued the card and in limited locations. While modern credit cards are mainly used for convenience, these predecessor cards were developed as a means of creating customer loyalty and improving customer service, Sienkiewicz says. According to Ben Woolsey, the first bank card, named "Charg-It," was introduced in 1946 by John Biggins, a banker in Brooklyn, according to MasterCard. When a customer used it for a purchase, the bill was forwarded to Biggins' bank. The bank reimbursed the merchant and obtained payment from the customer. Purchases could only be made locally, and Charg-It cardholders had to have an account at Biggins' bank. In 1951, the first bank credit card appeared in New York's Franklin National Bank for loan customers. It also could be used only by the bank's account holders (Ben Woolsey, 2011). The Diners Club Card was the next step in credit cards. According to a representative from Diners Club, the story began in 1949 when a man named Frank McNamara had a business dinner in New York's Major's Cabin Grill. When the bill arrived, Frank realized he'd forgotten his wallet. He managed to find his way out of the pickle, but he decided there should be an alternative to cash. McNamara and his partner, Ralph Schneider, returned to Major's Cabin Grill in February of 1950 and paid the bill with a small, cardboard card. Coined the Diners Club Card and used mainly for travel and entertainment purposes, it claims the title of the first credit card in widespread use (Ben Woolsey, 2011). 1.1b Credit card processing evolves As credit card processing became more complicated, outside service companies began to sell processing services to Visa and MasterCard association members. This reduced the cost of programs for banks to issue cards, pay merchants and settle accounts with cardholders, thus allowing greater expansion of the payments industry. Visa and MasterCard developed rules and standardized procedures for handling the bank card paper flow in order to reduce fraud and misuse of cards. The two associations also created international processing systems to handle the exchange of money and information and established an arbitration procedure to settle disputes between members.

University Business School, Panjab University

Page | 2

Attitude of consumers towards credit card usage

1.2 Consumer Attitude

The study of consumer attitude focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. According to Solomon (1996) (M.A Abdallat; Hesham El Sayed El - Emam, March 2008), consumer behaviour is a study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires. Standard surveys for customer attitude cover nearly every facet of customer attitudes (M.A Abdallat; Hesham El Sayed El - Emam, March 2008), including:

Overall satisfaction Product-level satisfaction Importance vs. satisfaction Timeliness of delivery Customer service process satisfaction Returns and exchange process satisfaction Interest in new potential products and services

1.3 Penetration of credit cards

India has the lowest pay later penetration rate in Asia Pacific, at just 0.02 pay later cards per person compared to the regional average of approximately 1.25 (Datamonitor ,Feb 2012) . The country also experienced sluggish growth of 1.5% between 2005-10 , while other countries in the region witnessed an average rate of 10.0% over the same period. China, in comparison, recorded an astonishing 340.0% growth (Datamonitor ,Feb 2012). Despite these negative market indicators, there is evidence to suggest that India's affluent consumer segment and its use of premium cards represent an untapped potential in this fast-growing economy. Credit card penetration among affluent Indian consumers is lagging behind the global average, this could be attractive to credit card issuers. This is because the market absorption potential is huge, given that not enough people who could afford and would be interested in a credit card hold one at the moment. However, the penetration rate of premium credit cards among affluent card holders is 85.6% (Datamonitor ,Feb 2012). This is the second highest penetration rate after Singapore among the 21 countries analyzed in Datamonitor's 2011 Financial Services Consumer Insight (FSCI) Survey, indicating that an affluent consumer deciding to acquire a credit card would most likely choose a premium branded card rather than a regular card. Interestingly, India also has a very high penetration of premium cards among regular non-affluent card holders at nearly 60% (Datamonitor ,Feb 2012), which is almost double the global average.

University Business School, Panjab University

Page | 3

Attitude of consumers towards credit card usage

1.4 Latest trends in market

Credit cards have become a ubiquitous financial product held by households in all economic strata in most countries. Credit card market in India is estimated at 14-20 million (Jinkook; Kwon; KyoungNan; 2005) according to a recent survey conducted by global management consultant McKinsey. ICICI Bank asserts an average of Rs. 32,000 as annual spends per card (comparable to that of more advanced markets like Taiwan and Malaysia). ICICI Bank, which has more promotions in the pipeline, now claims to add up to 100,000 new customers every month while Citibank adds 80,000-90,000 and State Bank of India adds 70,000-75,000 cards per month (Jinkook; Kwon; Kyoung-Nan; 2005). Credit market like automotive loans, housing loans, personal loans, education loans are all expanding. Consumerism or consumerist philosophy is buy now and pay later .It is under this scenario the linkages between the retail segment and the credit market seems important. The economy is growing at an average rate of 6% every year, for the last 12 years (Jinkook; Kwon; KyoungNan; 2005). The employment opportunities are on the rise leading to increasing disposable income. According to the National Council of Applied Economic Research, the Indian middle class has increased on the back of the economic boom, growing by some 10 to 12 percent per year, and estimates its size to reach 300 million people. As an outcome of consumerism, the money that could have spent on social capital like education, nutrition is spent on dubious items that give no social return. There is an endless quest to purchase newer products and the life is focused on the imaginary world of the unattainable. As a consequence of spending to exhibit wealth, now major life events like weddings and births are transformed into consumer events. The increasing buying frequency is leading families to a path of huge debts traps. The point of concern here, are defaults accumulating as an outcome of a phenomenon called consumerism.

1.5 Role of carrying cash

Credit cards allow consumers to borrow within their credit limit without transaction costs, which includes all the time and effort involved with obtaining a loan from a financial institution. This convenience attracts many consumers to pay high interest on outstanding credit card balances, rather than taking the time to apply for a loan with a lower interest rate. As a result, credit cards account for a substantial and growing share of consumers debt The popularity of credit cards as a payment medium has been attributed to the convenience of not carrying cash and checks, the limited liability of lost/stolen cards, and additional enhancements, such as dispute resolution services and perks (i.e., frequent-use awards programs).

University Business School, Panjab University

Page | 4

Attitude of consumers towards credit card usage

1.6 Future of Credit Cards in India

Marketers and market-makers in the financial services industry have for years salivated at the great Indian opportunity for growing the credit cards market (Anil Ramachandran, Feb 2012). And it indeed has been a great opportunity and will continue to be so in the coming years. A growing middle class, rising aspirations and an increased propensity to spend by an inherently young population creates a heady mix of untapped market opportunity. The credit cards industry is today coming out of what have truly been testing times. The financial crisis of 2008-2010 remains fresh in our minds (Anil Ramachandran, Feb 2012). With the tide seeming to have turned finally and with the indicators across almost all key areas looking positive, if not robust, there is fresh optimism in the industry and an almost unanimous positive view that the industry is today placed well for sustained growth. Before we look forward to the future, we have to understand the past. As they say, hindsight is always 2020. The question remains: what went wrong? The answer lies not just in one reason but a multitude of factors which both issuers and consumers should introspect upon. Credit is, at the end of the day, a powerful tool and a truly flexible option to meet immediate expenses when cash is not at hand. The credit card, therefore, adroitly addresses medical emergencies, facilitates holidays and travel, or fulfils the aspiration of purchasing that new television or washing machine, with the knowledge that the payment may be done in parts over a period of time, or when that bonus cheque comes in. What will be key is, how both, consumers and card issuers, will treat this extremely powerful tool? While the global financial crises is ascribed as one reason for the fallout in unsecured lending in India, the impact was also compounded by the misplaced market growth ambitions of some credit card issuers who were immersed in the mantras of market share and market expansion. With access to easy credit card facilities from over-exuberant and ambitious card issuers, customers somehow seemed to have lost the key message: that credit is an important tool, to be used with responsibility and prudence. The future, however, is bright. Several factors strongly indicate that credit card businesses will grow robustly in the coming years. The first is the emergence of strong credit rating agencies in India. Card issuers now have access to complete information of the applicant prior to issuing a card. The key will be in seeing how the issuers use this information in taking prudent decisions. All information used in determining the creditworthiness of an applicant ultimately hinges on determining the ability and intention of the applicant to pay back the amount spent or borrowed. The expertise and sophistication of issuers in making such judgments, leveraging bureau data and recalibrating their own policies from time to time, will determine how the industry fares in future. Customers, too, have now started understanding the importance of using credit wisely (Anil Ramachandran, Feb 2012). With regulators and banks educating customers about the benefit of a good credit history, it is envisaged that better sense will prevail. Both issuers and customers now have the benefit of hindsight! Card issuers will have to clearly strategize as to which segments they want to operate in. Most card issuers have moved completely away from the mass market segments as the risk-reward equations have just not borne out. Their predominant focus has been a move to mass affluent segments and high net worth individuals. These segments are traditionally more robust and easier to evaluate. Credit underwriting norms have been
University Business School, Panjab University Page | 5

Attitude of consumers towards credit card usage

tightened across the board. Card issuers also have to become more judicious about growing the market purely for that sake, as inactive cards can savage a portfolio. It is no wonder that of the 28 million cards which were in the marketplace in 2008, only around 20 million exist today (Anil Ramachandran, Feb 2012). While there has been a huge de-growth in plastics, there has been no slowing down the overall industry spends which have been growing robustly. All of which goes to show the wastage by the industry in issuing cards to customers who saw no value in the product. At the end of the day, the consumer is king and will patronize a product or a brand which adds enhanced value to his / her life. Free cards, in many ways, were perceived to be free of value and benefits, and, as a corollary, have been freed of customer patronage! Card issuers will now have to work extra hard in delivering enhanced value to consumers. Creating and managing sophisticated products, constantly enhancing value and innovating on service delivery, will be key drivers of future growth. At this stage, the opportunity looks large with a large untapped market potential. Only about 3% of the total personal consumption expenditure in India is done on plastic cards (Anil Ramachandran, Feb 2012). With the government keen on moving more payments on to electronic media, the spends on plastic cards will continue to grow significantly. The sustained growth in organized retail, the booming e- commerce space, the aspirations of one of the youngest populations in the world and the strong, globally savvy emerging middle class all foretell that it can only be a boom time for the credit cards business in the coming years. The key will be to take measured steps based on prudence and good judgment. Let the good times begin!

University Business School, Panjab University

Page | 6

Attitude of consumers towards credit card usage

2. Review of Literature

2.1 Research Trends

(Phylis M. Mansfeild ,Erie, Mary Beth Pinto - Journal of Management and Marketing Research) Seven research trends and opportunities surfaced from this investigation. First, there has been a shift in research emphasis over time, with earlier studies focusing on demographics and observable characteristics like the number of cards held; whereas, later studies emphasize a broader range of factors such as attitudes, external impacts (social, family, and environmental factors), and behavior. We found no longitudinal studies in the total number of studies reviewed. While studying credit usage trends throughout lifetimes or generations would certainly help develop a richer understanding of the determinants of credit card attitude or behavior, it is not surprising no longitudinal data was found because of the difficulties in obtaining this type of data. A second trend was the overwhelming use of college students as the sample population in a predominate number of studies. This sampling choice is not surprising due to the great amount of attention in the popular press on the credit card usage and spending patterns of American college students. In addition, universities and parents of college-aged students have also turned to public policymakers and academic researchers in an effort to reduce problems associated with college student credit debt. As such, in some studies the selection of college students is appropriate due to the context and purpose of the research, such as comparisons of oncampus versus off-campus solicitation , and risky behavior of young adults. In other studies, college students are most likely chosen as a convenience sample and pose a limitation on the generalisability of the findings. Future researcher should consider broadening the sampling methods and include representations from cross sections of various generational groups. Third, public opinion and legislation regarding credit card attainment has changed dramatically since the early 1980s. Due to the public policy concern regarding college students usage and access to credit cards on campus, a great deal of attention has focused on the credit card solicitation policies in higher education; specifically, whether or not protecting students from on-campus solicitation impacted the students card ownership and outstanding balance. The recent enactment of the CARD act in 2009 brings with it numerous research opportunities. Among its significant provisions, the Card act puts strict restrictions on marketing and issuing credit cards to young people under the age of 21. Offering free items such as water bottles and Frisbees, to induce college students to sign up for credit cards is banned if conducted within 1,000 feet of campus . Therefore, future research needs to understand the general perception of this legislation and how it impacts undergraduate students prior, during, and after the enactment of the act. Fourth, several studies have noted that credit cards are unique in the market as they may, at times, serve to stimulate spending behavior. Another trend uncovered methodological concerns. The initial literature search retrieved numerous articles relating to credit but not specifically focused on credit cards.
University Business School, Panjab University Page | 7

Attitude of consumers towards credit card usage

Many of the studies mixed the concepts or terminology when referring to credit in general, credit cards, money, and financial literacy. For example,attitude towards money is not equal to attitude toward credit, and likewise, attitude toward credit credit cards. Since we wanted to isolate the specific findings related to credit cards, several studies were eliminated from this review. Future research on consumer credit cards needs to give serious consideration to methodological issues that will impact the validity and reliability of the findings. The sixth trend applies to the increasing interest in establishing a connection between credit card knowledge and credit card use behavior. Future research should address what types of knowledge are most influential, how the knowledge is obtained, and the difficulty in changing usage behavior.

2.2 Recent Trends in Credit Card Usage

According to a report published in The Economic Times, The Times of India Sep 2010, Almost everyone has been a victim of the aggressive cold calls in which banks push their credit cards. With the Indian economy expanding rapidly and the middle class burgeoning, several analysts believed there was no end to the use of plastic money in India. In fact, they had predicted it would only grow. However, numbers released by the Reserve Bank of India have belied any such projections far from growing at a blistering pace, credit card usage amongst India's consumers is actually falling. Use of plastic money, instead of cash, is seen by economists as a sign of confidence of the ordinary consumer in the economy. Not only is the plastic money in circulation in India falling, it is also underutilized. On an average, the annual number of transactions per credit cards stands at 11; it is only one in case of debit cards. "Debit cards have had a slow start and their growth only took off in the last three years. On the other hand, credit cards grew faster since inception, with the growth turning negative in the latest year," noted IIT-Bombay faculty Ashish Das, who authored a paper 'Cashless payment system in India A roadmap'. Data thrown up by the most recent RBI bulletin to which TOI has access shows that the Indian consumer remains cautious when it comes to making his purchases through the swipe of a card. Backed by strong marketing, the number of credit cards issued by various banks showed an upward trend from 2006 to 2008 (ET Sep 2010). In fact their number grew by more than a crore in the three financial years from 2005 to 2008. However, thereafter, figures began to dip perhaps due to the global economic slowdown and the Indian consumer's conservative nature. For the first time in many years, the number of transactions where credit cards were used also fell in the last financial year of 2009-10. While 25 crore purchases saw the use of plastic money in 2008-09 (ET Sep 2010), the figures fell by more than two crore transactions in the financial year ending March 2010. "We have seen several customers surrender their credit cards. Increasingly, debit cards are gaining popularity. While the total business transacted by credit cards fell by 10% across India, the total amount of
University Business School, Panjab University Page | 8

Attitude of consumers towards credit card usage

transaction with debit cards increased from Rs 18,547 crore to Rs 26,417 crore," said a senior manager from HDFC bank. (ET) In the recent past, credit cards have found acceptance with the Indian consumer after banks introduced several security features and even simple purchases could be made using plastic money. However, the falling numbers in both the number of cards issued and the transactions carried out with them is a source of worry for most major banks, said a senior manager from a public sector bank. Increasing reliance on cashless transactions is seen as sign of a modern economy where there is a strong synergy between the ordinary consumers and its financial institutions.

In another report published in The Economic Times, The Times of India Aug 2012, After going through a dark phase of 2008-09, the credit card space in the country seems to be set for brighter days ahead. Data released by credit information company CIBIL indicates that the segment has seen a growth in live, or active, cards, new disbursals and more importantly, usage of credit cards in the last few quarters. "There is a 30% increase in average balances per borrower in the last one year. This implies that credit card holders are utilising their cards for higher amounts, as compared to the previous year," notes the study. In case of multinational banks, the average balance, or usage, per borrower has gone up from Rs 61,758 in 2011 to Rs 82,455 in 2012 (ET Aug 2012). During the same period, private bank customers' usage grew from Rs 39,368 to Rs 47,370. Similarly, new credit card disbursals in 2012 have shot up to 0.58 million during the first three months of this calendar year (ET Aug 2012), from just over 0.30 million in the preceding quarter (October-December 2011). In addition, the number of active credit cards stands at 18 million in Q2 2012 - highest in the last three years.

2.3 Attitude of Consumers towards Credit Card Usage

(Afshan Ahmed, Ayesha Amanullah - Journal of Comparative International Management 2009, Vol. 12, No.1, 47-57) The behavior and the attitude of the consumer towards the use and acceptability of credit cards differ for psychographic . Xiao, Noring and Anderson (1995) devised a 38-item scale to measure affectiveness, cognitive and behavioral attitudes towards credit cards. Affective attitudes involve emotional feelings (e.g. My credit card makes me feel happy); cognitive attitudes involve thoughts (e.g. Heavy use of credit cards results in heavy debt); while behavioral attitudes involve actions (e.g. I use my credit card frequently). Many consumers value uncollateralized credit lines for making purchases when they are illiquid (i.e. before their incomes arrive), even at relatively high interest rates. Because of limited alternatives to short-term uncollateralized credit, the demand for such credit may be fairly in-elastic with respect to price.

University Business School, Panjab University

Page | 9

Attitude of consumers towards credit card usage

Ausubel (1991) suggests that consumers may not even consider the interest rate when making purchases because they do not intend to borrow for an extended period when they make purchases. However, they may change their minds when the bill arrives. Stavins (1996) argues that consumers are somewhat sensitive not only to changes in the interest rate but also to the value of other credit-card enhancements such as frequent-use awards, expedited dispute resolution, extended warranties, and automobile rental insurance. However, she agrees with Ausubel (1991), Calem and Mester (1995) that lowering interest rates may attract less creditworthy consumers, therefore dissuading some credit-card issuers from lowering their interest rates. According to Jeans S. Bowers (1979) longitudinal study, low income users of credit cards tend to use the cards for the installment feature rather than for service features such as convenience, safety, or identification. It has been suggested that the installment feature of credit is needed by the low income consumer to permit purchases such as automobiles, furnishings, and other consumer durables. Demographics also seem to play a vital role in making a choice and the use of credit cards as a convenience user or revolver. Age, income level has been studied previously and suggest some indication for correlation between demographic and use of credit card. According to the study conducted by Jean Kinsey (1981) the probability of having credit cards and the number held was correlated highly with age and occupation. However these two characteristics were less important than the place of residence, use of checking and savings accounts, and attitude towards credit. In India, the banking reforms have made the market more competitive and attractive. There is a need to study the customer and how do they behave towards use of plastic money, specially through the use of credit cards. As compared to the rest of the economies, credit card has not been a driving source for the Indian economy. The development of financial services marketing has been slow and for a long time the industry was primarily product led. According to Raj Singh and Ahmed, Amanullah and Hamid ,Evertt (1996), banks focus on geographical, socio-economical and psychological characters to segment the market for financial services, although this is not the right predictor of the buying behavior. For this purpose, a better approach is to focus on the customers attitudes and behaviors and segment them by benefit segmentation. Knowing consumers level of interest in alternative benefits is important in shaping, and perhaps changing a companys product portfolio. The majority of studies regarding a consumers attitude toward credit cards have been conducted in the last twelve years, making it a relatively recent phenomenon. Several additional articles were found that measured financial literacy and overall credit attitude but included only one or two items about credit card attitude; these articles were eliminated from the present study due to the researchers inability to discriminate the specific findings on credit card attitude.

University Business School, Panjab University

Page | 10

Attitude of consumers towards credit card usage

3. NEED OF STUDY
The need of this study is to investigate consumer attitudes and intentions towards credit card ownership and usage. In particular, to study the influence of Credit Cards on Consumer Spending, Security concerns in Credit Card usage, knowledge structures, beliefs, likes and dislikes and attitudes of credit card owners in the possession and use of credit cards. To find the association of materialism on compulsive buying. To find the association of introversion, emotional stability, agreeableness and conscientiousness on compulsive buying. To find the association (affect) of credit card spending style on compulsive buying. To find the association (affect) of credit card financing behaviour on compulsive buying. To find the credit default probability of respondents. To find the association of age on personality variables. To find the association of demographics like age, Income on compulsive buying and materialism. To find the association of demographics like age and income on credit card usuage pattern.

4. OBJECTIVES
To study the influence of credit cards on consumer spending Security concerns in credit card usage.

5. HYPOTHESIS
The following hypotheses have been considered while studying Consumer attitude toward credit card usage: Credit card usage is affected by Age. Credit card usage is affected by Gender. Credit card usage is affected by Literacy level. Credit card usage is affected by Income level.

University Business School, Panjab University

Page | 11

Attitude of consumers towards credit card usage

6. Research Methodology
This study examined how certain factors influence consumer expenditure patterns with respect to usage of credit card. The survey approach was used for this study. First, the research method is discussed after which the data collection and analysis procedures are explained. Justifications for the suitability of the chosen methods are also presented throughout the report.

6.1 Research Design

Research design is summarized in tabular form as given below:

OBJECTIVE

HYPOTHESIS

DEPENDENT AND INDEPENDENT VARIABLE

DATA COLLECTION INSTRUMENT

To study the influence of SECTION credit cards on consumer A spending B D

SECTION C Security concerns in credit card usage.

Credit card usage is affected by Age. Credit card usage is affected by Gender. Credit card usage is affected by Literacy level. Credit card usage is affected by Income level.

Consumer Behavior Age Gender Income Literacy level Occupation

Likert scale

University Business School, Panjab University

Page | 12

Attitude of consumers towards credit card usage

6.1.1 Type of Research

The study undertaken is of Descriptive Research in nature

6.1.2 RESEARCH APPROACH

As per conventions of social sciences data for any kind of research is either collected through qualitative or quantitative method. The study is quantitative in nature and the primary data collected will help in analyzing demographic factors influence consumers spending patterns by means of credit card.

6.2 POPULATION SAMPLE

Our sample would comprise of 100 credit card users of different areas of Chandigarh and Delhi. SAMPLING DESIGN A sample design is a definite plan for obtaining in sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting the items for the sample. The sample frame consists of the population using simple random sampling technique. In this research the sampling unit being the people from different sections of society. No statistical technique was applied for sample size selection. For the survey sample size of 100 was selected.

6.2.1 DATA COLLECTION INSTRUMENT (Questionnaire)

The researcher will collect data by administering a questionnaire. The questionnaire will use structured questions, consisting of 42 questions divided into five sections A, B, C, D and E. Section A consists of ten questions regarding consumer saving behavior, Section B consists of ten questions regarding credit card payment behavior, Section C consists of two questions regarding security concerns related to credit card, Section D consists of fifteen questions regarding attitude of consumer towards credit card and Section E consist of five questions relating to demographic profile of the respondent. Questionnaire is summarized in tabular form as given below: Section A Consumer saving behavior Importance of saving money Saving money on regular basis Revolving credit card debt Online transaction Preference Cash over credit card Age Income Gender Occupation Literacy level
Page | 13

Section B Section C Section D Section E

Credit card payment behavior. Security concerns related to credit card Attitude of consumer towards credit Demographic variables

University Business School, Panjab University

Attitude of consumers towards credit card usage

6.2.2 SOURCE OF DATA

PRIMARY DATA All the primary data about credit card usage and expenditure pattern will be collected through questionnaire filled by our sample. SECONDARY DATA All the secondary information will be collected from mass media example internet, digital libraries, newspaper and magazines but analysis will be purely conducted on primary data of the study.

6.3 Data analysis

The analysis will be done on the basis of the data collected in the form of questionnaire from the sample and would be shown in descriptive form. 6.3.1 STATISTICAL TOOLS FOR DATA ANALYSIS Survey was conducted using Likert based questionnaire ranging from 1 = Strongly Disagree to 5 = Strongly Agree. Further SPSS 17.0 was used for analyzing the data. 1. CORRELATION First of all correlation was applied to test the research hypothesis. The purpose of correlation analysis is to measure and interpret the strength of a linear or nonlinear (e.g., exponential, polynomial, and logistic) relationship between two continuous variables. When conducting correlation analysis, we use the term association to mean linear association. Here in, we focus on the Pearson and Spearman correlation coefficients. Both correlation coefficients take on values between 1 and +1, ranging from being negatively correlated (1) to uncorrelated (0) to positively correlate (+1). The sign of the correlation coefficient (i.e., positive or negative) defines the direction of the relationship. The absolute value indicates the strength of the correlation. We elaborate on two correlation coefficients, linear (e.g., Pearson) and rank (e.g., Spearman), that are commonly used for measuring linear and general relationships between two variables. I. Correlation between Saving behaviour, Debt Behaviour and Consumer attitude towards credit cards:

University Business School, Panjab University

Page | 14

Attitude of consumers towards credit card usage

Correlations AvgSBDB AvgSBDB Pearson Correlation Sig. (2-tailed) N AVGATC Pearson Correlation Sig. (2-tailed) N 100 .477
**

AVGATC 1 .477
**

.000 100 1

.000 100 100

**. Correlation is significant at the 0.01 level (2-tailed).

II.

Correlation between Security concerns and Consumer attitude towards credit cards:
Correlations avgatc avgsc 1 .252
*

avgatc

Pearson Correlation Sig. (2-tailed) N

.012 100 .252

*

100 1

avgsc

Pearson Correlation Sig. (2-tailed) N

.012 100 100

*. Correlation is significant at the 0.05 level (2-tailed).

2. CHI- SQUARED TEST

A chi-squared test, also referred to as chi-square test or test, is any statistical hypothesis test in

which the sampling distribution of the test statistic is a chi-squared distribution when thenull hypothesis is true, or any in which this is asymptotically true, meaning that the sampling distribution (if the null hypothesis is true) can be made to approximate a chi-squared distribution as closely as desired
by making the sample size large enough.

If a sample of size n is taken from a population having a normal distribution, then there is a well-known result (see distribution of the sample variance) which allows a test to be made of whether the variance of the population has a pre-determined value. For example, a manufacturing process might have been in stable condition for a long period, allowing a value for the variance to be determined essentially without error. Suppose that a variant of the process is being tested, giving rise to a small sample of product items whose variation is to be tested. The test statistic T in this instance could be set to be the sum of squares about the sample mean, divided by the nominal value for the variance (i.e. the value to be tested as

University Business School, Panjab University

Page | 15

Attitude of consumers towards credit card usage

holding). Then T has a chi-squared distribution with n 1 degrees of freedom. For example if the sample size is 21, the acceptance region for T for a significance level of 5% is the interval 9.59 to 34.17. I. Chi-Square Tests between Consumer attitude towards credit cards and Age:
Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 46.022
a

df 54 54 1

sided) .772 .746 .713

46.782 .135 100

a. 74 cells (97.4%) have expected count less than 5. The minimum expected count is .01.

II.

Chi-Square Tests between Consumer attitude towards credit cards and Income:
Chi-Square Tests Asymp. Sig. (2Value df
a

sided) 54 54 1 .734 .357 .654

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases a.

47.145

57.192 .200 100

76 cells (100.0%) have expected count less than 5. The minimum expected count is .19.

III.

Chi-Square Tests between Consumer attitude towards credit cards and Occupation:
Chi-Square Tests Asymp. Sig. (2Value df
a

sided) 72 72 1 .141 .096 .461

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases a.

84.945

88.030 .544 100

95 cells (100.0%) have expected count less than 5. The minimum expected count is .15.

University Business School, Panjab University

Page | 16

Attitude of consumers towards credit card usage

IV.

Chi-Square Tests between Consumer attitude towards credit cards and Gender:
Chi-Square Tests Asymp. Sig. (2Value df
a

sided) 18 18 1 .679 .473 .115

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

14.745

17.740 2.478 100

a. 33 cells (86.8%) have expected count less than 5. The minimum expected count is .40.

V.

Chi-Square Tests between Consumer attitude towards credit cards and Education:

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 54.134
a

df 36 36 1

sided) .027 .006 .128

60.738 2.315 100

a. 55 cells (96.5%) have expected count less than 5. The minimum expected count is .24.

ETHICAL CONSIDERATIONS Our samples would be assured that privacy would be our first priority and the information collected regarding and through them would be used solely for the purpose of research thus, after this study it would be buried forever in Davyjones locker.

University Business School, Panjab University

Page | 17

Attitude of consumers towards credit card usage

REFERENCES
creditcards.com (http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php) Datamonitor.com (http://www.datamonitor.com/store/News/indias_credit_card_market_holds_untapped_potential?pro ductid=5861ECB8-961F-48C1-BC5C-D42EC0824C56) Compulsive buying behaviour in Indian Consumers and its impact on credit default- An emerging paradigm. Consumers' Use of Credit Cards: Store Credit Card Usage as an Alternative Payment and Financing Medium By Lee, Jinkook; Kwon, Kyoung-Nan Academic journal article from The Journal of Consumer Affairs, Vol. 36, No. 2 Daily News and Analysis (DNA) Article by Anil Ramachandran Feb 2012 Consumer Behavior Models in Tourism Analysis Study,Muhannad M.A Abdallat, Hesham El Sayed El - Emam ,March 2008 Financial behaviours of consumers in credit counseling Jing Jian Xiao,Benoit Sorhaindo and E. Thomas Garman ; International Journal of Consumer Studies,30, 2, March 2006, pp108121 Personal Credit and Debt By Supriya Singh, Paul Myers, Warren McKeown and Marita Shelly May 2005 2009, Vol. 12, No.1, 47-57 Reference - creditcards.com http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php

Consumers' Use of Credit Cards: Store Credit Card Usage as an Financing Medium

Alternative Payment and

o Reference - Daily News and Analysis http://www.dnaindia.com/money/comment_why-the-credit-card-business-will-grow-robustlynow_1650710 Economic Times -The Times of India Journal of Management and Marketing Research, Phylis M. Mansfield Journal of Comparative International Management 2009, Vol. 12, No.1, 47-57 Compulsive buying behaviour in Indian Consumers and its impact on credit default- An emerging paradigm. Consumers' Use of Credit Cards: Store Credit Card Usage as an Alternative Payment and Financing Medium By Lee, Jinkook; Kwon, Kyoung-Nan Academic journal article from The Journal of Consumer Affairs, Vol. 36, No. 2

University Business School, Panjab University

Page | 18

Attitude of consumers towards credit card usage

Consumer Behavior Models in Tourism Analysis Study,Muhannad M.A Abdallat, Hesham El Sayed El - Emam ,March 2008 Financial behaviours of consumers in credit counseling Jing Jian Xiao,Benoit Sorhaindo and E. Thomas Garman ; International Journal of Consumer Studies,30, 2, March 2006, pp108121 Personal Credit and Debt By Supriya Singh, Paul Myers, Warren McKeown and Marita Shelly May 2005

University Business School, Panjab University

Page | 19

Attitude of consumers towards credit card usage

THANK YOU

University Business School, Panjab University

Page | 20