CONSUMER BEHAVIOR ON CREDIT CARDS

Consumer
Behavior
on Credit
Cards

Vikas Kumar 2016c47

Shall I use credit cards?
Raj Kolawala 2016c31
This Research Project is regarding the consumer behavior in India towards credit cards. We
will have a questionnaire that will answer:-
1. How many people on an average use credit cards?
2. Does occupation has an impact on credit card behavior of consumers?
3. Why dont people use credit cards?
4. Are Indian consumers skeptical about the use of credit cards?
5. Which Bank card they use?
6. How often they use the credit card?
7. Does cashback points play any role in their buying behavior?
8. Do they default on their payment?
9. Are they satisfied with their Service provider?
And many more answers we will get on Credit cards.
Income level of people is rising and people started using credit cards mainly for their
online shopping and travel tickets booking. But still a large chunk of population is
skeptical about its use maybe because of ignorance or because of bad word of mouth
from their friends and relatives. With this survey we will try to understand more of Indian
consumer behavior, some insights into their buying patterns.
Objectives
I personally hold 4 credit cards and use them at various occasions because of the
convenience and offers that banks offer. I never defaulted on any payment and thus
strongly believe that with good promotions and advertisement banks can make Indian
population use credit cards.
we will try to understand the satisfaction level of people using credit cards.
CONSUMER BEHAVIOR ON CREDIT CARDS 2

What are the things that a consumer needs to look for in a credit card before
deciding to purchase it?
For our research we will use below data:-
Primary data:
1) The primary data are those which are collected fresh and for the first time, and thus
happen to be original in character.
2) Here primary data collection through survey questionnaire with the different
respondents.

INTRODUCTION
The credit card had its start in a humiliating episode that occurred in the mid 1950's in
America. The story goes that Mr. McNamara; a New York specialist took his companions out
to supper. Toward the finish of supper he found that he had overlooked his wallet at home,
the proprietor was sufficiently benevolent to permit him a later settlement of bill. As
McNamara ventured out of the eatery he had the brainwave for the presentation of Visas -
arrangement of benefiting moment credit after affirming the personality of cardholder.
Accordingly was conceived the Coffee shops Club Cards, the pioneer of today's multibillion-
dollar plastic cash business.

Burger joints Club embraced a promising methodology by selecting different inns and
eateries to go about as part foundations for tolerating the cards. Not exclusively did these
foundations pay a commission on part's buys however the individuals likewise paid a yearly
membership charge. Burger joints Club considered its individuals for credit value and
ensured installment to taking part foundation. Subsequently was conceived the main
'Travel and Amusement Card'. It was trailed by American Express, which is currently an
overwhelming power in the Travel and Stimulation cards industry, and by 1959 via
Unlimited authority, after numerous changes is presently a piece of Citi Bank Domain
Together With Cafes Club. In the present time American Express leads the travel and
excitement (T&E) card industry.

The following awesome jump forward originated from Bank of America, which in different
banks. Such cardholders could utilize their card 1966 offered to permit its effective blue,
white and gold Bank America card to at any tolerant vendor foundations around the world.
Later in 1977 all the national and worldwide Bank America licenses were pulled together
under the single name of Visa.

Not to be beaten, an opponent gathering of American Banks met up in 1966 under the
name of Interbank, later renamed Ace Charge later still Ace Card. As far back as Ace Card
and Visa and their subsidiaries have cut the world Visa advertise.
CONSUMER BEHAVIOR ON CREDIT CARDS 3

In the 1980s charge card idea was propelled in India through the Burger joints Club card,
and soon, inside two or three months both Visa and Ace card went into the Indian market.

INDIAN CREDIT CARD SCENARIO

The credit card industry in India has enrolled an empowering development as of late,
however the utilization example of credit cards remains a state of concern, those in the
business say. Seven years back, India had a base of around five lakh credit cards. There has
been a seven-overlap increment, with the quantity of cardholders touching more than 38
lakh. These figures point towards the way that the credit card industry in India is
developing at an energetic yearly rate of 30 for each penny and is relied upon to develop at
a comparative rate in the coming years. This invigorates the view that moderate acquiring
thoughts are offering path to the enormous in-thing. However, the ease of use raises
questions.

As per a study by the Credit Card and Administration Consultancy (CCMC), 71 for every
penny of first time credit card candidates in the nation have communicated the
requirement for exhortation on fitting card determination in spite of the plenty of cards
accessible in the market. Through this overview it has come to understand a long felt need
of potential and existing cardholders for counsel on appropriate choice of a credit cards.
The entire thought behind the presentation of the credit cards was to expand the buying
limit of the cardholder. In view of this, the remote banks propelled a credit card raid on the
Indian client.
TYPES OF CARDS
MasterCard MasterCard is a product of MasterCard International and along with
VISA are distributed by financial institutions around the world. Cardholders borrow
money against a line of credit and pay it back with interest if the balance is carried
over from month to month. 23,000 financial institutions in 220 countries and
territories issue its products. In 1998, it had almost 700 million cards in circulation,
whose users spent $650 billion in more than 16.2 million locations.
VISA Card VISA cards are financial institutions around the world distribute a
product of VISA USA and along with MasterCard. A VISA cardholder borrows money
against a credit line and repays the money with interest if the balance is carried
over from month to month in a revolving line of credit. Nearly 600 million cards
carry one of the VISA brands and more than 14 million locations accept VISA
cards.
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.
CONSUMER BEHAVIOR ON CREDIT CARDS 4

When you use a Credit card to pay for anything, you get an interest-free
period of 45 days. Billing cycles are structured in such a way that you definitely
get at least 30 days out of these as clean credit time, which is especially beneficial
to salaried people. Better still, you can opt to pay your bill in full when you receive
it or you can carry forward your payments by paying as little as 5% of the total
amount on or before the due date, every month. You can spend now , pay later.
-> Convenience:
With a credit card on you, you don't need to run the risk of carrying a lot of cash.
-> Cash Advance:
Another advantage of a Credit card is that you can use it as an ATM card too! But
remember, there's a fee to it. It typically starts with a flat fee going up to a
percentage-based fee on the amount of the withdrawal.

ANALYSIS
Research Methodology
Nature of Research Descriptive
Research Approach Survey
Method of Research Questionnaire
Research Instrument Random Sampling
Sample Size 50

68% of our sample is students. 26 %

constitute employees.

74% people said that they dont use

credit cards whereas only 26% of
underlying sample was usng credit
cards. So there is a gap that we can fill.
CONSUMER BEHAVIOR ON CREDIT CARDS 5

Afte this we segmented our survey in 2 parts, one is for the people who use credit cards,
and other one is for people who dont use credit cards. So first we will understand the
behavior of people who use credit cards.
CONSUMER BEHAVIOR ON CREDIT CARDS 6

Credit Card: Yes

Around 70% people, who use credit cards are having only 1 card.

69%
people
feel they
buy
advance,
pay later
is the
most
important benefit of having credit cards. A small population also
thinks that it gives them a feel of superiority when they possess
credit cards.
CONSUMER BEHAVIOR ON CREDIT CARDS 7

46% people use credit cards very frequently. Whereas 23% of smaple use it only once a
month.

More than 60% people say that cashpoint

points is the motivating factor for them
to use credit cards.

People are very cautious regarding the billing date. Thats why more than 90% of our sample never
defaulted on the payments.
CONSUMER BEHAVIOR ON CREDIT CARDS 8

People seem satisfied with their service providers. That is the reason no one in our sample gave
poor ratings to their card providers.

75% sample is happy to recommend credit cards to others as they know the benefits and comfort of
having a credit card.

No cards
Now we will understand the behavior of 2 nd segment of our smaple, that does not use credit cards.

27% people said that they have

misconception about the credit cards
that credit cards result in higher
payments.
Around 20% people admitted that
because of lack of knowledge, they dont
use credit cards.
And 10% people said that because
of ineligibility they cant use credit
cards.

54% people who dont use

credit cards are interested
in trying a credit card. So
here is an opportunity for
card providers to tap this
CONSUMER BEHAVIOR ON CREDIT CARDS 9

market through their

awareness programs and
make this population use
credit cards.

CONCLUSION & RECOMMENDATIONS

Credit card awareness is low

Company should do advertisement through various channels

Acceptability of credit cards is limited

There are myths regarding credit cards

satisfaction survey - satisfaction level

price should be kept low

Microsoft Excel
Worksheet