Comparative Study of Credit Cards Provided by Major Banks

FINAL DISSERTATION DECLARATION 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 students Kanika Jain. Mayank Arora.

ACKNOWLEDGEMENT
We 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

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 PROBLEM To 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 OBJECTIVES PRIMARY OBJECTIVE

1. To analyse the behaviour of customers towards credit cards. 2. To study the customer perception towards credit cards. SECONDARY OBJECTIVES 1. 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 STUDY
The customer today is getting wise. No longer enamoured by the window dressing attempts of banks that introduce various credit cards, customers

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 the various product that they offer, what distinguishes the market leaders from others are the aggressive service marketing strategies followed by them to achieve global dominance.

LITERATURE REVEIW

Credit Card
Background
A credit card allows consumers to purchase products or services without cash and to pay for them at a later date. To qualify for this type of credit, the consumer must open an account with a bank or company, which sponsors a card. They then receive a line of credit with a specified dollar amount. They can use the card to make purchases from participating

merchants until they reach this credit limit. Every month the sponsor provides a bill, which tallies the card activity during the previous 30 days. Depending on the terms of the card, the customer may pay interest charges on the amount that they do not pay for on a monthly basis. Also, credit cards may be sponsored by large retailers (such as major clothing or department stores) or by banks or corporations (like VISA or American Express). 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 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 program... credit card instead of requiring cash. The merchant makes arrangements to participate in a internationally to cover all these cards. VISA became the first credit card to be recognized

Credit Cards Effect to the Company

Disadvantage of Credit Cards
Some 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 outfit for the weekend. No, these customers are thinking of the short term gains. Experts have

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.

Advantages
1. Offer free use of funds, provided you always pay your balance in full, on time. 2. Be more convenient to carry than cash. 3. Help you establish a good credit history. telephone. 5. Give you incentives, such as reward points, that you can redeem. 4. Provide a convenient payment method for purchases made on the Internet and over the

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! Simply choose a credit card online 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, 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 you do not have your billing statement, either search online or call directory assistance billing statement. They will be able to help you close the card and issue you a new card. If send us an email at cs@credit.com letting us know what kind of card you are interested in

(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 not 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? stolen cards, fraudulent charges, change of address, and more. Unfortunately, Credit.com is

A secured credit card can 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 when you 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 as the 4th Credit Bureau) to determine what credit card products to offer. However, once you submit your application, the credit card companies may use your credit scores from 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

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 my name without my authorization? Contact the credit card company immediately! Let them know you suspect you are a victim of 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 own business, 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 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 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 regular credit cards designed for students who are first-time credit card applicants. You your credit card is lost or stolen, you can be reimbursed for any fraudulent charges made. If

$200 to $250. This deposit will act as your credit limit and will be returned to you when you cancel your card. While your card is active, your credit card company will report your status monthly to the three major credit bureaus and your credit line will periodically increase, helping to improve your overall credit score and credit history.

If you are looking for something similar to the secured credit card but cannot afford to put down a deposit, you may want to consider an unsecured card for borrowers with credit problems. These cards allow you to apply with a processing fee of $39 that you pay after the credit card company receives your application. Your initial credit limit will be at least $250 and the following fees will be billed to your first statement: annual fee of $48, account setup fee of $29, program fee of $95, monthly participation fee of $6, and an additional card paid. Although you will ultimately pay the same as if applying for a secured card, an unsecured card will give you the opportunity to spread out your payments over several months.

fee of $20 per card (if applicable). These fees will reduce your available credit until they are

Our recommendation is if you are considering either the unsecured card or the secured card, choose the secured card. You will save money in the long run by going with the secured card, and the security deposit is refundable. The fees on the unsecured card are not refundable and you will have to pay interest on any initial charges you dont pay right away.

METHODOLOGY

TYPE OF RESEARCH DESIGN

A 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.

SOURCES OF DATA
There 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 SOURCE

Secondary data was collected from Books Journals and magazines. Internet sources. Articles. Research papers and publications.

DATA FROM PRIMARY SOURCE

The 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.

SCALING TECHNIQUES
There 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 in the following casesThe 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. It was used when The respondents were asked were their complaints resolved by their bank. When the customers were asked to rate the credit cards provided by the banks.

Thus both, Rank order scale and Likert scale were used to determine customers perceptions of their bank services.

QUESTIONNAIRE DEVELOPMENT
The questionnaire was developed in accordance with the research objective. For better understanding

ANALYSIS AND DISCUSSION

ANALYSIS OF QUESTIONNAIRE
Q1. How many males and females are using Credit cards for making their purchases?

Sales
MALE FEMALE

Interpretation: - More than 70% of the people interviewed are male. Only 6 out 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 travel different 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

15-35 yrs 35-50 yrs 50-60 yrs Above 60

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 among youngster 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, who have 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?

Sales
>1 lac rs 1-2 lac rs 2 - 3 lac rs >3 lac rs

Interpretation

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 the bank. Q4- which area the customer belongs?

Sales
urban rural

INTERPRETATION More 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.

Sales
Consultant Student Others Doctor Engineer

INTERPRETATION

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 also prefer 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?

Sales
Axix SBI HSBC HDFC

Interpretation From the above observation we can see that most of the people prefer using credit cards of SBI