research on credit card

8/3/2019 Research on Credit Card

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Comparative Study of Credit CardsProvided by Major Banks


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FINAL DISSERTATIONDECLARATION FORM

We hereby declare that the project work entitled COMPARITIVE STUDY OF

CREDIT CARDS PROVIDED BY MAJOR BANKS Submitted by us for the partial

fulfilment of post graduate diploma in international business programme to

Institute for Integrated Learning in Management, Greater noida is our own

original work and has not been submitted earlier either to IILM GSM or to any

other Institution for the fulfilment of the requirement for any course of study.

We also declare that no chapter of this manuscript in whole or in part is lifted

and incorporated in this report from any earlier/other work done by us or

others.

Place:-Date:-Name of studentsKanika Jain.

Mayank Arora.


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ACKNOWLEDGEMENTWe would never have been able to finish our dissertation without the constant

guidance and encouragement of our supervisor, Dr.Gurendra Nath Bhardwaj

We would like to thank him for excellence guidance, caring and patience he

gave to us. We have no doubt in saying that we shared some good and

knowledgeable moments during our interaction with him.

We would particularly like to extend our gratitude to Dr. Niharika Gann for

helping us in carrying out this project and for making it a success.

Last, but not the least, We would like to thank Prof Waseem Ansari, Faculty,IILM-GSM for guiding us and for clearing our doubt from time to time.

PROBLEM DEFINITION


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Until and unless the marketing research problem is clearly defined the

research cannot be designed and conducted properly. We would hereby define

the marketing research problem.

Management Decision Problem

To find out whether the credit card services provided by the major banks are

effective or does it needs to be modified.

MARKETING RESEARCH PROBLEMTo determine the effectiveness of credit card services by major banks

The problem has been defined after having discussions with industry, experts,students and other knowledgeable individuals, analysis of secondary data

(articles and journals) and qualitative research.

Based on the definition of the marketing research problem, an appropriate

approach to the problem was developed.

The bank employees told that they have invited certain practices in their banks

in order to increase their credit card customers. They wanted to find out the

perception of their customers toward credit card so that they can better

understand the need of the credit card.

RESEARCH OBJECTIVESPRIMARY OBJECTIVE


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1. To analyse the behaviour of customers towards credit cards.2. To study the customer perception towards credit cards.SECONDARY OBJECTIVES1. To study the concept and benefits of credit cards in Indian market.2. To study reserve bank policy regarding credit cards.3. To study the fraud which customers may face.

RATIONALE OF STUDYThe customer today is getting wise. No longer enamoured by the window

dressing attempts of banks that introduce various credit cards, customers


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now want the full information and knowledge about credit cards before

using it. Customer wants to see action not words.

The questions that arise therefore are

- How can you change your attitude towards the customer?

- How can bank spend time, efforts and money on achieving customer

satisfaction in terms of Credit Cards?

Customers are now looking for various value added services provided by

banks on credit cards. These value added services will increase the

customers of the bank and then the growth of credit cards will also

increase.

The current day environment is flanked by stiff competition amongst

various players in all sectors of the economy. Banking industry is no

exception. In the Indian scenario, nationalized banks have majorly

dominated banking sector. But the entry of private and multinational

players in India has shaken the entire banking industry. Apart from thevarious product that they offer, what distinguishes the market leaders from

others are the aggressive service marketing strategies followed by them to

achieve global dominance.


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LITERATURE REVEIW

Credit CardBackgroundA credit card allows consumers to purchase products or services without cash and to pay

for them at a later date. To qualify for this type of credit, the consumer must open an

account with a bank or company, which sponsors a card. They then receive a line of creditwith a specified dollar amount. They can use the card to make purchases from participating


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merchants until they reach this credit limit. Every month the sponsor provides a bill, which

tallies the card activity during the previous 30 days. Depending on the terms of the card,

the customer may pay interest charges on the amount that they do not pay for on a monthly

basis. Also, credit cards may be sponsored by large retailers (such as major clothing or

department stores) or by banks or corporations (like VISA or American Express).

Credits cards are a relatively recent development. The VISA Company, for example, traces

its history back to 1958 when the Bank of America began its BankAmerica program.

In the mid-1960s, the Bank of America began to license banks in the United States the

rights to issue its special BankAmericards. In 1977 the name Visa was adopted

internationally to cover all these cards. VISA became the first credit card to be recognized

worldwide.

The banks and companies that sponsor credit cards profit in three ways. Primarily they

make money from the interest payments charged on the unpaid balance, but they also can

make money by charging an annual fee for the use of the card. The income from this fee,which is typically only $50 or $75 per customer per year, can be substantial considering

that the larger companies have tens of millions of customers. In addition, the sponsors make

money by charging merchants a small percentage of income for the service of the card. This

arrangement is acceptable to the merchants because they can let their customers pay by

credit card instead of requiring cash. The merchant makes arrangements to participate in a

credit card program...

Credit Cards Effect to the CompanyDisadvantage of Credit CardsSome credit cards come with a high interest rate. If you are carrying a balance month to

month, this can end up costing the customer more. The higher the interest rate of the credit

card you are carrying a balance on, the higher the minimum monthly payment is going to

be.

Credit cards can get consumers into trouble. When most people use a credit card, they are

not thinking about when they are going to repay the meal out for family or the new outfitfor the weekend. No, these customers are thinking of the short term gains. Experts have


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theorized that this is the quickest road to credit card debt.

A credit card can be an asset to your lifestyle, but if not handled carefully it can become a

liability, especially if you find it so convenient and easy to use that you lose control of your

spending.

Advantages1. Offer free use of funds, provided you always pay your balance in full, on time.

2. Be more convenient to carry than cash.

3. Helpyou establish a good credit history.

4. Provide a convenient payment method for purchases made on the Internet and over the

telephone.

5. Give you incentives, such as reward points, that you can redeem.

Disadvantages

1. Cost much more than other forms of credit, such as a line of credit or a personal loan, if

you don't pay on time.

2. Damage your credit rating if your payments are late.

3. Allow you to build up more debt than you can handle.4. Have complicated terms and conditions.

1. How do I apply for a credit card?Applying for a credit card is easy! Simplychoose a credit cardonline that meets your needs.

Click on the orange apply button or the picture of the credit card and you will be

connected to a credit card application. Most of the applications are very short and only take

a minute or two of your time. If you would like a credit card application emailed to you,

send us an email at [email protected] letting us know what kind of card you are interested in

and we will reply with your credit card application.

2. How do I report a lost or stolen credit card?To report your credit card lost or stolen, please call the customer service number on your

billing statement. They will be able to help you close the card and issue you a new card. If

you do not have your billing statement, either search online or call directory assistance
http://www.credit.com/products/credit_cards/http://www.credit.com/products/credit_cards/http://www.credit.com/products/credit_cards/http://www.credit.com/products/credit_cards/


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(411) to ask for the toll-free number of the banking institution (ex. Capital One, Citibank,

etc) that issued your credit card.

3. How do I contact my credit card company?Your creditors toll-free customer service number is printed on the back of your credit card

in small lettering. Their customer service team will be able to assist you with billing, lost or

stolen cards, fraudulent charges, change of address, and more. Unfortunately,Credit.comisnot able to assist you with your account. Please contact your credit card company directly.

4. Where do I send my credit card payment?If you have lost your billing statement and need help getting the address to make a payment,

simply call the toll free phone number on the back of your credit card. The number will be

written in small lettering underneath your signature strip. Most credit card companies also

allow you to pay your bill over the phone. To make a payment over the phone you may use

the same customer service number on the back of your credit card.

5. What is a "secured" credit card?Asecured credit cardcan be a very helpful way to start building credit or to rebuild your

credit. Secured credit cards are perfect for individuals who have been turned down for

credit cards, have never had a credit card, or are currently in bankruptcy. Secured cards

offer guaranteed approval for all borrowers, despite their financial history.

Secured cards guarantee approval by asking you to secure the card with a deposit, usually

$200 to $250. This deposit will act as your credit limit and will be returned to you whenyou cancel your card. While your card is active, your credit card company will report your

status to the three major credit bureaus. Your credit line will periodically increase, helping

to improve your overall credit score and credit history. These credit cards tend to have

higher interest rates, especially when withdrawing cash from an advance fund, so use them

wisely. You can apply for a secured credit card online today.

6. Why do I receive credit card offers in the mail and then get declined for a credit card?Credit card offers often use reporting services from Innovis (Innovis is sometimes know asthe 4th Credit Bureau) to determine what credit card products to offer. However, once you

submit your application, the credit card companies may use yourcredit scoresfrom

Experian, TransUnion, and/or Equifax to make the final decision whether to approve your

application. Often the information from Innovis is different from the three major credit

bureaus, thus causing the discrepancy.

7. How long will it take to receive my credit card?You can expect to receive a letter in the mail with the status of your credit card application

within 5-7 business days. If approved, you will receive your credit card within 10-15 days
http://www.credit.com/http://www.credit.com/http://www.credit.com/http://www.credit.com/products/credit_cards/secured.jsphttp://www.credit.com/products/credit_cards/secured.jsphttp://www.credit.com/products/credit_cards/secured.jsphttp://www.credit.com/products/credit_reports/http://www.credit.com/products/credit_reports/http://www.credit.com/products/credit_reports/http://www.credit.com/products/credit_reports/http://www.credit.com/products/credit_cards/secured.jsphttp://www.credit.com/


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of your approval letter. The credit card company will inform of you of the estimated time it

will take for your card to arrive along with a phone number in case you have questions on

your approval letter.

8. What do I do if someone else has used my credit card or obtained a credit card in myname without my authorization?Contact the credit card company immediately! Let them know you suspect you are a victimof identity theft. They will often remove fraudulent charges from your account. If a card

was obtained without your authorization, cancel the credit card and report the fraud to the

credit card company. Next contact Experian, Equifax, and TransUnion (the three major

credit bureaus) and they will put a fraud watch on your credit

9. Why should I have a credit card?Credit cards help you build your credit, increase your borrowing power, and make major

purchases. If your future goals include owning a home, buying a car, owning your ownbusiness, or traveling, having a credit card is an excellent first step.

Credit cards give you borrowing power. Your credit limit contributes to the amount of

borrowing power you have. If you have several credit cards with large credit limits, you

have a lot of borrowing power. This makes you more attractive to lenders because of your

increased ability to pay back your loans. Credit cards also report your repayment history on

a regular basis to the credit bureaus. If you use your cards wisely, lenders will see that you

are a trustworthy person who makes your payments. A person who is responsible and has

alternative means to repay loans is a low-risk applicant and has a much better chance of

qualifying for a loan than someone with no history and no credit line.

Credit cards can also be used as an additional form of identification. They can be necessary

when renting a car or staying in many hotels, and they are excellent alternatives to cash. If

your credit card is lost or stolen, you can be reimbursed for any fraudulent charges made. If

your cash is lost or stolengood luck! Cash is much harder, if not impossible, to claim if it

is stolen.. Credit cards come with many benefits, but borrowers should be careful to use

them responsibly. You can apply for a credit card online now.

10. I have bad credit/no credit: Can I still get a credit card?Sure you can! There are several different credit card options available to borrowers with

credit troubles: secured, unsecured, and student credit cards. Student credit cards are

regular credit cards designed for students who are first-time credit card applicants. You

must be a student to qualify for these offers.

Secured cards offer guaranteed approval for all borrowers, despite their financial history.

Secured cards guarantee approval by asking you to secure the card with a deposit, usually


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TYPE OF RESEARCH DESIGNA research design is a framework or blueprint for conducting the marketing research

project. It details the procedures necessary for obtaining the information needed to

structure and/or solve marketing research problem.

The research designs may be broadly classified as exploratory or conclusive. Further

conclusive research is divided into Descriptive research and Causal research. Both the

research designs, Exploratory and Descriptive, have been used to carry on this project.

Exploratory research provides insights into, and an understanding of, the problem

confronting the researcher. In this project to determine the effectiveness of CRM, it was

necessary to have a clear understanding of what CRM practices these banks followed

and with what objective were they carried out. For this purpose exploratory research

was carried out where I visited branches of both the banks in the south Delhi region.

The results gained from the exploratory research might be verified or qualified by

conclusive research. It was used to determine the effectiveness of the CRM practices of

the banks and to find out the perceptions of the customers towards these practices.


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SOURCES OF DATAThere are two sources of data that can be used to carry the project. These are

# Primary data# Secondary data

A judicious blend of both the sources of data has been used towards the completion of

the project.

DATA FROM SECONDARY SOURCESecondary data was collected from

Books Journals and magazines. Internet sources. Articles. Research papers and publications.

DATA FROM PRIMARY SOURCEThe primary data was collected from the managers through personal interview

Method. The collection of data is done with the help of a questionnaire.

The questionnaire was non-disguised and well structured. More of open-ended

questions were asked from the managers. For the salesperson, mainly close ended

questions with multiple choice answers were used. Few open-ended questions were also

used to give freedom to their thought.


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SCALING TECHNIQUESThere are two major types of scaling techniques

1. Comparative scaling techniques,2. Non comparative scaling techniques

Both the type of scaling techniques was used in the project.

In case of comparative scaling, Rank Order Scaling was used. This is used

when several objects are simultaneously presented and the respondents are

asked to rank them according to some criterion. In the report, it was used inthe following cases-

The customers were presented with several CRM services carried out by their

bank and were asked to rank them on the basis of their importance to them.

In case of non-comparative scaling technique, Likert Scale was used. It is

used when the respondents are required to indicate a degree of agreement or

disagreement with each of a series of statement about the stimulus objects. Itwas used when-

The respondents were asked were their complaints resolved by theirbank.

When the customers were asked to rate the credit cards provided bythe banks.


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Thus both, Rank order scale and Likert scale were used to determine

customers perceptions of their bank services.

QUESTIONNAIRE DEVELOPMENTThe questionnaire was developed in accordance with the research

objective. For better understanding


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ANALYSIS AND DISCUSSION


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ANALYSIS OF QUESTIONNAIREQ1. How many males and females are using Credit cards for making theirpurchases?

Interpretation: - More than 70% of the people interviewed are male. Only 6out of 20 people interviewed are female. We can observe that maximum

users of credit cards are male. The reason is in India most of the working

people are male and their family members are more or less dependent on

them. We also observed that businessman and service people need to traveldifferent places, so rather that carrying cash they prefer to use plastic

money which is safer.

Q2. What are the age group of credit card users?

Sales

MALE

FEMALE


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From the above observation we can see that 45% of the people interviewed

are of age group 15-35 and 7 out of 20 are of age group 35-50 with the

above data we can observe that credit card is mostly popular amongyoungster and professionals. It is because increasingly, a small number of

youngsters are consciously resisting a desire to own a credit card. Of course

they are far outnumbered by the flashy crowd of youngsters working for

BPO s and KPOs who live by credit cards and swear by easy credit. The

older people in the group may have had a bad experience dealing with

credit cards and they consciously stay away from further trouble. Kids, whohave grown up hearing stories about the perils of easy credit, seam to have

early lesson in life and keep away from free credit cards for the rest of their

life.

Q3. Annual income of credit card user?

Interpretation

Sales

15-35 yrs

35-50 yrs

50-60 yrs

Above 60

Sales

>1 lac rs

1-2 lac rs

2 - 3 lac rs

>3 lac rs


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Of all the people interviewed it has been observed that once having income

more than 3 lacks rupees prefer credit cards more as compared to others

because they are mostly professionals and they are aware about various

benefit of credit cards .Banks also provide credit card facility only to those

customers who have high income and have a good relationship with thebank.

Q4- which area the customer belongs?

INTERPRETATIONMore than 75 % of the people interviewed belong to urban area that use

credit card. The simple reason is, rural people do not have knowledge of

credit cards and they dont even know the benefit of using credit cards. It

has also been observed that in rural areas, people will not be able to use

their credit cards because of lack of means.

Q 5.

INTERPRETATION

Sales

urban

rural

Sales

Consultant

Student

Others

Doctor

Engineer


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From the above data we can observe that most of the businessman and

students prefer using plastic money as compared to cash because they have

to travel a lot for business and education purposes so they prefer using

plastic money because it is safe and easy. They cannot carry cash

everywhere but they can carry credit card wherever they want. They alsoprefer credit cards because they are aware about how to use them more

smartly and how can they gain rewards point and bonus points and use

them in a proper way.

Q6. Which Bank credit card they use?

InterpretationFrom the above observation we can see that most of the people prefer using

credit cards of SBI

Sales

Axix

SBI

HSBC

HDFC


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research on credit card

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