impact of credit card usage on consumers expenditure pattern

Impact of Credit Card usage on Consumers Expenditure Pattern

__________________

A thesisPresented tothe faculty of

Management SciencesBahria Institute of Management & Computer Sciences, Karachi

____________________

In Partial Fulfillmentof the Requirements for the

Degree Master in Business Administration

____________________

by

ALI AZIZ AHMEDDECEMBER, 2010

BAHRIA UNIVERSITY

INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, KARACHI

RECOMMENDATION FOR ORAL EXAMINATION

This Project/thesis hereto attached, entitled,“__________________________”,prepared and submitted by ______________, in partial fulfillment of the requirements for the degree MASTER IN BUSINESS ADMINSTRATION, is hereby recommended for appropriate action.

Date: _______ _________________Advisor

Name: __________________

PROJECT/ THESIS COMMITTEE

In partial fulfillment of the requirements for the degree of MASTER IN BUSINESS ADMINSTRATION, this thesis entitled, “_________________________”is hereby recommended for Oral Examination.

_________________________Chairman

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Name:_____________ Name:_____________ Name:________________________________

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ii

BAHRIA UNIVERSITYINSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, KARACHI

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PANEL OF ORAL EXAMINERS ACTION

_________________________ ____________Chairman

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____________________________ ____________Member

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_____________________________ ____________Member

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BAHRIA UNIVERSITYINSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, KARACHI

APPROVAL SHEET

This Project/ thesis entitled, “_____________________________________________”,prepared and submitted by __________________, in partial fulfillment of the requirements for the degree of MASTER IN BUSINESS ADMINISTRATION has been examined and recommended for acceptance and approval.

THESIS COMMITTEE

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Approved by the Committee on Oral Examination with a Grade of __________

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__________________________________ Head of the Department

Management Sciences

iv

ORAL EXAMINATION ON PROJECT/THESIS Rating Sheet- MBA WEEKEND PROGRAM

Name: __________________________ Date: ___________Registration No.: _________ Year of Entry: _______CRITERIA

A. QUALITY OF THE SCHOLARLY REPORT Total60 Points

a. Efforts in Identifying Organization or Activity 10b. Identification of Problem 10c. Genuine Effort in Collecting Organizational Data and Their Analyses

20

d. Meaningful Conclusion and Recommendation 20

B. QUALITY OF THE SCHOLARY DIALOGUE

Total40 Points

a. Understanding of the Data/ Information contained in the Report15

b. Justification, Arguments, and Persuasiveness15

c. Expression and Articulation5

d. Openness, flexibility and Intellectual Honesty 5

GRAND TOTAL 100

FINAL RATING ______________Examiner

______________Advisor

________________________ Head of the Department Management Sciences

Grade Scale:87-100 A80-86 B+72-79 B66-71 C+60-65 CBelow 60 F

v

ORAL EXAMINATION ON INTERNSHIPRating Sheet-MBA WEEKEND PROGRAM

Name: __________________________ Date:___________Registration No: _________ Year of Entry:______

CRITERIA

A. QUALITY OF THE WRITTEN REPORT Total60 Points

a. Nature of Work 10b. Training Analysis 10c. Work Analysis 20d. Conclusion and Recommendation 20

B. QUALITY OF THE PRESENTATION OF REPORT

Total40 Points

a. Articulation of written report15

b. Justification, Arguments, and Persuasiveness15

c. Expression and Articulation5

d. Openness, flexibility and Intellectual Honesty 5

GRAND TOTAL 100

FINAL RATING ___________Examiner

____________Advisor

________________________ Head of the Department Management Sciences

Grade Scale:87-100 A80-86 B+72-79 B66-71 C+60-65 CBelow 60 F

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ABSTRACT

The research was conducted to check out the affect of credit card usage on consumer’s

expenditure patterns. The gathered data were examined in respective with inflation,

interest rate and demographic factors. The approach adopted included quantitative

information. Questionnaires were used for gathering data of credit card users in Karachi,

while, Chi-square, frequency distribution and One-Sample t test were used to test the

hypothesis. The cumulative result conclude that most of the credit card users use their

card to facilitate themselves to make purchases in retail stores, education, utility bills,

dine out and in jewellery, air traveling and clothing. On the contrary credit card usage is

not affected by inflation, interest rate and education level while age, gender and income

level do affect it. Likewise none of the expenditure is affected by either interest rate or

inflation as commodities are considered necessitates by consumers.

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ACKNOWLEDGEMENT

First, we would like to praise Al-Mighty Allah for giving me the courage and the strength

to complete the task of writing this thesis. This thesis would not have been possible

without the impeccable support and guidance that I have received from my advisor, Mr.

Mumtaz Khan.

I would also like to thank all of those provided me the data and my family during the

exercise of collecting data, brain storming, analyzing and compiling the data which is

presented in the form of this thesis.

viii

DEDICATION

I would like to dedicate all my work to my late father Mr. Aziz Ahmed, to my mother

Allah bless her with health and keep her shadow on us (Ameen!) and to my younger

brother Master Daniyal Ahmed.

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TABLE OF CONTENT

RECOMMENDATION FOR ORAL EXAMINATION..............................................................................ii

APPROVAL SHEET........................................................................................................................... iv

ABSTRACT.....................................................................................................................................vii

ACKNOWLEDGEMENT..................................................................................................................viii

DEDICATION................................................................................................................................... ix

TABLE OF CONTENT........................................................................................................................x

CHAPTER # 1

INTRODUCTION..............................................................................................................................1

1.1 BACKGROUND.................................................................................................................1

1.2 STATEMENT OF PROBLEM..............................................................................................2

1.3 SIGNIFICANCE OF THE STUDY.........................................................................................3

1.4 SCOPE OF THE STUDY......................................................................................................3

1.5 LIMITATION OF THE STUDY.............................................................................................3

1.6 BASIC ASSUMPTIONS......................................................................................................4

1.7 DEFINITION.....................................................................................................................4

CHAPTER # 2

RESEARCH METHADOLOGY AND PROCEDURE................................................................................5

2.1 RESEARCH DESIGN................................................................................................................5

2.2 RESEARCH PURPOSE.............................................................................................................5

2.3 RESEARCH APPROACH..........................................................................................................5

2.4 POPULATION - SAMPLE.........................................................................................................5

2.5 RESEARCH QUESTION...........................................................................................................6

2.6 SOURCE OF DATA..................................................................................................................6

2.6.1 PRIMARY DATA..............................................................................................................6

2.6.2 SECONDARY DATA.........................................................................................................6

2.7 HYPOTHESIS..........................................................................................................................6

2.8 DATA ANALYSIS.....................................................................................................................7

2.9 ETHICAL CONSIDERATIONS...................................................................................................7

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CHAPTER # 3

REVIEW OF RELATED LITERATURE & STUDIES................................................................................8

3.1 MEDIA OF PAYMENT.............................................................................................................8

3.2 CREDIT CARD USAGE.............................................................................................................9

3.3 ELECTRONIC PAYMENTS.....................................................................................................11

3.4 CREDIT CARD AND INTEREST RATE.....................................................................................12

3.5 CREDIT CARD AND INFLATION............................................................................................12

3.6 CREDIT CARD STATISTICS....................................................................................................13

3.7 DEMOGRAPHIC FACTORS....................................................................................................15

3.8 EXPENDITURE PATTERNS....................................................................................................16

CHAPTER # 4

PRESENTATION ANALYSIS.............................................................................................................18

4.1 FREQUENCY OF THE DATA..................................................................................................18

4.1.1 AGE..............................................................................................................................18

4.1.2 GENDER........................................................................................................................18

4.1.3 EDUCATION LEVEL.......................................................................................................19

4.1.4 INCOME LEVEL.............................................................................................................19

4.1.5 MONTHLY USAGE OF CREDIT CARD.............................................................................20

4.1.6 HIGHEST EXPENDITURE CATEGORY.............................................................................20

4.1.7 IMPACT OF HIGH INFLATION........................................................................................21

4.1.8 IMPACTOF HIGH INTEREST RATE.................................................................................21

4.1.9 EXPENDITURE AFFECTED BY HIGH INFLATION.............................................................22

4.1.10 EXPENDITURE AFFECTED BY HIGH INTEREST RATE....................................................23

4.2 HYPOTHESIS TESTING..........................................................................................................23

4.2.1 AGE AND CREDIT CARD................................................................................................24

4.2.2 GENDER AND CREDIT CARD.........................................................................................25

4.2.3 INCOME LEVEL AND CREDIT CARD...............................................................................26

4.2.4 EDUCATION AND CREDIT CARD...................................................................................27

4.2.5 HIGH INFLATION AND CREDIT CARD............................................................................28

4.2.6 HIGH INTEREST RATE AND CREDIT CARD.....................................................................28

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CHAPTER # 5

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS............................................30

5.1 FINDINGS............................................................................................................................30

5.2 CONCLUSION......................................................................................................................30

5.3 RECOMMENDATION...........................................................................................................31

REFERENCES.................................................................................................................................32

APPENDIX A..................................................................................................................................34

QUESTIONNAIRE.......................................................................................................................34

APPENDIX B..................................................................................................................................35

DATA ANALYSIS.........................................................................................................................35

xii

CHAPTER # 1

INTRODUCTION

1.1 BACKGROUND

Despite of the convenience concept for which today, modern credit cards are used for,

this was denied or in better words denied by the credit card issuers who were mainly oil

companies followed by departmental stores in early 1900 but issued their own specific

cards with credit limits and limited acceptance.

In 1946, Johan Biggins a banker in Brooklyn, issued the first bank card named as “charg-

it” and that has resulted in the flourishing of credit card industry worldwide, taking it up

to its extremes with a business of over one trillion US Dollars. When consumer uses

credit card as an alternate of cash, the bank pays to the merchant on behalf of its card

holder after the merchant provides the bank with customer invoice. In 1951, the first

credit card was issued by Diners Club after Frank McNamara, a representative of Diners

Club, realized that he forgot his wallet at home while having a business dinner in one of

the major New York’s restaurant and so he decided to have an alternate to cash. As per

Diners Club record, they issued their first credit card to 200 customer’s accepted in 27

restaurants in New York, followed by American Express, who too issued their first credit

card in the same year. In 1958, diner’s issued purple card for traveling and entertainment.

In 1959, the option of maintaining balance was introduced which meant the card holder

could carry forward leftover payment after paying part sum of that cycle to the next cycle

with inclusion of some financial charges.

In Pakistan, the credit of the introduction of the credit card goes to Habib Bank which

issued its first gold card decades ago but in limited sum resulting in limited usage and

knowing. Habib Bank’s footsteps were then, followed by Allied Bank which first issued

Master card while Citi Bank introduced its Visa card. Citi Bank could be renowned as the

uncrowned king of credit card industry in Pakistan because firstly for doing an

uncomment able / marvelous job in educating the people of Pakistan regarding the

importance and application of credit cards and for the use of massive technology and for

1

creating throat-cut competition in the marketing of credit cards. From that day onwards,

every Bank has credit card facility included as a part of basic services to its customers

like MCB, National Bank of Pakistan, Bank Alfalah and Standard Charted Bank. In

Pakistan Bank Alfalah claims to be the highest market credit holders during the current

period with no annual fee, good customer services, acceptance around the globe and

facilitations with reward points.

Expenditures are the spending of a proportion of one’s individual income expenditures

pattern is the way of spending that proportion and is determined by the weights ( Scale of

preference i.e. high percentage for necessities rather than luxuries) followed by spending

on each particular goods. An expenditure pattern not only varies with Income Levels but

also with Demographic Factors. As income groups have different expenditure patterns as

compared to social class and so does gender and each group but expenditure through

credit cards are also affected by Inflation and Interest rate. Since the invention of credit

cards throughout the world expenditure of individuals have increased as they are

facilitated to pay for purchases in the future and this has resulted into individual spending

more than his earnings and so does goes for Pakistan. This can be supported by stating a

single quarter of 2006 from July to September resulting in billing by Visa Card of Rs. 15

billion. During this period the Visa Card experienced 80 percent growth, but as economy

takes a turn currently Visa Card is experiencing 3.9 decrease in volume and 4 percent

decrease in value in the current quarter of the fiscal year. As per Visa Card statistics

Pakistan card holders mostly use their Credit Cards at retail outlets i.e. 39 percent of the

Visa Purchases while transport facility comprises of 27 percent followed by 26 percent in

Misc items and only 8 percent a small proportion on restaurant of the total Visa

purchases. This research is being conducted to check and record the expenditure patterns

and its limiting factors; example gender, age, income level, inflation and interest rate.

1.2 STATEMENT OF PROBLEM

The research will highlight “Influence or Impact of Credit Card usage on Consumers

Expenditure Patterns”.

2

We have seen a lot of purchases are done through credit cards and this applies to the

world as plastic money’s application is increasing day by day with the decrease in the

spending through cash. As it experiences increase in it usage, credit card a form of plastic

money, is also experiencing an increase in its acceptance. This is happening as people can

buy more irrespective of their incomes, savings, price of the commodity or even the cash

they are having at the time of buying, this increasing purchases and expenditures overall.

1.3 SIGNIFICANCE OF THE STUDY

To determine the effect of the demographics variables like age, gender, income level and

literacy rate on the credit card usage and consumer expenditure pattern.

To determine the influence of inflation and interest rate on expenditure made through

credit cards.

The study would identify the constraining which hinder the usage of credit card which

could help in making long term social and economical planning – a part of contingency

planning.

1.4 SCOPE OF THE STUDY

The study would revolve around all the credit card users in Pakistan, sampled as a small

proportion of credit card holders of Karachi giving a generalized perceptions effects and

statistics regarding people from different cultures and life styles in Pakistan. No other

type of plastic money will be studied accept credit cards as our topic states effects of

inflation, interest rate and demographic factor on “credit card”.

1.5 LIMITATION OF THE STUDY

This study deals only with credit cards and no other type of plastic money will be studied.

The study would only analyze the effect of inflation, demographic factors, interest rate

and no other factors that acts as constrains.

3

1.6 BASIC ASSUMPTIONS

The basic assumptions taken for this research are credit card expenditures are constant

along with any other constraining factor except inflation, interest rate and demographic

factors which are kept as the only variable factors in this study.

1.7 DEFINITION

Credit Card – A card issued by banks or shops with certain limit, allows the holder to

buy on credit.

Expenditure – The act of using or spending money, time, etc.

Expenditure Pattern – Is the way of spending a proportion of one’s individual income

proportion and is determined by the weights (scale of preference i.e. high percentage for

necessities rather than luxuries) followed by spending on each particular goods.

Demographic – Socio economic characteristics or variables of a population, such as age,

gender, education level, income level, occupation, religion, family, size, etc.

Variables – A characteristic or property that varies from individual to individual and

may change with the passage of time.

Social Class – Hierarchy in which individuals and groups are classified on the basis of

accumulation of wealth. Commonly social class is classified into four groups (1) upper

class, (2) middle class and (3) lower class.

Interest Rate – The cost of borrowing money or the extra amount paid for borrowing of

money.

Inflation – The persistent increase in the general price level of commodities.

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CHAPTER # 2

RESEARCH METHADOLOGY AND PROCEDURE

2.1 RESEARCH DESIGN

It involves the setting up of research methodology along with research design. The

research includes the following items are described below.

2.2 RESEARCH PURPOSE

The research is being classified into three different categories; exploratory, descriptive

and explanatory.

2.2.1 The Study is descriptive and it will be substance by gathering and analyzing data

through primary sources, in other words collected data and its analysis will help us

determine how factors will influence consumer expenditure patterns with respect to usage

of credit card.

2.3 RESEARCH APPROACH

As per conventions of social sciences data for any kind of research is either collected

through qualitative or quantitative method.

2.3.1 The study is quantitative in nature and the primary data collected will help in

analyzing how inflation, interest rate and demographic factors influence consumers

spending patterns by means of credit card.

2.4 POPULATION - SAMPLE

As Karachi is a habited for people from different parts and cultures of Pakistan,

commonly referred as mini Pakistan so our sample would be comprising of 100 credit

card users of Karachi representing all the credit card users in Pakistan i.e. our population.

5

2.5 RESEARCH QUESTION

How demographic factors influence credit card usage and expenditures?

How inflation affects credit card usage and expenditures?

How interest rate affects credit card usage and expenditures?

2.6 SOURCE OF DATA

2.6.1 PRIMARY DATA

All the primary data about credit card usage and expenditure pattern will be collected

through questionnaire filled by our sample.

2.6.2 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.

2.7 HYPOTHESIS

Hypothesis for this study are as below;

H1; Credit card usage is affected by Age.

H2; Credit card usage is affected by Gender.

H3; Credit card usage is affected by Literacy level.

H4; Credit card usage is affected by Income level.

H5; Credit card usage is affected by High Inflation.

H6; Credit card usage is affected by High Interest Rate.

6

2.8 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.

2.9 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.

7

CHAPTER # 3

REVIEW OF RELATED LITERATURE & STUDIES

A literature review gives the researcher an understanding of how the findings of the study

fit into existing body of knowledge. The chapter begins with a brief discussion about the

importance of previous research.

3.1 MEDIA OF PAYMENT

According to J. White, the most common mode of payment used by customers is cash,

cheques and credit cards. Depending upon on different situations people prefer different

means of payment. Innovations and Inventions in the field of payment mechanism cannot

be enforced on consumers, they gradually accept it over a period of time; such as coins

replaced barter system because of the failure of occurrence of coincidence of wants; later

coins were replaced by currency as coins were difficult to carry and store. Further coins

were replaced by cheques as with the passage of time it became difficult or inevitable to

carry large amount of cash. Credit card innovation facilitates consumers more than any

mode of payment as it allows them to purchase goods on credit. The latest innovation

didn't completely replace the old payment methods, some of them are still in use today.

According to Hirschman, payment system does influence the purchasing behavior of

consumers. As per 1978 empirical studies, consumers are able enough to differentiate

among different credit card payment systems. The primary system of any credit card is to

facilitate its user while making purchases through credit card consumers not only decides

the mode of payment but also from its various types. The selection is impacted by five

factors: firstly the demographic factors i.e. income, age, gender and etc. Secondly the

attributes’ of credit card such as billing pattern and markup. Thirdly the type of

transaction that means the type of item purchased in terms of its monetary and volumetric

value. Another factor includes the place where the transaction is taken place and is

regarded to the credit card acceptance and all in all, the situation in which the transaction

will take place such as degree of necessity and urgency of good. The above five factors

may be at times complementary and competitor. Consumers had to decide to pay for their

purchases from different means. Individual goes through decision making process which

8

includes, firstly, whether to use cash, cheque or credit card. Then, cash is eliminated

because although it is widely accepted but is difficult to carry, therefore credit card is

preferred over cheque depending upon its acceptance and convenience. Thus purchases

made through credit cards urge consumers to purchase more as payment is not to be on

spot. A part from this credit card purchases are to influence by the demographic factors

and the costs associated with a specific credit card, these are further followed by credit

card acceptance and urgency to make purchase could compel consumers to buy on credit.

3.2 CREDIT CARD USAGE

According to Sienkiewicz, in a very short span of time credit cards were preferred for

purchases by many consumers since 1950. In 1916 only 16% of USA households used

credit cards but the end of 1995 almost 65% of the households became the part of credit

card usage community. Credit cards are now widely accepted over 4 million places only

in USA and over 14 million locations throughout the world. According to 1999 statistics

1 trillion of goods and services where bought through credit cards. Since the advent of

Dinners club's purple card and American Expresses' green card, in the same decade many

large banks developed universal card product for consumers allowing them choice to

purchase goods and services from many locations. A credit card holder experiences a

whole lot of process in its single usage which starts with sweeping a credit card through

electronic terminal at the transaction place followed by the amount of transaction and

card holder’s specifics that are available to the acquirer. If the acquirer is the issuing body

then details can be verified within the system else or otherwise information is passed on

to the issuer. The issuer than authorizes or declines the transaction and a message

containing either of the two is passed to the merchant via the acquirer. If authorization is

given, the merchant substantiates the card holder by comparing his sign on the voucher

with his original one on the card this ends the transaction which is now accepted by the

merchant.

According to Arano, credit card usage is a readily available source of funding to finance

consumption is steadily on rise. Factors such as acceptance and convenience and facility

of borrowing debt allowing higher level of consumption, are believed to have constituted

9

to the flourishing of credit card industry in terms of increase availability and aggressive

marketing.

The summary of the factors that are believed to have contributed to the steady rise in

credit cards industry are increased availability and acceptance of credit cards followed by

aggressive (informative and persuasive) both by the industry to attract potential

customers.

According to J. Mann, in USA wide use of credit cards is one of the salient features of

consumer retail purchases. American’s are recorded to have purchased 25% of their

retails using credit cards. This is against of consumer behaviors in some highly

industrialized nations. Bank statistics such as that annually an individual has 60 card

based transaction in USA, while in Japan it is only four. In Japan borrowing appears in

only about one tenth in the credit card transactions while half of the Americans pay of

their credit card debt each month, ready to borrow next month. Its usage depends upon

different policies that are being practiced in different countries. In countries where credit

cards are frequently used, their idea is to increase accessibility to expensive purchases

cheaply i.e. more credit purchases with payments in installments while in countries where

its use is discourage they state that there are higher chances of Bankruptcy, also it

discourages savings as people can have more than they could pay for it.

In 1998 credit card there were over 14 billion credit card transactions equally valued to

1.1 trillion dollars, resulting in a mean of 76 dollar per transaction. The 1998 statistics

also indicated that credit card was 18% of all USA transaction for the year. Almost about

half of USA citizens take the benefit of differ payment of some or all of their credit card

bills, on the contrary the Japanese statistics indicated that only 20.76 trillion yen or

equivalent to 190 billion USA dollars was the value of credit card transaction, thus giving

an overall average of being three times smaller in monetary value as compared to USA.

According to Plummer, credit cards are more often used by consumers depending upon

their purchasing behavior. The two major duo Visa and Master card are issued all around

the world by over 6000 banks with each claiming to have about 20 million card holders.

A useful relationship persists between social and income class and credit card usage i.e.

10

the social class uses credit card to avail the availability of installments while, on the other

hand upper class uses credit card as a means of convenience. Although all consumers

have positive attitude towards credit card usage however the former (social class) tends to

use credit card for installment purpose in order to fulfill their necessities of life while, the

latter uses it to buy luxury items.

According to Mathews and Slocum Jr., consumers become more sophisticated purchaser,

purchases on credit has played a major role in flourishing the credit card industry and this

has resulted in entrance of many retail stores and financial institutions in this new

segment. Credit card usage has risen with the passage of time because consumers prefer

to buy more and more of the commodities to have maximum utility from them and credit

card issuing bodies have also played a significant role in helping consumers to aware

them and making them move towards achieving this utility. Previously a handful number

of people in every nation knew about credit cards and its usage but by the time people

realized its importance and convenience they moved their attention towards facilitating

their expenditure by using credit cards, this can be substantiated by USA 1999 statistics

which show that over one trillion dollars transaction were recorded in that current

financial year.

Credit card is more of a source of borrowing – an incentives associated with its usage

rather than a mode of payment.

3.3 ELECTRONIC PAYMENTS

According to report published by state Bank of Pakistan, in the current Fiscal year

(FY10) of Pakistan a rising drift is continuously seen in both value and volume of

Electronic payments. As per State Bank of Pakistan the E-Payment transaction in

Pakistan for FY10 have touched Rs 50.3 million with increase in volume of 8.4 percent

and increase of 8.2 percent in value. Consistent growth is observed on electronic

transactions in this quarter with 37.75 percent in volume of retail transaction as compared

to previous quarter which was 35.3 percent. In this quarter as per State Bank of Pakistan

credit card have observed decreasing trend both in volume and value respectively 3.6

million and Rs 16.35 billion making it 3.9 percent decrease in volume and 4 percent in

11

value as compared to previous quarter. The report published by State Bank of Pakistan

mentioned that the number of cards in circulation in the current quarter of the Fiscal year

has reached 10.45 million showing vastly an increase of 4.9 percent from the previous

quarter which had an increase of 6.8 percent.

3.4 CREDIT CARD AND INTEREST RATE

According to Brito and Hartley, borrowing using credit cards at high interest rates might

be irrational, however credit cards would act more attractive compared to bank loans for

low cost transactions. Credit cards also provides liquidity services to its users by making

them staying away from the opportunity cost of holding money that comprises of

devaluation of money, security concerns and space to store it etc. The effects of

alternating interest rates on credit card purchases can give details why markup on credit

cards only partially replicates changes in the cost of production. Credit card interest rates

that is inflexible to the changes in the cost of funds acts contradictory to a competitive

equilibrium resulting in no profits for significant application. Many notable authorizes

have argued that despite being a free market of bank credit cards it yet appears to be non

competitive although thousands of independent firms mainly comprising of new entrants

having million of consumers.

3.5 CREDIT CARD AND INFLATION

According to Geanakoplos and Dubey extensive use of credit cards although increases

trading effectiveness but it results in demand pull inflation i.e. increase in price levels.

Government monetary interference to lower this inflation might act as an obstacle in

decreasing efficiency gains in credit card usage. Further things get worsen if credit card

debts are not paid out. In contemporary economies most of the transactions take place via

credit cards. Although the credit card effects have not been comprehensively studied by

theorist either price level or monetary theorist but still it is believed that credit card

effects are non vital and could be easily controlled by monetary interventions, after all

credit card is just plastic money and nothing more than that. Deciding whether to buy

commodity using credit card causes increase in general price levels of commodities or

12

inflation i.e. the value of money is lowered/ decreased even though increasing feasibility

to purchase.

3.6 CREDIT CARD STATISTICS

Credit card facility is almost availed by every country of the world either in small

quantity or in larger quantity. Below mention table shows some statistics of fewer

countries in the world.

COUNTRY CREDIT CARD IN CIRCULATION

AUSTRALIA 16,000,000BRAZIL 191,000,000

CANADA 72,000,000CHINA 199,000,000

FRANCE 34,000,000GERMANY 4,000,000

INDIA 24,000,000INDONESIA 10,000,000

ISRAEL 6,000,000JAPAN 346,000,000

MEXICO 26,000,000PAKISTAN 1,700,000

PHILIPPINES 8,000,000RUSSIA 10,000,000

SAUDIA ARABIA 3,000,000SOUTH KOREA 96,000,000

SPAIN 18,000,000THAILAND 14,000,000

TURKEY 45,000,000UNITED KINGDOM 80,000,000

UNITED STATES 686,000,000VENEZULA 6,000,000VIETNAM 2,000,000

From the statistics it’s clear seen that USA is the country with largest number of credit

card user i.e. 686 million credit cards are present within the people living in USA. The

second largest country with credit card user is Japan with 346 million users in Japan

using credit card for payment of their expenditures.

13

AUSTRALIA; 16,000,000

BRAZIL; 191,000,000

CANADA; 72,000,000

CHINA; 199,000,000

FRANCE; 34,000,000

GERMANY; 4,000,000 INDIA; 24,000,000 INDONESIA; 10,000,000 ISRAEL; 6,000,000

JAPAN; 346,000,000

MEXICO; 26,000,000

PAKISTAN; 1,700,000

PHILIPPINES; 8,000,000

RUSSIA; 10,000,000

SAUDIA ARABIA; 3,000,000

SOUTH KOREA; 96,000,000

SPAIN; 18,000,000

THAILAND; 14,000,000

TURKEY; 45,000,000

UNITED KINGDOM; 80,000,000

UNITED STATES; 686,000,000VENEZULA;

6,000,000

VIETNAM; 2,000,000

CREDIT CARD IN CIRCULATION

China is the third largest country with credit card user with 199 million credit card

owners across China followed by Brazil with 191 million users in throughout the country.

South Korea is the fifth country in the statistics table with 96 million users followed by

United Kingdom in the sixth place in the statistics table with 80 million credit card users.

Canada is next in the statistics list with 72 million credit card users followed by turkey

with 45 million users. According to the statistics France is ninth country with 34 million

credit card holders with Mexico on tenth place with 26 million users. India is next with

24 million users and holding the eleventh place of the statistics table. Pakistan only has

14

1.7 million users of credit cards as compared to other Asian countries especially India

and China the neighboring countries of Pakistan.

3.7 DEMOGRAPHIC FACTORS

According to Hirschman, there are six demographic variable factors that act as variables

in the course of researches on bank credit card and retail card. These variables include

total house hold income, social class, education level of respondee and age, residency

period and stages in one’s family life. These demographic factors are always used as

independent variables because in many researches it has been made obvious that these

factors do affect purchases. Before insuring them as variables all of the factors were

taken into consideration and three hypotheses were tested against them, first; alternative

credit card payment systems are competitive. Second; the more alternative credit payment

system available, individual will purchase and lastly relative to cash purchases, credit

card purchases are more in term of dollar value. The first hypothesis concluded that bank

credit cards are a simple of higher level of income i.e. the more the income the more the

possessions of credit card. The second conclusion suggested that high credit cards usage

and possessions are associated with the purchase behavior of its users i.e. the more the

person is shopaholic the more credit card he would use; the conclusion suggested that

younger and unmarried people had more than one credit card in their possession. Finally,

third hypothesis indicated that purchases in terms of dollar value or cots of purchases are

higher with credit cards, of any sort, are higher than cash purchases. Further evaluation

showed that credit card possession is also affected by gender. Men like to have more

travel and entertainment credit cards while woman like to have retail credit cards this

pattern could be attributed to men being the provider of the family while women are

restricted to house hold purchases.

According to J. White, consumer’s choice regarding the mode of payment also depends

on demographic factors. A researcher chose households from a metropolitan city of

Durban; all households had bank accounts which meant either they could facilitate their

purchases by paying through cheques or credit cards. The research included age, race,

gender and marital status of the household head as demographic factors. Data was

15

gathered through bank using monthly bank statements and only transactions that affected

only bank account taken into considerations. The result suggested that men found credit

cards more convenient way of payment than females; this may be because men buy a

Varity of goods. While, on the other hand, non white credit cards expenditure are lower

than those of whites and young people prefer more credit cards frequently as compared to

old ones. A general conclusion suggested that different individuals perceive different

types of production in terms of monetary value either they pay by cheque or by credit

card depending upon ones financial and demographic status.

Thus it can be concluded that demographic factors do affect the credit card usage as

suggested by different researchers and studies. The factors that are accused of being

affecting credit card usage are age, gender and income level. Male found credit cards a

more convenient mode of payment to pay off their variety of purchases as compared to

female. Income level does also varies credit card usage, while higher income groups use

credit cards as a means of convenience and luxury goods, at the same time, social class

use credit cards to facilitate their purchases of their durable and necessities into

installments. According to Mathews and Slocum Jr., lower income groups pay less than

their balance and instead pay interest on their unpaid balance and thus they are classified

as installment users. Higher income groups pay their balance within a specific billing

cycle and are classified as convenient user as they prefer credit card over cash.

3.8 EXPENDITURE PATTERNS

Feinberg has researched on credit cards affecting expenditure patterns and overall

increasing it for an individual’s spending. The study also verified whether credit cards

were affected by gender and type of the product was used as a dependent variable. The

sample included 60 respondents (males and females) 30 from each category and all were

individual tested. The research was related to the attitudes of the individuals with

consumer products. The sample was asked to look at a collection of pictures in a book

labeled as consumer products. The book contained seven photographs of consumer items,

each one labeled as product with a number; the products varied between two dresses a

men cardigan, a tent, a lamp, a chess set and an electric type writer. The sample was

16

asked two questions, first they would have to indicate the amount of money they would

be willing to spend for the items and secondly, the most distinct aspects of the products

were to be pen down by them. The results indicated that with credit cars one would spend

more as compared to one without credit card. The results were neither affected by gender

nor by the classification of the product.

A second experiment was conducted by Feinberg to check the associated spending

reactions an individual may have while using credit cards. For example an individual may

not only spend more but would also be quick to spend more. The research has shown

decision time to be an indicator of scale of preference i.e. reliable and valid too, for

example short reaction time represents greater product reference as a result experiment

two was conducted to serve as a replica of the basic hypothesis and to further test effects

concerned with credit card usage like increases motivation and decrease decision time

regarding spending. The sample consisted of twenty four female randomly assigned to

each of the two experimental condition i.e. credit card possessed or not possessed.

The respondents were let to a desk in an experimental room were a rare projected slide

screen was placed on a table. Further on a button labeled as response was attached to the

desk in front of them. The sample was asked to evaluate the number of consumer

products that would be shown on the screen. With no time limit they were instructed to

look at the slide and whenever they wanted they could press the response button as soon

as they have decided and then write their response (the willing amount) on an answer

sheet provided to them. Three different dependent variable were gathered and analyzed;

estimated spending per item, decision time and the motivation to purchase with credit

cards. The results indicated that possession of credit card would facilitate a larger

spending per item, a faster decision time and motivation to purchase. Thus it showed that

presence of credit card does facilitate consumers spending with decision time being

shortened and with no affect of acceptability of credit card in various purchase situations.

17

CHAPTER # 4

PRESENTATION ANALYSIS

This chapter deals with the analysis and interpretation of the collected data. The data

collected for this study played a significant role in analyzing the impact of credit card

usage on consumer’s expenditure pattern. To analyze data a tool plays the most important

role, in this study SPSS (Statistical Package for the Social Sciences) version 17 is used as

an Analytical Tool to process all the required outputs for acceptance or rejection of the

hypothesis developed for the study. Collected data were analyzed through different tests

of SPSS. Below are the different test performed with their interpretations of the collected

data.

4.1 FREQUENCY OF THE DATA

4.1.1 AGE

Frequency Percent Valid Percent

Cumulative

Percent

Valid Below 20 7 7.0 7.0 7.0

20 - 29 52 52.0 52.0 59.0

30 - 39 24 24.0 24.0 83.0

40 Plus 17 17.0 17.0 100.0

Total 100 100.0 100.0

The above table shows that out of 100 samples collected from credit card users 7 percent

of respondent belongs to the group below 20 years, 52 percent respondent belongs to the

age between 20 to 29 years, 24 percent belongs to the age group between 30 to 39 years

and the remaining 17 percent lies in the group of above 40 years.

4.1.2 GENDER

The below table shows that out of 100 respondents 65 percent of the respondents are

male and the remaining 35 percent are female.

18


Cumulative

Percent

Valid Male 65 65.0 65.0 65.0

Female 35 35.0 35.0 100.0

Total 100 100.0 100.0

4.1.3 EDUCATION LEVEL


Cumulative

Percent

Valid Bachelors 42 42.0 42.0 42.0

Masters 36 36.0 36.0 78.0

Others 22 22.0 22.0 100.0

Total 100 100.0 100.0

The above table shows that 42 percent respondents posses Bachelors degree where as 36

percent posses Masters Degree and remaining 22 percent respondent are below

Bachelors.

4.1.4 INCOME LEVEL


Cumulative

Percent

Valid 20 - 30 20 20.0 20.0 20.0

31 - 40 24 24.0 24.0 44.0

41 - 50 27 27.0 27.0 71.0

50 Plus 29 29.0 29.0 100.0

Total 100 100.0 100.0

Above mention table shows different income level respondent, 20 percent earn between

20,000 to 30,000 Rupees monthly, 24 percent earn between 31,000 to 40,000 Rupees, 27

19

percent earn between 41,000 to 50,000 Rupees monthly and remaining 29 percent have

monthly earning above Rupees 50,000.

4.1.5 MONTHLY USAGE OF CREDIT CARD


Cumulative

Percent

Valid Less than 5 48 48.0 48.0 48.0

5 - 10 27 27.0 27.0 75.0

10 - 15 16 16.0 16.0 91.0

More than 15 9 9.0 9.0 100.0

Total 100 100.0 100.0

The above table shows that 48 percent of the respondent use the credit card less than 5

times monthly, 27 percent use the credit card between 5 to 10 times monthly, 16 percent

use the credit card 10 to 15 times monthly and remaining 9 percent use the credit card

more than 15 times monthly.

4.1.6 HIGHEST EXPENDITURE CATEGORY


Cumulative

Percent

Valid Retail Store 23 23.0 23.0 23.0

Jewellery 9 9.0 9.0 32.0

Dine out 10 10.0 10.0 42.0

Air Travelling 9 9.0 9.0 51.0

Fuel 6 6.0 6.0 57.0

Electronics Goods 2 2.0 2.0 59.0

Clothing 9 9.0 9.0 68.0

Education 17 17.0 17.0 85.0

Utility Bills 11 11.0 11.0 96.0

Other 4 4.0 4.0 100.0

Total 100 100.0 100.0

20

The above table shows the different category on which respondents use credit card, 23

percent use credit card on retail store, 9 percent use credit card on jewellery, 10 percent

use on Dine out, 9 percent use on Air travelling, 6 percent use on fuelling, 2 percent on

electronic goods, 9 percent use on clothing, 17 percent use on education purpose, 11

percent on utility bills and remaining 4 percent on other categories.

4.1.7 IMPACT OF HIGH INFLATION

The below table shows the respondent responses for high inflation impact on

expenditures, 33 percent respondents believe that high inflation affects the expenditure

were as 42 percent respondents believe that high inflation have less affect on expenditure

and the remaining 25 percent believes that high inflation have no affect on expenditures.


Cumulative

Percent

Valid More 33 33.0 33.0 33.0

Less 42 42.0 42.0 75.0

Same 25 25.0 25.0 100.0

Total 100 100.0 100.0

4.1.8 IMPACTOF HIGH INTEREST RATE


Cumulative

Percent

Valid More 28 28.0 28.0 28.0

Less 46 46.0 46.0 74.0

Same 26 26.0 26.0 100.0

Total 100 100.0 100.0

21

The above table shows the respondent responses for high interest rate impact on

expenditures, 28 percent respondents believe that high interest rate affects the

expenditure were as 46 percent respondents believe that high interest rate have less affect

on expenditure and the remaining 25 percent believes that high interest rate have no

affect on expenditures.

4.1.9 EXPENDITURE AFFECTED BY HIGH INFLATION


Cumulative

Percent


Jewellery 16 16.0 16.0 39.0

Dine Out 10 10.0 10.0 49.0


Fuel 11 11.0 11.0 73.0

Furniture 3 3.0 3.0 76.0

Clothing 3 3.0 3.0 79.0

Education 4 4.0 4.0 83.0

Utility Bills 15 15.0 15.0 98.0


Total 100 100.0 100.0

The above table shows the different categories which are affected by high inflation, 23

percent respondents believe high inflation affect retail store, 16 percent respondents

believe high inflation affect jewellery, 10 percent respondents believe high inflation

affect Dine out, 13 percent respondents believe high inflation affect Air travelling, 11

percent respondents believe high inflation affect fuelling, 3 percent respondents believe

high inflation affect furniture, 3 percent respondents believe high inflation affect

clothing, 4 percent respondents believe high inflation affect education, 15 percent

respondents believe high inflation affect utility bills and remaining 2 percent respondents

believe high inflation affect electronic goods.

22

4.1.10 EXPENDITURE AFFECTED BY HIGH INTEREST RATE


Cumulative

Percent


Jewellery 13 13.0 13.0 32.0

Dine Out 8 8.0 8.0 40.0


Fuel 8 8.0 8.0 57.0

Furniture 4 4.0 4.0 61.0

Clothing 6 6.0 6.0 67.0

Education 4 4.0 4.0 71.0

Utility Bills 17 17.0 17.0 88.0


Total 100 100.0 100.0

The above table shows the different categories which are affected by high interest rate, 19

percent respondents believe high interest rate affect retail store, 13 percent respondents

believe high interest rate affect jewellery, 8 percent respondents believe high interest rate

affect Dine out, 9 percent respondents believe high interest rate affect Air travelling, 8

percent respondents believe high interest rate affect fuelling, 4 percent respondents

believe high interest rate affect furniture, 6 percent respondents believe high interest rate

affect clothing, 4 percent respondents believe high interest rate affect education, 17

percent respondents believe high interest rate affect utility bills and remaining 12 percent

respondents believe high interest rate affect electronic goods.

4.2 HYPOTHESIS TESTING

Hypothesis for the study were selected in the beginning and on the basis of SPSS tests the

hypothesis are either accepted or rejected on the basis of the output of these tests. Two

type of test “Chi-Square” and “One-Sample T Test” are used for accepting or rejecting

the hypothesis. In Chi-Square test the value of “P” must be greater than 5 percent in order

23

to accept the hypothesis developed for this study and reject the null hypothesis. In one-

sample T test the value of t must be greater than 0.5 in order to accept the hypothesis

developed in study and reject the null hypothesis.

4.2.1 AGE AND CREDIT CARD

H0: Credit card usage is not affected by Age.

HA: Credit card usage is affected by Age.

To verify the acceptance or rejection of this Hypothesis developed for the study, Chi-

Square test is applied on age group and expenditure group to test out the significance.

Age_Grp * Exp_Grp Crosstabulation

Exp_Grp

TotalLess Than 5000 5000 - 11000

More Than

11000

Age_Grp Less Than 30 Count 35 22 2 59

% within Age_Grp 59.3% 37.3% 3.4% 100.0%

30 Plus Count 15 22 4 41

% within Age_Grp 36.6% 53.7% 9.8% 100.0%

Total Count 50 44 6 100

% within Age_Grp 50.0% 44.0% 6.0% 100.0%

Chi-Square Tests

Value df Asymp. Sig. (1-sided)

Pearson Chi-Square 5.608a 2 .031

N of Valid Cases 100

The researcher can wrap up on the basis of analysis that at 5 percent significance level,

the data provide sufficient evidence to conclude that the usage of credit card is affected

by age; therefore the researcher can reject the null hypothesis.

24

4.2.2 GENDER AND CREDIT CARD

H0: Credit card usage is not affected by Gender.

HA: Credit card usage is affected by Gender.


Square test is applied on gender and expenditure group to test out the significance.

Gender * Exp_Grp Crosstabulation

Exp_Grp


More Than

11000

Gender Male Count 38 23 4 65

% within Gender 58.5% 35.4% 6.2% 100.0%

Female Count 12 21 2 35

% within Gender 34.3% 60.0% 5.7% 100.0%


% within Gender 50.0% 44.0% 6.0% 100.0%



by gender; therefore the researcher can reject the null hypothesis.

25

Chi-Square Tests




4.2.3 INCOME LEVEL AND CREDIT CARD

H0: Credit card usage is not affected by Income Level.

HA: Credit card usage is affected by Income Level.


Square test is applied on income level and expenditure group to test out the significance.

Income * Exp_Grp Crosstabulation

Exp_Grp


More Than

11000

Income 20 - 30 Count 17 3 0 20

% within Income 85.0% 15.0% .0% 100.0%

31 - 40 Count 12 12 0 24

% within Income 50.0% 50.0% .0% 100.0%

41 - 50 Count 11 14 2 27

% within Income 40.7% 51.9% 7.4% 100.0%

50 Plus Count 10 15 4 29

% within Income 34.5% 51.7% 13.8% 100.0%


% within Income 50.0% 44.0% 6.0% 100.0%

Chi-Square Tests






by income level; therefore the researcher can reject the null hypothesis.

26

4.2.4 EDUCATION AND CREDIT CARD

H0: Credit card usage is not affected by Education.

HA: Credit card usage is affected by Education.


Square test is applied on education level and expenditure group to test out the

significance.

Education Level * Exp_Grp Crosstabulation

Exp_Grp


More Than

11000

Education Level Bachelors Count 24 16 2 42

% within Education Level 57.1% 38.1% 4.8% 100.0%

Masters Count 14 21 1 36


Others Count 12 7 3 22




Chi-Square Tests





the data provide sufficient evidence to conclude that the usage of credit card is not

affected by education; therefore the researcher can accept the null hypothesis.

27

4.2.5 HIGH INFLATION AND CREDIT CARD

H0: Credit card usage is not affected by High Inflation.

HA: Credit card usage is affected by High Inflation.

To verify the acceptance or rejection of this Hypothesis developed for the study, One-

sample t test is applied on group inflation to test out the significance.

One-Sample Statistics

N Mean Std. Deviation Std. Error Mean

Grp_Inflation 100 .3300 .47258 .04726

One-Sample Test

Test Value = 0.5

t df Sig. (2-tailed) Mean Difference

95% Confidence Interval of the

Difference

Lower Upper

Grp_Inflation -3.597 99 .001 -.17000 -.2638 -.0762

The researcher can wrap up on the basis of analysis that at 5% significance level, the data

does not provide sufficient evidence to conclude that increase in the inflation has a

positive impact; therefore the researcher can accept the null hypothesis.

4.2.6 HIGH INTEREST RATE AND CREDIT CARD

H0: Credit card usage is not affected by High Inflation.

HA: Credit card usage is affected by High Inflation.

To verify the acceptance or rejection of this Hypothesis developed for the study, One-

sample t test is applied on group interest rate to test out the significance.

28

One-Sample Statistics

N Mean Std. Deviation Std. Error Mean

Grp_Interest 100 .2800 .45126 .04513

One-Sample Test

Test Value = 0.5

t df Sig. (2-tailed) Mean Difference

95% Confidence Interval of the

Difference

Lower Upper

Grp_Interest -4.875 99 .000 -.22000 -.3095 -.1305

The researcher can wrap up on the basis of analysis that at 5% significance level, the data

does not provide sufficient evidence to conclude that increase in the interest rate have a

positive impact; therefore the researcher can accept the null hypothesis.

29

CHAPTER # 5

SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATIONS

5.1 FINDINGS

This research assisted in verdict out that credit card usage is affected by age, gender and

income level where as it is not affected by education level, high inflation and high

interest rate. All the age group use credit card as per their desire needs out of 100

respondents 7 percent are below 20 years, 52 percent respondents are between 20 to 29

years which is the largest user group of using credit card followed by 24 percent between

30 to 39 years of age and 17 percent of age above 40 years. The highest expenditure done

through credit card is on retail stores i.e. 23 percent. Among 100 respondents 65 percent

are male credit card user and 35 percent respondents are female, showing clear picture

that male respondents prefer more spending on credit cards as compared to females. Most

of the respondents i.e. 48 percent of them use credit card less than 5 times in a month.

High inflation has no affect on spending of the respondent as 42 percent have view of less

affecting followed by no affect of 25 percent, only 33 percent respondent believe that

high inflation affects their spending on credit card. High Interest rate likely high inflation

have no affect on spending of the respondent as 46 percent believe that it is less affecting

their spending followed by 26 percent with no affect on their spending and only 28

percent who believe that it affects their spending on credit card.

5.2 CONCLUSION

Subsequent to the data collected from respondents and its analysis through the SPSS

software the things that were highlighted are that the consumers expenditure pattern is

not affected by high inflation, high interest rate and education level but consumers

expenditure pattern is highly affected by three demographic factors i.e. age, gender and

income level out of the four used in this study. Survey methodology was used to collect

data in the form of closed end questionnaire to be filled by credit card users. All the data

30

collected from the respondents belong to Karachi City of different age group belonging to

different professions.

5.3 RECOMMENDATION

After the research and its complete analysis the thing that would be recommended are as

follows;

Banks can attract more users by doing mass marketing i.e. targeting all marketing

segments.

Banks can attract more users by focusing on people from all age groups by

allowing different credit limits to different credit card users as per their spending

i.e. a student would be having lower expenditure as compared to adult so his

credit limit should be less as compared to that of an adult.

Banks can attract more users especially females by providing great facilitation

rewards on usage like on jewellery, home appliances etc.

31

REFERENCES

http://ezinearticles.com/?A-History-and-Background-of-Credit-Cards&id=284713

http://www.businesscreditcardprocessing.com/credit_card_processing.php

http://waytoohigh.wordpress.com/2008/01/21/background-on-credit-card-interchange-

collective-price-fixing-antitrust-litigation-2/

http://creditcard.trendsdaily.net/you-know-history-and-background-of-credit-cards.html

http://www.articlecity.com/articles/business_and_finance/article_7236.shtml

http://www.abcarticledirectory.com/Article/Background-and-History-of-Credit-Cards/

56929

http://www.creditcards.com/

http://www.sbp.org.pk_reports_annual_arFY09_Vol2_Chapter-5

http://www.pakistancreditcards.com/

http://www.economywatch.com/pakistan-credit-cards/

http://www.time.com/time/magazine/article/0,9171,1893507,00.html

http://propakistani.pk/2010/05/18/e-payments-grow-to-rs-4-5-trillion-in-q3-2010/

http://www.sbp.org.pk_reports_annual_arFY09_Vol2_Chapter-5

Geanakoplos, John and Dubey, Pradeep "Credit Cards and Inflation", Cowles foundation

for research in economics Yale University, PAPER NO. 1709 (June, 2009), 1-38

White, Kenneth J. "Consumer Choice and Use of Bank Credit Cards: A Model and

Cross-Section Results", the Journal of Consumer Research, II, 1 (June, 1975), 10-18

Brito, Dagobert L. and Hartley, Peter R. "Consumer Rationality and Credit Cards", the

Journal of Political Economy, 103, 2 (April, 1995), 400-433

32

http://www.sbp.org.pk_reports_annual_arFY09_Vol2_Chapter-5/

http://propakistani.pk/2010/05/18/e-payments-grow-to-rs-4-5-trillion-in-q3-2010/

http://www.time.com/time/magazine/article/0,9171,1893507,00.html

http://www.economywatch.com/pakistan-credit-cards/

http://www.pakistancreditcards.com/

http://www.sbp.org.pk_reports_annual_arFY09_Vol2_Chapter-5/

http://www.creditcards.com/

http://www.abcarticledirectory.com/Article/Background-and-History-of-Credit-Cards/56929

http://www.abcarticledirectory.com/Article/Background-and-History-of-Credit-Cards/56929

http://www.articlecity.com/articles/business_and_finance/article_7236.shtml

http://creditcard.trendsdaily.net/you-know-history-and-background-of-credit-cards.html

http://waytoohigh.wordpress.com/2008/01/21/background-on-credit-card-interchange-collective-price-fixing-antitrust-litigation-2/

http://waytoohigh.wordpress.com/2008/01/21/background-on-credit-card-interchange-collective-price-fixing-antitrust-litigation-2/

http://www.businesscreditcardprocessing.com/credit_card_processing.php

http://ezinearticles.com/?A-History-and-Background-of-Credit-Cards&id=284713

Hirschman, Elizabeth C. "Differences in Consumer Purchase Behavior by Credit Card

Payment System", The Journal of Consumer Research, VI, 1 (June, 1979), 58-66

Plummer, Joseph T. "Life Style Patterns and Commercial Bank Credit Card Usage", the

Journal of Marketing, 35, 2 (April, 1971), 35-41

Feinberg, Richard A. "Credit Cards as Spending Facilitating Stimuli: A Conditioning

Interpretation", the Journal of Consumer Research, 13, 3 (December, 1986), 348-356

Sienkiewicz, Stan “Credit Cards and Payment Efficiency, Federal Reserve Bank of

Philadelphia Payment Cards Center Discussion”, Paper 01-02, (August, 2001), 1-13

G. Arano, Kathleen "Modeling credit card borrowing by students”, Fort Hays State

University, (2007), 27-38

Mann, Ronald J. "Credit Cards and Debit Cards in the United States and Japan",

Monetary and Economic Studies, (2002), 123-159

33

APPENDIX A

QUESTIONNAIREQ 1. Do you use credit card to facilitate your expenditures?

Q 2. What is your current age?

Q 3. What is your gender?

Q 4. What is your education level?

Q 5. What is your Current Income? (in Rupees thousands)

Q 6. How often do you use credit card in a month?

Q 7. On Which category do you make the Highest Amount of Expenditure?

Q 8. How much in a month you usually spend on Retail Store? (in Rupees)

Q 9. How much in a month you usually spend on Furniture? (in Rupees)

Q 10. How much in a month you usually spend on Jewellery? (in Rupees)

Q 11. How much in a month you usually spend on Clothing? (in Rupees)

Q 12. How much in a month you usually spend on Dine Out? (in Rupees)

Q 13. How much in a month you usually spend on Utility Bills? (in Rupees)

Q 14. How much in a month you usually spend on Air Travelling? (in Rupees)

Q 15. How much in a month you usually spend on Fuel? (in Rupees)

Q 16. How much in a month you usually spend on Electronic Goods? (in Rupees)

Q 17. How much in a month you usually spend on Education? (in Rupees)

Q 18. If Inflation is High, will it influence your expenditures?

Q 19. If Interest Rate is High, will it influence your expenditures?

Q 20. Which of the following expenditures gets highly affected by Inflation?

Q 21. Which of the following expenditures get highly affected by Interest Rate?

Name:Occupation:

Respondent Details

Yes No

Below 20 30 - 3920 - 29

Male Female

Bachelors Masters Others

20 - 30 30 - 40 40 - 50 50 Plus

Less than 5 5 - 10 10 - 15 More than 15

Retail Store Jewellery Dine Out Air Travelling

Furniture Clothing Education Utility Bills

Fuel Electronic Goods

Other

Less than 2000 2000 - 5000 5000 - 8000 8000 - 11000 11000 - 15000 More than 15000










Fuel

Electronic Goods



Fuel

Electronic Goods

More Less Same

More Less Same



40 Plus

34

APPENDIX B

DATA ANALYSIS

35

impact of credit card usage on consumers expenditure pattern

Documents

bahria university

provide sufficient

mba weekend

member

related literature

credit card

cumulative

credit card