Dissertation MSC International Business and management Topic: The difference and similarities of Consumer behavior of India and

UK towards usage of Credit Cards Submitted To: Dr. Juanling Huang By: Rohit Sharma Birmingham City University

ABSTRACT This piece of systematic study has been done on the area of consumer behaviour towards the use of credit card as a medium of purchasing power. This study includes a comparative study of Birmingham based consumers and New Delhi (India) based consumer s. In order to achieve the objectives of this piece of work researcher has done extensive literature review and chosen sample from both the countries towards conducting primary research. Researcher has collected data from the identified samples and analysed that data to get the conclusion and relate the same with the established objectives. Conclusion of this project is ver y interesting. Researcher found that it is the good and bad experience of the consumers that influencing consumer behavior that leads to usage and non usage of the credit card. But in India this outcome is completely different. Most of the consumer are falling in the same category, that is their choice of using and non using of credit card is depending on the good and bad experience of the consumer with the service provider but there are some factor which seems equal influence to the consumer behavior of Indian consumers that is the influence of their family members and overall their family culture.

ACKNOWLEDGEMENT I would foremost like to place on record my deepest regards, gratitude and appr eciation to my supervisor in the research work Dr. Juanling Huang, who have been a driving force behind the completion of this project. She has been a great source of inspiration and learning, guiding me smoothly throughout this period.

INTRODUCTION Credit car ds are convenient way to pay for all kind of products. Many consumers regard them safer then use of cash. Credit cards basically offer the most flexible form of short term borrowings and repayment terms available on the high street. The use of credit cards is increasing rapidly all over the world but percentage of consumers var ies in different countries according to the consumer usage behavior. In todays era, with expansion of new industries and globalization ther e ar e many sectors which have flourished other then Production and Manufacturing units. There has been outstanding improvement in the financial sector all over the world. Although there was drastic affect of recession in many parts of the world, still the financial sector has regained its position by upcoming Technology and debt covers. In this competitive world, Plastic money holds a wider place in everyones life. The use of plastic money (Credit/Debit/ATM cards) has made life easy and comfortable. The use of plastic money varies from individual to individual. As students pr efer to use ATM/DEBIT card for their day to day expenditures whereas business men prefer to use Credit Cards as the common mode of expenditure. With use of Plastic money, card holders enjoy the fun of shopping and making expenditures without cash payments. There are various pros and cons in use of Credit Cards. Use of credit card is of great ease while using them at the time of travelling or purchase of some expensive item at one point for which customer might not be carrying hard cash in pocket. It is easy to carry and simple to use but on other side of the coin it has many negative effects in respect to which there have been huge default ratio of credit car ds and of course one of the major reason of recession in the US. Many people fear using credit cards because of high interest rates to be paid at nonpayment of the credit cards bills. Secondly it does not let make a hold on persons expenditure list, as customers do not feel hard to pay through credit cards as compared to paying Hard cash.

India and its banking sector: India Is consisted on Area of total: 3,287,263 sq km, which include land: 2,973,193 sq km water: 314,070 sq km with the population of 1,173,108,018. Population of India is the second highest in the world. India is included in large domestic markets and ther e is dramatic rise in domestic demand. Economy of India is going good, and is set to be a global growth outperformer Indian economy is showing stability from number of years and is among countries have high gr owth rate. Central bank of India is showing positive attitude towards stable policy and encouraging commercials to introduce new products. Curr ently banking sector of India is facing some difficulties for example increasing number of loans. There is lack of links between Indian banks and the global financial system . The banking sector is held back by low levels of per capita GDP. Banking sector in India have to face some problems of logistics, for example logistics involve in running the bank operations. There are other pr oblems involve are too much dependency on papers for example cheques. Some 600,000 villages in India lack banking services, Reserve Bank of India data show. The central bank has ordered commercial and r egional banks to bring financial services to at least 400,000 of those by 2015(Chibber, 2010). Indian financial institutions issued 185 million debit cards as of the end of April, up 32.1% from 140 million issued a year earlier (Chibber, 2010). Selection of UK: Uk is multicultural country with 61 million people, and is considered one the most developed country on this wor ld. UK has people all around the wor ld. UK is also one of those countries where people enjoy their basic human rights, and UK Government is working for basic human right in other countries like Pakistan and Afghanistan. UK is one of those countries which have low poverty level. The UK is made up of 4 countries. Throughout history, many different races and cultures have had an influence on the UK and consequently played a role in creating the diverse society UK is living today. Germanic tr ibes such as the Angles and Saxons, the Romans, Scandinavian Vikings and the Normans all invaded and settled in the UK a thousand year s or more ago. Mor e

recently, large numbers of South Asians, Africans, West Indians, Australians, South Africans and others have come to live in the UK's towns and cities (FCO, 2009). AIM & OBJECTIVES / RESEARCH QUESTIONS / HYPOTHESIS This project is based on credit cards and its usage. The project has been undertaken to bring in lime light the usage of credit cards between Birmingham (UK) based and New Delhi (India) based consumers. This study is based on factors which affect the behaviour of consumers in these categories towards usage of credit cards .The behavior of these consumers towards the acceptance and negligence of credit cards has been studied. Various kinds of cultural values and norms has been studied which relates to the credit cards usage in both the categories and countries. Aim: The aim of this research is to explore the consumer behavior on usage of credit card as a mode of expenditure in India and UK. Objectives: 1. To review and critically analyze the consumer behavior of India and UK towards usage of cr edit cards as mode of expenditure. 2. To identify the impact of cultur al difference on credit cards usage. 3. To identify various reasons that affects the usage/Non usage of credit cards in India and UK 4. Suggestions on the base of findings, to improve the usage of credit car ds.

Research Questions: 1. What are the factors that affect usage and non usage of credit card in India and UK? 2. what is the difference in preference of usage of credit card in the consumers of New Delhi (India) based and consumers of Birmingham (UK)? 3. What are the possible cultural and other difference effecting the usage of credit cards. Justification of the Topic Organizations expansion is key point for any organization in this world, companys works to maximize their profits. Key strategies for profit saving companies use are Cost saving and getting more specialization on key competencies aspects, and capture more markets. A lot of companies are already operating in different parts of world. The main obstacles they feel in operating in differ ent countries are difference of cultur e, norms values and differ ent environment. Consumer behavior is an important expects of any business success, and is directly related to culture of any society. Consumer behavior is more important for organizations operating in different cultures. Select ion of Industry and product : Banking industr y is one of those industries which are globally recognized. Indian banking industry is somehow influenced by UK banking industr y. Cr edit card is considered as a global product and will be a good selection In order to understand the clear picture of cultural impacts on business operating in different areas of world with same product.

Structure of Dissertation: This piece of research project has been presented in following order. Introduction chapter Literature review Research method Analysis and discussion Conclusion and r ecommendations Bibliography and Appendix.

Chapter 2 Literature review Background Information: In our day of age, there is rapid growth of technological which has not only improve the system and oper ations but brought a different view of handing different things and situations. All these things bring more competition in Banking Sector. It is clear that the organizations that are unable to keep align themselves with these technological advancement for example electronic banking are faced with the threat of not being able to compete with their competitor s and faced the danger of going out of business. It will not be false if we say that electronic banking has changed the shape of the competition and competitive environment. Technology assures the customers to meet their demands and wants at right time and right place. The credit card market has grown markedly since the first cards were introduced in the 1950s ([2] Durkin and Price, 2000). Credit card is and important part of electronic banking. Credit card is used instead of paper money and is considered as contemporary tool for paying bills. As the credit card services currently focus on customers, determining the effective factor s on credit card ownership and usage is crucial for marketing purposes. According to this, the subject of this experimental study is to determine the factors of how to become a cr edit card holder and the effective user of the credit cards. As the summary of research obtained via factor analysis, 2 out of 5 factors were found to be effective on owning/using credit card. Credit Card usage in UK: A recent sur vey shows that nearly one in four people in UK use credit cards to pay their household bills and meet day-to-day expenses. Credit cards companies are now beginning to offer less fr ee balance transfers, introducing the balance transfer fee. This is a charge levied on balance transfers that you make and are set around 2% of the balance. In the UK by the end of 2005 there were 70 million credit cards in circulation, held by 31.6 million cardholders, with an average of 2.4 cards per per son. (APACS, 2006). This is a growth of 14 million cardholders since 1995 and credit cards ar e now held by over two- thirds of the UK over-18 population. Spending on credit cards in the UK was 125 billion in 2005, with the average value of a credit card transaction being 60 ( APACS, 2006). Lindley et al. (1989) identified the characteristics of consumers who held credit cards and established the types of spending for which they used their credit cards. This study, just like that of Hawes (1988), was longitudinal. The findings suggested that the growth in number of households which possess credit cards had slowed since 1971, implying that the market had become more saturated. They also found that women use credit card mor e often as mode of expenditure whereas men use it occasionally Car d usage had increased for payments relating to furniture/appliances, clothing/shoes and small household goods (sheets, towels, dishes, etc.) but had declined for gasoline/oil payments.

According to research from the Halifax, cash is no longer king. When asked to 935 UK consumer s, how long they could last with their credit card alone, over 54% of respondents say a week or more. Almost one in three ( 29%) say they would feel comfortable going a month or more. And it is the convenience of paying with a credit card that is most appealing. When asked "why do you use your credit card?" by Halifax, the top answer was convenience ( 49%), followed by the fact consumers don't like to carry cash (17%) and that cards offers added protection (16%) Credit cards are still the preferr ed method of online payment probably because any personal information lost to hackers wouldn't empty their bank accounts. (Sarawak,2008) Credit card usage in India: India's improving economy is helping to drive higher overall payment card usage, with debit cards growing significantly faster than cr edit cards, new data from India's central bank show, It is because of uncertainty and insecurity and high debt risk people want to go for debt cards but still Indian consumers in June spent 55.4 billion rupees (US$1.2 billion) on credit cards, up 14% from 48.6 billion rupees spent during June 2009. They initiated 20.2 million transactions, up 5.8% from 19.1 million during the same period a year ago, according to the Reserve Bank of India. But still credit card consumers are very less in India as compared to the other big developed or developing nations. Indian financial institutions issued 20.4 million credit cards as of Dec. 31, down 20.9% from 25.8 million a year earlier, the central bank says. The current upswing for credit card spending bodes well for card issuers affected by the economic slowdown, Mrinalini Manral, an analyst with Mumbai-based electronic payments research firm Dassler Business Intelligence, tells Payments Source. "Card issuers like ICICI have been paring down cards ...," she says. "The lack of confidence could also be seen by the decision of RBS to not carry on with ABN Amro's card operations This card-usage upsurge should instill some confidence back into the market," she adds. (By: Ankush Chibber) Credit Card Users: (Mathews and Slocum,1969) classify credit card holder s into two categories, based on their "use" of credit cards. The first group is labeled " installment users " because they elect to pay an amount less than their monthly balance and by rolling over part of the debt, they consequently pay interest charges. The second group is labeled " convenience users". This group considers cards as substitutes for cash and they pay all the balance due within the billing cycle. More recent terminology (see Worthington, 2005) categories these repayment behaviors as "transistors" (those who repay in full at the end of each billing cycle) and "revolvers" (those who do not repay in full and hence take debt and pay interest on that debt) . In both studies, the researchers compare cardholders based on their social class. They find that upper class cardholders, in comparison with lower class cardholders, have a greater tendency to use cards for the

convenience they offer and to pay the whole sum due within the billing period.

Advantages of Credit Card FAST Credit cards are quick and easy to use, no matter where ever u are. It gives you quick access to finance up to your credit limit at any time u want, making them very useful for dealing with unexpected costs and expenses. Flexible You can use credit cards to pay for anything as you need it, last minute or unexpected costs can be covered without any tension as you ar e given at least 56 days before paying interest. If you don't like to carry large amounts of cash with you or if a company doesn't accept cash purchases (for example most airlines, hotels, and car rental agencies), putting pur chases on a credit card can make buying things easier. Though you should always pay off as much off the credit card balance as possible to avoid interest building up. Purchase Protection In a way credit card gives protection to your purchases means if u lost your real receipt card statement helps you to prove that that u purchase such things. one can easily track his or her purchases as all purchases made by a credit

card listed (online and in bills)as compare to chauqes or cash which involve keeping numerous receipts. Id you provide employees with a credit card then it becomes much easier to keep track of their purchases, and advise them where purchases may not be considered suitable expenditure by you. Some cards even give insur ance on large pur chases. Credit Card Benefits - In addition to the benefits listed above, some credit cards offer additional benefits, such as discounts from particular stores or companies, bonuses such as free airline miles or travel discounts, and special insurances (like travel or life insurance.)Most of these benefits are meant to encourage you to charge more money on your credit card. The benefits are real and can be helpful as long as you remember your spending limits. Disadvantages of Credit Card Remember, credit card companies start making their money when you can't afford to pay off your char ges! Blowing Your Budget - - The biggest disadvantage of credit cards is that they encourage people to spend money that they don't have. Most credit cards dont ask you to pay off your balance each month, so even if you only have 100, you may be able to spend up to 500 or 1,000 on your cr edit car d. While this may seem like 'fr ee money' at the time, but you will have to pay it off -- and the longer you wait, the more money you will owe since credit card companies charge you interest each month on the money you have borrowed. Cost Most credit cards have relatively high rates of interest compared to loans and other finance; which means if you allow interest to accrue, the cost of using credit cards

can be very high. Expenses Control If you give a credit card to an employee, they are able to pay for expenses and other costs instantly. Whereas if they had to pay cash you could ensure that they do not get their money back for items you consider not to be expenses. Credit Card Fraud - Like cash, credit cards can also be stolen. They may be physically stolen (if you lose your wallet) or someone may steal your credit card number (from a receipt, over the phone, or from a Web site) and use your card for large purchase. The good news is that, unlike cash, if you realize your credit card or number has been stolen and you report it to your credit card company immediately, you will not be charged for any purchases that someone else has made. Even if you don't realize your credit car d

number has been stolen (sometimes you might not know until you receive your monthly statement), most credit card companies don't charge you or only charge a small fee. There are several things you can do to prevent credit card fraud: If you lose your card or wallet, report it to your credit card company o immediately. Don't loan your credit card to anyone and only give out your credit car d o infor mation to tr usted companies or Web sites. Check your statement closely at the end of each month to make sure all o char ges are yours. Credit car ds can make life easier and be a great tool, but if they aren't used wisely they can become a huge financial burden. If you do decide to use credit cards, remember these simple rules: Keep track of all your purchases. y Payback your charges quickly y Find the right deal for yourself y Don't spend outside your budget. y Pay off your balance on all of your credit cards at the end of each month. y Don't loan your credit or give out your credit card information to anyone but y reliable companies. Evidence on the profitability of credit card arbitrage Many banks offer credit card balance transactions with low, or no interest rates. The balances can generally be transferred to pay off another card. These introductory low inter est rate offers are intended to attract the individuals to open an account with the financial institution or to transfer their balance to a lower interest rate credit card. The low interest rate offers generally apply to an introductory period and have an up-front fee. The introductory time period is typically anywhere from three months to eighteen months. Other promotions offer the intr oductory r ate until the balance is paid off. Some

promotions require the cardholder to make a purchase to receive the special rate. Although the credit card offers are intended to attract more credit card business for the bank, they may also provide the customer with the potential to earn an arbitrage profit. To earn an arbitrage profit, an individual takes a cash advance against the credit card and deposits the funds received into an FDIC insured money market account. An arbitrage profit is earned if the interest earned on the money market account exceeds the cost of funds related to the credit card cash transfer. Low introductory rates serve as a loss leader for the financial institution. Banks profit fr om these offer s in several ways. Some of the offer s are made on accounts with an annual fee. In the event of a missed or late payment, the interest rate on the card reverts to the regular, much higher rate allowing the bank to earn a profit. Banks may also earn a profit if the cardholder uses the card for purchases in addition to the cash advance. The bank earns a transaction fee in these instances. These transaction fees offset the cost of providing the low introductory rate. Finally, some introductor y offers, despite having an enticing appearance, are designed in such a way that arbitrage attempts will be unprofitable. The par agraph above has directly analyzed arbitrage opportunities available through the use of credit cards. Chakravorti and To (2002) propose a model that explains interactions between consumer s, merchants and card issuers. In their model, the issuer's ability to charge higher mer chant discount fees depends on the number of customers gained when the credit cards ar e accepted. Each mer chant faces a prisoner's dilemma where each independently chooses to accept credit cards, however all merchants' profits ar e reduced because of inter temporal business stealing across industries. Ausubel (1999) examines preapproved credit card solicitations. He finds evidence of adverse selection whereby the least cr editworthy individuals receiving the offer are more likely to respond. Moreover, he finds that recipients of credit card solicitations over respond to the introductory interest rate, relative to the duration of the introductory offer and to the interest rate that applies after the introductory period. Specifically, he finds that consumers are at least thr ee times as sensitive to changes in introductor y interest rates as compared to dollar-equivalent changes in the post introductory interest rate. He

also finds that consumers are two to three times as responsive to changes in the introductory interest rate as compared to dollar-equivalent changes in the duration of the introductory offer. Our research will extend this line of literature by pr ecisely measuring arbitrage profits at different interest rate combinations. This measurement provides additional evidence on the motivations of individuals to respond to interest rate changes. Some people surmise that credit card companies have taken steps to target individuals who are least likely to incur and manage additional credit card debt well. Several studies, including Black and Morgan (1999) and Bird, Hagstrom and Wild (1999) argue that credit card debt has become more readily available to lower income households on an absolute basis and has increased at a faster rate than for middle- and high-income households. Stavins (2000) finds evidence that bank credit card companies which extend credit to higher risk borrowers, char ge higher interest rates and fees, earning higher net revenues. Kidane and Mukherji (2004) analyze the characteristics of consumer s who are targeted and those who are neglected by credit card companies. Contr ary to the spirit of the previous work in this area, they provide evidence that credit card companies target consumers who have greater financial resources, a clean credit histor y, and a track record of responsible cr edit use. They also find evidence that individuals with fewer financial resources, recent payment problems, or limited credit histor y are neglected by credit car d companies. These results have important implications for our study of credit card arbitrage. They imply that individuals with better credit history and financial resources are more likely to receive credit car d offers that position them to execute cr edit card arbitrage transactions. Sullivan and Worden (1995) consider credit card defaults and bankruptcy. They find evidence of a moral hazard where consumers who ar e paying high inter est rates on credit cards, tend toward the aggressive use of credit in an apparent attempt to maximize the value of their option to default. They argue that these findings provide a plausible explanation for consumers' seeming insensitivity to interest rates charged on credit cards.

A cr itical issue related to credit card arbitrage is the impact that it might have on a consumer 's credit score. While the precise computation of credit scor es is not publicly available, many popular press articles propose actions that will improve individual credit scores. Some factors that are commonly referenced include the number of credit cards, the length of credit history, and the incidence of late or missed payments. Cardline (2006) reports that from 2001 to 2006 the aver age consumer credit score fell seven points to 675 whereas the average consumer balance on credit card debt increased from $7,270 to $12,300. Two other factors potentially contributing to these lower credit scores are an increase in late payments and delinquencies and an increase in the credit balance to credit limit ratio. Spencer (2006) describes situations wher e consumer cr edit scores have been damaged by fees and fines owed for items like overdue library books and unpaid parking tickets. In some cases, the impact led to higher mor tgage rates and down payments. King and King (2005) provide a compelling argument for consumers to prefer the use of credit cards over debit cards under the assumption that the credit card balance is paid on time each payment period. Their work considers the use of credit cards as a substitute for cash, checks, and debit cards. This approach assumes that individuals pay off the balance of their credit cards each month. Because the credit function of the cards is not the focus of their work, they do not address the issue of credit scores. Credit Card Market When customers in the market are homogeneous then in that case we can offer the product with undifferentiated marketing strategy that implies that product will go after the whole market with one offer. This is very simple and easy marketing condition where there will be less cost of advertising and other marketing efforts for the customers. Another situation where product doesnt match the objective of every customer, then the previous marketing strategy will not work. In this situation there should be a separate marketing str ategy for the different kind of customer s along with different kind of the product. In credit card market, there are vast number of credit card issuers all over the world which leads to high competition in the mar ket. So credit card companies need to

segment the market according to the need of customers of different age group or different cultures and accordingly try to satisfy their needs. Right marketing is not simply sale of the product; rather it is to have customer satisfaction. When marketing strategy is made to offer right product to the right people that basically requires matching the product with the people. In order to do the exercise of matching the product with the people, market should be segmented in to different groups of people with same requirements . This division of the market is known as Market Segmentation. As per Kotler 1993, Market segmentation is the process of classifying customers into groups with different needs, characteristics or behaviors. So market can be segmented based on the demographic factors, socio-economic factors and even the geographical factors. While doing the segmentation we need to match the above factors along with factors like- benefits, attitudes or beliefs and personality or lifestyle etc. Market strategies 1 With emerging globalization tr ends in trade and technology, there is a vast growth in financial markets. Cross-border transactions can happen easily and with use of credit car ds, the business house has lot more options to go ahead with. They are no longer under pressure and continue to find innovative ways to market their products and services. Credit cards are used by people all over the wor ld and the number of users is growing at an extremely high rate. 2 Credit card companies are using affiliate mar keting as a strategy and the use of internet has proven to be a success. They use conventional mar keting tools like advertisements in newspaper; magazine, radio and television as well. But advantages of Internet Promotions and affiliate marketing are known to credit car d companies. Internet offers opportunities to small entrepreneurs, who want to earn online. 3 The advent of inter net and its spread to the household has been understood by prime financial institutions. For a small business entrepreneur, to market or promote its product or services through online media can be difficult. But, with

sufficient information small businesses can get significant advantages from Internet. In other words, affiliate marketing strategy generates the highest return on investment if adequately supported by online interment advertisements. The number of Cr edit cards sold by affiliate marketing over the internet has grown rapidly over the number of years proves the success of such strategies. However one must fully understand the implications of this str ategy. Credit card policies Arbitration Clause/Agreement Some credit cards have a mandator y arbitration clause. This clause states that if you have a dispute with the credit card company you waive your right to have your case heard in a court of law. Instead your case will be heard by a mediator. The majority of mediation cases are decided in favor of the credit card company. Default Rate A credit card usually has a default rate. If you are late with your payment your interest rate could increase to 29.99 percent, depending on the credit card. Even if you have a zero percent promotional rate for balance transfers, a late payment will cause it to increase. Universal Default When you are late with a credit card payment it could affect your other credit car d accounts with other companies. They could lower your credit limit, increase your rate, or close your account. It all depends on that credit card company. This is known as the universal default clause.

Payment Allocation When you make a purchase or a balance transfer they are usually subject to different inter est rates. When you make your monthly payments the balance with the lowest inter est rate gets paid first. Rate Change A credit card company can change your interest rate any time even if the rate is fixed. They have to give you written notification, which is usually 15 days prior to the change in rate. Credit Card Operations of banks Pursuant to the announcement made in the Annual Policy Statement 2004-05, the Reserve Bank of India had constituted a Working Group on Regulatory Mechanism for Cards. The Group has suggested various regulatory measures aimed at encouraging growth of credit cards in a safe, secure and efficient manner as well as to ensure that the rules, regulations, standards and practices of the card issuing banks are in alignment with the best customer practices. The following guidelines on credit card operations of banks have been framed based on the recommendations of the Group as also the feedback received from the members of the public, card issuing banks and others. All the credit card issuing banks / NBFCs should implement these guidelines immediately. Each bank must have a well documented policy and a Fair Practices Code for credit card operations. In March 2005, the IBA released a Fair Pr actices Code for credit card operations which could be adopted by banks / NBFCs. The bank / NBFC's Fair Practice Code should, at a minimum, incorporate the relevant guidelines contained in this circular . Banks should widely disseminate the contents thereof including through their websites, at the latest by November 30, 2005. Guidelines for Implementation 1. Issue of cards

a. Banks / NBFCs should independently assess the credit risk while issuing cards to per sons, especially to students and others with no independent financial means. Add- on cards i.e. those that are subsidiary to the principal card, may be issued with the clear understanding that the liability will be that of the principal cardholder. b. As holding several credit cards enhances the total credit available to any consumer, banks should assess the credit limit for a credit card customer having regard to the limits enjoyed by the cardholder from other banks on the basis of self declaration/ credit infor mation. c. The card issuing banks / NBFCs would be solely responsible for fulfillment of all KYC requirements, even where DSAs / DMAs or other agents solicit business on their behalf. d. While issuing cards, the terms and conditions for issue and usage of a credit car d should be mentioned in clear and simple language (preferably in English, Hindi and the local language) comprehensible to a card user. The Most Important Terms and Conditions (MITCs) ter med as standard set of conditions, as given in the Appendix, should be highlighted and advertised/ sent separately to the prospective customer/ customers at all the stages i.e. during marketing, at the time of application, at the acceptance stage ( welcome kit) and in important subsequent communications. 2. Interest rates and other charges a. Card issuers should ensure that there is no delay in dispatching bills and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged. b. Car d issuers should quote annualized percentage rates ( APR) on card products, (separately for retail purchase and for cash advance, if differ ent). The method of calculation of APR should be given with a couple of examples for better comprehension. The APR charged and the annual fee should be shown with equal prominence. The late payment charges, including the method of calculation of such charges and the number

of days, should be prominently indicated. The manner in which the outstanding unpaid amount will be included for calculation of interest should also be specifically shown with prominence in all monthly statements. Even where the minimum amount indicated to keep the card valid has been paid, it should be indicated in bold letters that the interest will be charged on the amount due after the due date of payment. These aspects may be shown in the Welcome Kit in addition to being shown in the monthly statement. c. The bank / NBFC should not levy any charge that was not explicitly indicated to the credit card holder at the time of issue of the card and getting his / her consent. However, this would not be applicable to charges like service taxes, etc. which may subsequently be levied by the Government or any other statutory authority. d. The terms and conditions for payment of credit card dues, including the minimum payment due, should be stipulated so as to ensur e that there is no negative amortization. e. Changes in charges (other than interest) may be made only with pr ospective effect giving notice of at least one month. If a cr edit card holder desires to surrender his credit card on account of any change in credit card charges to his disadvantage, he may be per mitted to do so without the bank levying any extra charge for such closure. 3. Wrongful billing a. The car d issuing bank / NBFC should ensure that wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank / NBFC should provide explanation and, if necessary, documentar y evidence to the customer within a maximum period of sixty days with a spirit to amicably redress the grievances. b. To obviate frequent complaints of delayed billing, the credit card issuing bank / NBFC may consider providing bills and statements of accounts online, with suitable security built therefore. 4. Us e of DSAs / DMAs and other agents

a. When banks / NBFCs outsource the various credit card operations, they have to be extremely careful that the appointment of such service provider s does not compromise with the quality of the customer service and the bank / NBFCs ability to manage credit, liquidity and operational risks. In the choice of the service provider, the bank / NBFCs have to be guided by the need to ensure confidentiality of the customers records, respect customer privacy, and adhere to fair practices in debt collection. b. The Code of Conduct for Direct Sales Agents (DSAs) formulated by the Indian Banks Association (IBA) could be used by banks / NBFCs in formulating their own codes for the purpose. The bank / NBFC should ensure that the DSAs engaged by them for marketing their credit card products scrupulously adhere to the bank / NBFCs own Code of Conduct for credit card operations which should be displayed on the bank / NBFCs website and be available easily to any credit card holder. c. The bank / NBFC should have a system of random checks and mystery shopping to ensure that their agents have been properly briefed and trained in order to handle with care and caution their responsibilities, par ticularly in the aspects included in these guidelines like soliciting customers, hours for calling, privacy of customer information, conveying the correct ter ms and conditions of the product on offer, etc. 5. Protection of Customer Rights Customers rights in relation to credit card operations primarily relate to personal privacy, clarity relating to rights and obligations, preservation of customer records, maintaining confidentiality of customer information and fair practices in debt collection. The card issuing bank / NBFC would be responsible as the principal for all acts of omission or commission of their agents (DSAs / DMAs and recovery agents). i. Right to privacy a. Unsolicited cards should not be issued. In case, an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank / NBFC shall not only reverse the charges forthwith, but also pay a

penalty without demur to the recipient amounting to twice the value of the charges reversed. b. Unsolicited loans or other cr edit facilities should not be offered to the credit card customers. In case, an unsolicited credit facility is extended without the consent of the recipient and the latter objects to the same, the credit sanctioning bank / NBFC shall not only withdraw the credit limit, but also be liable to pay such penalty as may be considered appropriate. c. The card issuing bank / NBFC should not unilaterally upgrade credit cards and enhance cr edit limits. Prior consent of the borrower should invariably be taken whenever there are any change/s in terms and conditions. d. The card issuing bank / NBFC should maintain a Do Not Call Registr y (DNCR) containing the phone numbers (both cell phones and land phones) of customers as well as non-customers (non-constituents) who have informed the bank / NBFC that they do not wish to receive unsolicited calls / SMS for marketing of its credit card products. The DNCR should be set up within two (2) months from the date of this circular and wide publicity should be given to the arrangement. e. The intimation for including an individuals telephone number in the Do Not Call Registry (DNCR) should be facilitated through a website maintained by the bank / NBFC or on the basis of a letter received from such a person addressed to the bank / NBFC. f. The card issuing bank / NBFC should introduce a system whereby the DSAs/ DMAs as well as its Call Centers have to first submit to the bank / NBFC a list of numbers they intend to call for marketing purposes. The bank / NBFC should then refer to the Do Not Call Registry (DNCR) and only those numbers which do not figure in the Registry should be cleared for calling. g. The numbers cleared by the card issuing bank / NBFC for calling should only be accessed. The bank / NBFC would be held responsible if a Do Not Call Number (DNCN) is called on by its DSAs / DMAs or Call Centre/s.

h. The card issuing bank / NBFC should ensure that the Do Not Call Registry (DNCR) number s are not passed on to any unauthorised person/s or misused in any manner. i. Banks / NBFCs/ their agents should not resort to invasion of privacy viz., persistently bothering the card holders at odd hours, violation of "do not call" code etc. (ii) Customer confident iality a. The card issuing bank / NBFC should not reveal any information relating to customers obtained at the time of opening the account or issuing the credit card to any other person or organization without obtaining their specific consent, as regards the pur pose/s for which the information will be used and the or ganizations with whom the infor mation will be shared. Banks / NBFCs should satisfy themselves, based on specific legal advice that the information being sought fr om them is not of such nature as will violate the provisions of the laws relating to secrecy in the transactions. Banks / NBFCs would be solely responsible for the correctness or otherwise of the data provided for the pur pose. b. In case of providing information r elating to credit histor y / repayment record of the card holder to a credit information company (specifically authorized by RBI) , the bank / NBFC may explicitly bring to the notice of the customer that such information is being provided in terms of the Credit Information Companies (Regulation) Act, 2005. c. Befor e reporting default status of a credit card holder to the Credit Information Bureau of India Ltd. (CIBIL) or any other credit information Company authorized by RBI, banks / NBFCs may ensure that they adhere to a procedure, duly approved by their Board, including issuing of sufficient notice to such card holder about the intention to report him/ her as defaulter to the Credit Information Company. The procedure should also cover the notice period for such reporting as also the period within which such report will be withdrawn in the event the customer settles his dues after having been reported as defaulter. Banks / NBFCs should be particularly car eful in the case of car ds wher e ther e are pending disputes. The disclosure/ release of infor mation, particularly about the default, should be made only after the dispute is settled as far as possible. In all cases,

a well laid down procedure should be tr ansparently followed. These procedures should also be transparently made known as par t of MITCs. d. The disclosure to the DSAs / recovery agents should also be limited to the extent that will enable them to discharge their duties. Personal information pr ovided by the car d holder but not required for recovery purposes should not be released by the card issuing bank / NBFC. The car d issuing bank / NBFC should ensure that the DSAs / DMAs do not transfer or misuse any customer information during marketing of credit card products. (iii) Fair Practices in debt collection (a) In the matter of recovery of dues, banks / NBFCs may ensure that they, as also their agents, adhere to the extant instructions on Fair Practice Code for lender s (circular DBOD. Leg. No. BC. 104 /09.07.007 / 200203 dated May 5, 2003) as also IBAs Code for Collection of dues and repossession of security. In case banks / NBFCs have their own code for collection of dues it should, at the minimum, incorpor ate all the ter ms of IBA's Code. (b) In particular, in regard to appointment of third party agencies for debt collection, it is essential that such agents refrain from action that could damage the integrity and reputation of the bank / NBFC and that they observe strict customer confidentiality. All letters issued by recovery agents must contain the name and address of a responsible senior officer of the card issuing bank whom the customer can contact at his location. (c) Banks / NBFCs / their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection effor ts, including acts intended to humiliate publicly or intrude the privacy of the credit card holders family members, referees and friends, making threatening and anonymous calls or making false and misleading representations. 6. Redressal of Grievances

a. Generally, a time limit of sixty (60) days may be given to the customers for preferring their complaints / grievances. b. The card issuing bank / NBFC should constitute Grievance Redressal machinery within the bank / NBFC and give wide publicity about it through electronic and print media. The name and contact number of designated grievance redressal officer of the bank / NBFC should be mentioned on the credit card bills. The designated officer should ensure that genuine grievances of credit card subscribers are redressed promptly without involving delay. c. The grievance redressal procedure of the bank / NBFC and the time frame fixed for responding to the complaints should be placed on the bank / NBFC's website. The name, designation, address and contact number of important executives as well as the Grievance Redressal Officer of the bank / NBFC may be displayed on the website. There should be a system of acknowledging customers' complaints for follow up, such as complaint number / docket number, even if the complaints are received on phone. d. If a complainant does not get satisfactory response from the bank / NBFC within a maximum period of thirty (30) days from the date of his lodging the complaint, he will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievance/s. The bank / NBFC shall be liable to compensate the complainant for the loss of his time, expenses, financial loss as well as for the har assment and mental anguish suffered by him for the fault of the bank and where the grievance has not been redressed in time. 7. Internal control and monitoring systems With a view to ensuring that the quality of customer service is ensured on an on-going basis in banks / NBFCs, the Standing Committee on Customer Service in each bank / NBFC may review on a monthly basis the credit card operations including r eports of defaulters to the CIBIL, credit card related complaints and take measures to improve the services and ensure the orderly growth in the credit card operations. Banks / NBFCs should put up detailed quarterly analysis of cr edit card r elated complaints to their Top

Management. Card issuing banks should have in place a suitable monitoring mechanism to randomly check the genuineness of merchant transactions. 8. Right to impose penalty The Reserve Bank of India reserves the right to impose any penalty on a bank / NBFC under the provisions of the Banking Regulation Act, 1949 for violation of any of these guidelines. Short term finance With holidays like Christmas or the New Year seeming to come round too quickly, people often find they have not saved up enough for their celebrations. Moreover, budgeting is an alien concept during this and spending can spiral out of control. To cover the inevitable shortfall in resources, the credit card is an obvious attraction. There are advantages to using the card to finance your expenditure: i) It gives you free access to about a months credit. ii) It gives you the temporary ability to spend beyond your current means. iii) It allows you to track your expenditure. iv) You do not have to carry lots of cash around with you. Use of credit card, however, does carry with it significant dangers if it is not carefully controlled. Research indicates that spending could increase by up to 35% when using a credit card compared with using cash. Here are some key principles to help you guard against running into credit card debt trouble. 1. Spending Plan If your spending is going to exceed your income for the festive month, consider cutting intended festive expenses, or other expenses, to stay within your income. I am

assuming you have drawn up your spending plan for that period. Thats where a credit card comes to the rescue. Though not readily appar ent, the use of your credit card can create distortions in the management of your finances. Unless you are monitoring your spending in both cash and cr edit, there is a danger that you will be uncertain whether or not you are living within your means. It would therefore be unwise to begin using a credit card if you are not in control of your finances, that means using a spending plan. 2. Debt to Income Ratio Do not forget that use of your credit car d adds to your indebtness. In managing your financial affairs, one of the key indicators to watch is your debt-income ratio. This is monthly debt repayment as a percentage of your monthly after-tax income, and raises a red flag when you tinker with too much debt. A ratio of over 20% is becoming unhealthy. If you already have credit card debt that is overdue, do not add to it. 3. Bridging Finance Use of a credit card is ideally a means of short- term financing of your operations. That means settling any debt incur red using your card within days. Paying the minimum balance will not do. If you are not confident that you can pay it off in full, you wound do your self a huge favor by not using a credit card. Should you decide to go ahead and use a card, you need to be prepared for extra costs in interest and penalties associated with extended credit. This adds to your expenses, and you need to be ready to be ready to reduce other regular expense to accommodate this, other wise you run the risk of creating ongoing hard-core debt. 4 . Net Worth Credit card debt incurred during the festive season is usually for consumer spending paying for your holiday, buying gifts, entertainment, traveling expenses, etc and creates what is known as consumer debt. This kind of debt adds to your liabilities, but contributes nothing to your assets. Your net worth is reduced to the extent of consumer

debt incurred. Shrinking net wor th is not good for your financial health. So do have your self a happy holiday. But as you go about it, finance it in a way that gives you the comfort that you wont be debt-laden the following month Understanding consumers As per Kotler Armstrong (1996) Companies today recognize that they cannot appeal to all buyers in the marketplace, or at least not to all buyers in the same way, Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Moreover, the companies themselves var y widely in entire market, sometimes against superior competitors; each company must identify the parts of the market that it can serve best and more profitably. Thus, most companies are being choosier about the customers with whom they wish to build relationships. Most have moved away from mass marketing and inclined towards market segmentation and targeting-identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each. Instead of scattering their mar keting efforts, firms are focusing on the buyers who have greater inter est in the values they cr eate best. Companies have not always practiced market segmentation and targeting. For most of the past century, major consumer products companies held fast to mass marketingmass-producing, mass-distributing, and mass- promoting about the same product in about the same way to all consumer s. Henry ford typified this marketing strategy when he offer ed the model T Ford to all buyers; they could have the car in any color as long as it is black. Similarly, coca-Cola at one time produced only one drink for the whole market, hoping it would appeal to everyone. These companies argued that mass marketing creates the largest potential mar ket, which leads to the lowest costs. This in turn, can translate into either lower prices or higher margins; however, many factors now make mass mar keting more difficult. For

example, the wor lds mass markets have slowly splintered into a profusion of smaller segments- the baby boomers here, the Gen Xers there; here the Hispanic segment, there the African American segment; here working women, there single parents; her e the Sun Belt, there the Rust Belt. Today, marketers find it very hard to create a single product or program that appeal to all of these diverse groups. Kotler Armstrong (1996) . Credit card companies were also in to mass marketing in the past year s as they were offering the same services to all types of customers but now as the competition is high, they should provide services according to needs of different type of customers as students have different needs in terms of use of credit cards as compared to business men or a housewife. What is Consumer behavior? Consumer behavior depends on some basic points y The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers); y The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media); y The behaviour of consumers while shopping or making other marketing decisions; y Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; y How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and y How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. There are four main applications of consumer behaviour: y The most obvious is for marketing strategy i.e., for making better marketing campaigns. For example, by understanding that consumers are more receptive

to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in tur n influence many subsequent customers brand choices. y A second application is public policy . In the 1980s, Accutane, a near miracle cur e for acne, was introduced. Unfor tunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumer s attention, the Federal Drug Administr ation (FDA) took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers. y Social marketing involves getting ideas across to consumers rather than selling something. Marty Fishbein, a marketing professor, went on sabbatical to work for the Centres for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however , was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the dr ug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic. y As a final benefit, studying consumer behaviour should make us better consumer s. Common sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will

sensitize you to the need to check the unit cost labels to determine if you are really getting a bargain. Consumer satisfaction In order to understand the consumer behavior one should consider the concept of consumer satisfaction too. Consumer satisfaction is that area of consideration that attr acts all the efforts of an organization. At the end of the efforts to save the products long ter m loyalty can be achieved if consumers are satisfied. Its not an easy concept to conclude because there are many factors leads to consumer satisfaction. To understand the concept one should consider all aspect of the topic area. Researchers agr ee on the concept that its a wide area that is not easy to conclude, basically satisfaction part. A basic definitional inconsistency is evident by the debate of whether satisfaction is a process or an outcome (Yi 1990). More precisely, consumer satisfaction definitions have either emphasized an evaluation process (e.g., Fornell 1992; Hunt 1977; Oliver 1981) or a response to an evaluation process (e.g., Halstead, Hartman, and Schmidt 1994; Howard and Sheth 1969; Oliver 1997, 1981; Tse and Wilton 1988; Westbrook and Reilly 1983). From a general definition perspective, process definitions ar e problematic in that there is little consistency in the satisfaction process. From an operational perspective, process definitions are plagued by antecedent constructs included in the conceptual definition; thus, there is an overlap between the domains of the deter minative process constr ucts and the consumer satisfaction construct. Most definitions have favored the notion of consumer satisfaction as a response to an evaluation process. Specifically, there is an overriding theme of consumer satisfaction as a summary concept (i.e., a fulfillment response (Oliver 1997); affective response (Halstead, Hartman, and Schmidt 1994); overall evaluation (Fornell 1992); psychological state (Howard and Sheth 1969); global evaluative judgment (Westbrook

1987); summary attribute phenomenon (Oliver 1992) ; or evaluative response (Day 1984)). However, there is disagreement concerning the nature of this summary concept. Researchers portray consumer satisfaction as either a cognitive response ( e.g., Bolton and Drew 1991; Howard and Sheth 1969; Tse and Wilton 1988) or an affective response (e.g., Cadotte, Woodruff, and Jenkins 1987; Halstead, Hartman, and Schmidt 1994; Westbrook and Reilly 1983). Furthermore, oper ational definitions may include a behavioral dimension of satisfaction (e.g., "I would recommend the school to students inter ested in a business career." (Halstead, Har tman, and Schmidt 1994),although conceptual definitions are void of a behavioral orientation. Feelings, values and attributes of customer which encourage them to purchase and use the same product, service or brand again and again means customer loyalty to that product. They are built on the foundation of understanding customer needs and wants. A five-level hierarchy of customer behavior can be developed on the basis of this infor mation. It suggests that customer satisfaction as determined by, among other things, whether a customers expectations are met or exceeded in an individual transaction or a longer-term relationship is the lowest level of this hierarchy. Of cour se, we know that it supplies the preconditions under which customer loyalty in which a customer devotes an increasing share of wallet to repeat purchases from the same supplier may be developed (Heskett, 2002). Customer satisfaction is considered to be one of the most important outcomes of all marketing activities in a market-oriented firm. The obvious need for satisfying the firm's customer is to expand the business, to gain a higher market share, and to acquire repeat and referral business, all of which lead to improved profitability ( Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in service sector s such as: banking, pest control, dry cleaning, and fast food; found that customer satisfaction has a significant effect on purchase intentions in all four sectors. Similarly, in the health-car e sector, McAlexander et al. (1994) found that patient satisfaction and service quality have a significant effect on future purchase intentions.

Liter ature identifies a number of factors that r eflects image in the customer's mind. Image is considered to influence customer s' minds through the combined effects of advertising, public relations, physical image, word-of-mouth, and their actual experiences with the goods and services (Normann, 1991) . Similarly, (Selnes, 1993), using numerous researches on service organizations, found that service quality was the single most important determinant of image. Thus, a customer 's experience with the products and services is considered to be the most important factor that influences his/her minds in regard to image. Differences of consumer behavior in UK and India Consumers behavior on usage of credit cards is very variant in UK and India. Investors, manufacturers, retailers, banks and government agencies use various assessments of consumer confidence in planning their actions. The ability to predict major changes in consumer confidence allows businesses to gauge the willingness of consumers to make new purchases. As a result, businesses can adjust their operations and the government can prepare for changing tax revenue. If confidence is dropping and consumers are expected to r educe their spending, most producers will tend to r educe their production volumes accordingly. For example, if manufacturers anticipate consumers will reduce retail purchases, especially for expensive and durable goods, they will cut down their inventories in advance and may delay investing in new projects and facilities. Similarly, if banks expect consumer s to decrease their spending, they will prepare for the reduction in lending activities, such as mortgage applications and credit card use. Builders will plan for the decline in home construction volumes. The government will get ready for the reduction in future tax revenues. On the other hand, if consumer confidence is improving, people ar e expected to increase their purchases of goods and services. In anticipation of that change, manufacturers can boost production and inventories. Large employers can increase hiring rates. Builders can prepare for higher housing construction rates. Banks can plan for a rise in demand for credit products. Government can expect improved tax revenues based on the increase in consumer spending. The relevance of a consumer confidence index for a country like India is

evident from the fact that Consumption Expenditure accounts for over 60% of Indias GDP. According to the study done by Chitra krishnaswmay (Sarawak,2008) the diffusion of credit cards is very slow in India compared to the international scenario. The total universe of plastic cards issued - credit and debit is just over 30 million in India. Regarding the age of adopters of credit cards in India most (40%) of the adopters is in the age group of 46 to 55 years. The low cardholding rate in the Indian mar ket shows that the country still has untapped potential to be explored. The 'buy now, pay later' concept is yet to catch on with most consumers in the nation. While Asia Pacific as a whole is clearly dominant in the pay later card markets, India leads the way in debit in terms of card transaction value. Many Indian consumers still prefer to use debit cards linked to salary accounts when spending their money. The total value of card transactions in India grew to INR6,524 billion (E96.4 billion) in 2008 On the other hand spending on credit and debit cards in the UK rose at a near doubledigit rate during the past year, challenging suggestions that consumers are tightening their belts. People spent 9.2% more on their cards during August than they did in the same month of the pr evious year, according to Barclaycard. The group said autumn sales, discounts in shops, and back- to-school spending had helped keep the retail sector buoyant during the month, while the rising cost of food and cotton may also be star ting to filter through into prices, further boosting spending levels. Stuart Neal, head of Barclaycard UK Payment Acceptance, said: "With leading retailers warning that the Government austerity drive will keep the economy in the doldrums and hit consumer confidence hard, it is good to see a fourth month of increased spending. According to the research done by Morgan Stanley /*-Group, Britons are turning in to a credit card dependent society at a fast clip .Credit cards are being used for every day bills as the customers are becoming very plastic concisions. Most of the daily use items are being bought with the use of credit cards. Mr. Patrick Muir ( Marketing Director of Morgan Stanley Consumer Banking), the trend for using credit car ds for daily use items

continuing to grow. As per their research on 2000 consumers ,it is found that 38% of over all credit card holders use their credit cards to purchase groceries, where as 45% use them for essentials like petrol and car expenses . MOTIVATING FACTORS OF USAGE AND OWNERSHIP Recognizing the case that credit card usage patter ns of emerging markets in which India takes place largely differ from those of well-developed markets such as UKs market, understanding attitudes and credit card usage behavior may affect the development of marketing strategies of credit card companies. Equipped with this kind of knowledge, credit card companies may be able to change consumer attitudes towards using and owning credit cards (Kurtulus. and Nasir, 2006). Such factors can be Population Factor The population of India is a lot more than UK but the use of credit card as a mode of expenditure is very high in UK as compared to India. Credit card issuers now finding different ways to attract customers in UK by adding different facilities to the car ds accor ding to the needs of the card holders. Technological Fac tor Major changes have been done in UK for the plastic money people keep in their pockets and wallets, for not only are credit card companies taking tentative steps to ensuring the mater ial the cards are made of is more environmentally friendly, but ther e are moves to make the cards easier and quicker to use. Barclaycard revealed the brand name of its thr ee-in-one payment card One Pulse The card will be the only one in the UK to combine Transport for London's Oyster card with a credit card facility. So these types of cards are very useful for salary class consumers. Meanwhile, Master card is

looking to introduce a similar product in the UK, initially in partnership with fast-food chain McDonald's (MW April 7). These "wave and pay" or "contactless" cards aim to make life easier for consumers. Culture and Society Factor Culture is the total of learned, socially transited costume, knowledge, material objects, and behavior. Culture includes the ideas, values and artifacts of groups of people. In sociological terms, culture does not refer solely to the fine arts and refined intellectual taste. Culture consists of all objects and ideas within society, including ice cream cones, rock music and slang words. A fairly large number of people are said to constitute a society when they live in the same territory, are relatively independent of people outside their area, and participate in a common culture. A society consists of people who a common heritage and culture. Members of the society learn this culture and transmit it from one generation to the next. According to the research done by Morgan Stanley Group, Britons are turning in to a credit card dependent society at a fast clip .Credit cards are being used for every day bills as the customers are becoming very plastic concisions. Most of the daily use items are being bought with the use of credit cards. Mr. Patrick Muir ( Marketing Director of Morgan Stanley Consumer Banking), the trend for using credit cards for everyday items are continuing to gr ow. People in UK use credit cards for daily grocery or for petrol in car or to pay for a drink in the pub wher e as the culture in india is totally different ,people still use cash as main mode of payment for daily use things .Some people dont use credit cards due to religious values like in muslim religion its not allowed to take or give any inter est on money.

A fairly large number of people are said to constitute a society when they live in the same territory, are relatively independent of people outside their area, and participate in a common culture. A society consists of people who a common heritage and culture. Members of the society learn this culture and transmit it from one generation to the next. Having a common culture also simplifies many day to day interactions. For example, when you buy an airline ticket, you know you dont have to bring along a hundreds of pounds or thousands of r upees in cash. You can pay with credit car d. Most of the big brand stores in UK like Tesco or Argos who provide service of online shopping sitting at home take the payment from cards and having a good response from customers of online shopping because it makes their life comfortable and easy and saves a lot of time, So using credit cards which is an easy and safe mode of payment which saves time of withdrawing cash from bank or keeping cash with you all the time has become an important part of daily life of UK based customers. This assumption r eflects basic values, beliefs, and customs of the culture of United Kingdom. Language is a critical element of cultur e that sets human apart from other species. Members of a society generally share a common language, which facilitates day to day exchanges with others. Language can be a barrier in india for global companies because in all 28 states of India people speak differ ent languages and to provide them complete knowledge about the product or taking exact feedback from them can be only possible in their own language. English is the main language which is used all over world however, a term can have a number of different meanings, even within the same society. For example, in United States, grass signifies both a plant eaten by grazing animals and an intoxicating drug. Cultural, subculture, and social class are particularly important in buying behavior. Culture is the fundamental determinant of a persons want and behavior. The growing child acquires a set of values, perceptions, preferences, and behaviour through his or her family and other key institutions. Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups, and geographic regions. When subcultures

grow large and affluent enough, companies often design specialized marketing programs to serve them. Such programs are known as diversity marketing. (kotlar 2004) Based on the above statement of Philip kotlar- kotlar (2004) it is true that consumers are heavily affected by the culture and subculture. In term of credit car d usage it is true that indian people still having conservative approach towards cr edit card proving Kotlars(2004) statement. Awareness factor Usage of credit card is depends on the awar eness of the consumers of the product. There is a huge number of service providers competing in the market working at different levels. Awar eness factors include the education and proper information about the product, types of facilities available on the product and in terms of credit car d most important is the security of the credit card. Suitable deals, these days credit card companies are providing insurance, free cash withdrawal facilities during festival times etc. As far as non usage of credit cards is concerned it is heavily depends on the thinking and background of the consumer. In India this product is ruling the market for last 12 to 15 years, but still this concept is not acceptable to traditional people. Fr om traditional people we mean by the class of people who think that it is a wrong habits of spending money without having money in hand. This is being seen as a kind of taking loan- which is a big fear. In UK, its being used and offered for many years back. Its simply because of the kind of consumers. In UK consumers are well awar e and aggr essive and overall education level is higher than in India. In India main revolution came after liberalization of Indian economy in the year 1991. In UK the cards being used from last few years comes with a chip and pin number ,Earlier the companies provide cards with magnetic strip on the back of the card and the problem with the cards was that the details of the cards were easily traced by hackers

which was used to make fake or counterfeit cards to rob the actual owner. The cards being used now adays with chip and pin are more secure and can be trusted by the customers. In India, the credit card companies now started using the chip and pin service in their cards as well. But people are still unaware of it yet. Methodology: Secondary Data: Secondary data could be raw data or could be published data, jour nal articles, reports by government or financial institutes, books and internet is considered as major source of secondary data for research. Reliability of secondary data depends on number of factors, the most important factor is the source of data, Secondar y data will be reliable if sour ce of data is reliable, for example World Bank repor ts. Reliability of data also depends on the updated information. The mor e updated information will leads towards more reliable data, this because of the changing natur e of environment. General articles are mor e reliable because they are more updated as compare to books. It took years to bring books in markets. There are number of questions on the r eliability of the secondary data gathered on internet but it is still important if it is handled carefully. In the case of corporate companies, the best source of secondary data is companies per formance reports. According to john in 2000 Secondary data is the data which

already used, which is collected by others for any reason, secondar y data is used to get a new look of the current research or can be used to compare currant work with author (John, 2000). Number s of ways are available to collect the secondar y data; it could be via journals and text books, written by well-known and qualified authors. Case studies, news papers and internet portals can also be used Secondary data can be collected in many ways such as via journals and text books written by the qualified authors, case study relevant to the current work, newspapers and articles which contains the recent information about current innovation activities. Secondary data can be used in different ways: The data can simply report in its original format. It is most likely that the place for y this data will be in main introduction or literatur e review as support or evidence for the argument. If it used (analyse it or r e-interpret it) for a different pur pose to the original then y the most likely place would be in the Analysis of findings section of the dissertation. There are many sour ces of data and most people tend to underestimate the number of sour ces and the amount of data within each of these sources. Sources can be classified as: Paper-based sources books, journals, periodicals, abstracts, indexes, y directories, research reports, conference papers, market r eports, annual r epor ts, inter nal records of organisations, newspapers and magazines Electronic sources CD-ROMs, on-line databases, Internet, videos and

y broadcasts. The main sources of qualitative and quantitative secondary data include the following: Official or government sources. y Unofficial or general business sources. y Primary Data: Most research requires the collection of primary data (data that you collect at first hand), in primary data collection, the data is collected using methods such as inter views and questionnaires. The key point here is that the data collected is unique to you and your research and, until you publish, no one else has access to it. There are many methods of collecting primary data and the main methods include: questionnair es y inter views y focus group inter views y observation y case- studies y diaries y critical incidents y Portfolios. y Primary research entails the use of immediate data in determining the sur vival of the market. The popular ways to collect primar y data consist of surveys, inter views and focus groups, which shows that dir ect relationship between potential customers and the companies wher eas secondary research is a means to reprocess and reuse collected infor mation as an indication for betterments of the service or product. Both primary and secondary data are useful for businesses but both may differ fr om each other in various aspects. Primary data is considered as a main data, which is mostly gathered by using different tools like question are and interviews which could be str uctured or unstructur ed. The usage of tools is depends upon what type of research method we are using. There are two bas Primary data is the main data which is gathered it is mainly consist of sur vey questionnair e which is mixture of structured and unstructured questions. There ar e different ways to get primary data, which depend upon the type of research and also

depends upon the findings we need. There are two basic approaches of research y Qualitative research y Quantitative r esear ch

Qualitative Research: Qualitative research is related to more about words not numbers. Qualitative resear ch can be called as investigative methodologies. This research is also considered an inductive approach between theory and research. In qualitative research variables ar e looked in the nature they exist. Generally open ended questions are part of the interview in qualitative approach; interview is the main source of data gathering. In qualitative approaches Interview is consider ed as an integral par t for investigation (Jacob, 1988). The major difference of qualitative research with quantities research is that quantitative research is more formalized and qualitative research is less formalized. Qualitative research could be called as deeper and is tends to understand the deep roots of the data about the problems Qualitative research is less formalized than quantitative research. Qualitative research is deeper and tends to have complete understanding of the data or the problem. (Holme,Solvang 1991). Key Points about Qualitative Research 1) According to Flick U. (2002), the main concern of Qualitative research is explaining a social phenomenon, rather than going for numer ical results 2) Sponsorship is not a linear process, which means it can be change during its operations, in qualitative research questions are mainly designed to investigate the subject area of certain problem. Quant itative Research: In quantitative research numbers are considered centr al unit for analysis, quantitative research is mostly used for large scale research, in other words quantitative research is more str uctured and more formalized as compare to qualitative r esear ch. Moreover quantitative research treats the problem, in broad perspective and is mostly generalised the situation (Holme, Solvang 1991). The result of quantitative research is mostly measurable and easily understandable because of the numeric terms used in such type of research. There are number of things which make quantitative research easy to handle as compar e to quantitative research. The most important reasons is less number

of variables in quantitative research as compare to qualitative research, and these variables can be applied on large scale . Quantitative research is divided into different steps, the first step is it starts with theory, and the making of hypothesis, research design is next step, in the process of quantitative research data is gathered and analyzed to find a solution of problem or to prove hypothesis. Research Type Selected: Sampling method and techniques Sample decisions hold the key to usefulness of a survey exercise. The population of this study comprises of various individuals who bear at least one or more credit cards. A sample must be large enough to give a good representation of the population, but small enough to be manageable. In this section the two major types of sampling, random and non-random, will be examined. _ Random sampling In random sampling, all items have some chance of selection that can be calculated. Random sampling technique ensures that bias is not introduced regarding who is included in the survey. Five common random sampling techniques are: simple random sampling y systematic sampling y stratified sampling y cluster sampling y multi- stage sampling y

Simple random sampling _ With simple random sampling, each item in a population has an equal chance of inclusion in the sample. The advantage of simple r andom sampling is that it is simple and easy to apply when small populations are involved. However, because every person or item in a population has to be listed before the corresponding random number s can be r ead, this method is very cumbersome to use for large populations. Systematic sampling _ Systematic sampling, sometimes called interval sampling, means that there is a gap, or inter val, between each selection. This method is often used in industry, wher e an item is selected for testing from a pr oduction line (say, every fifteen minutes) to ensure that machines and equipment are working to specification. The advantage of systematic sampling is that it is simpler to select one random number and then every Ith ( e.g. 20th) member on the list, than to select as many random number s as sample size. It also gives a good spread right across the population. A disadvantage is that you may need a list to star t with, if you wish to know your sample size and calculate your sampling interval. Stratified sampling _ In str atified sampling, the population is divided into groups called strata. A sample is then drawn from within these strata. Some examples of strata commonly used by the ABS are States, Age and Sex. Other strata may be religion, academic ability or marital status. Cluster sampling _ It is sometimes expensive to spread your sample across the population as a whole. Cluster sampling divides the population into groups, or clusters. A number of clusters

are selected randomly to represent the population, and then all units within selected cluster s are included in the sample. No units fr om non-selected clusters are included in the sample. They are represented by those from selected clusters. This differs from stratified sampling, where some units are selected from each group. Multi-stage sampling _ Multi- stage sampling is like cluster sampling, but involves selecting a sample within each chosen cluster, r ather than including all units in the cluster. Thus, multi-stage sampling involves selecting a sample in at least two stages. In the fir st stage, large groups or clusters are selected. These clusters are designed to contain more population units than are required for the final sample. Sample type selected: Sampling techniques used in this research is simple random sampling on the hotel guest from India and UK. Researcher went to the Crown Plaza Hotel Birmingham (UK) to pick 30 samples and same numbers of samples from New Delhi (India) were taken with the help of an employee working in the hotel. Researcher chosen hotel because he believe hotel is the right place to find professionals. So researcher went with simple random sampling techniques. The Simple Random Sampling Method was used. The selection probability of a case was equal to 30 guests (target sample). Every guest in the hotel had an equal chance of being selected to avoid any bias. This characteristic of probability sampling makes it much more desirable given our goal of generalizing to the larger wor kforce population. Sample size: 30 sample from India and 30 from UK has been taken as sample size for this study. Instruments of Data collection: A market research project is based on the data collection. It is on this collected data that the researcher performs the analysis and arrives at the conclusion. Researcher referred questionnaire as a tool to collect data from the primar y source. Researcher chosen questionnaire because researcher feels that this segment of the people who coming to the 5 star hotel is very high and intellectual so time could have been the limiting factors and they would not allowed to conduct interview because conducting interview is time consuming. Researcher saved respondents time so respondents can answer his

questions truly and comfortably without wasting too much of their precious time.

Data analysis and results How many have a credit card and which gender is more in numbers About 95 people ask that how many of them have a credit card in both the countries. In India usage of credit card is increasing steeply specially in youth as they think that having a credit is status symbol. But women still are not encouraged to have one. Only 15 out of 95 have a credit card. 74 are male from total responders. On the other hand in UK credit cards are equally famous in men and women but women use credit car ds more frequently. Almost 47 women and 45 men have a credit card from total respondents . How many dont have a credit card and why? Main reasons for not having a credit card, through choice, are a claimed preference for using cash (44%) or a debit card (23%), fear of getting into debt (33%) and not being inter ested (30%). In practice, it is possible these reasons may all be related to a fear of debt, expressed in differing ways. Using cash may also include cheques and debit cards, which are widely considered as cash. Don't know Prefer to use chage card Put off by complexity Never thought about it No need to borr ow Prefer to use debit card Not interested Fear of getting into debt 2 4 6 11 23 30 33 1

No need- Prefer to use cash 44 Some people regard having a credit card solely as a means of borrowing money (11%).Those who work are much more likely to mention a preference for using cash (53%) than those who do not work (33%).

Barriers to obtaining a credit card One key reason why the minority who would like a credit card do not have one is that they are too young and only just finding their feet financially. Another important reason is low income. Although a small number in total, about half are aged 16 24. Don't know Other Indebted/ CCJ Lack of credit history Applied but been refused Not bothered to apply think will be refused Insufficient income Too young/ recently 27 14 5 7 10 7 9

financially independent

28

Credit cardholders were asked how often they used their credit cardOn average, credit cards are used a little mor e than once a week, there is wide variation in actual usage. Well over a third ( 36%) use it at least once a week and three in four (74%) use it at least once a month. Don't know Varies from month to month Less than once a month Once a month 2 8 16 17

Not weekly; several times a month 19 Once a week Not daily; several times a week Daily 17 18 3

Credit card users ask how many of them have 2 or more cards Although a majority of people have one cr edit card (63%), a significant minority have two or more. When asked how many are in active use, the number with one increases to three in four (73%).over a quarter of those with two or more only have one in active use. It is therefore the case that at least one in ten credit car dholders have one or more credit cards that have fallen into disuse but not been destroyed. 1 73 2 19 3 Or More 14 8 23 In active Total 63

There are five reasons for having more than one credit card people give to maximise the amount they want to borrow (22%) one came automatically with their bank account (18%) they offer different things - e.g. one gives low interest rate the other gives loyalty points (16%) one is for everyday spending; one is for exceptional items e.g. a holiday (15%) one is for personal spending and one is for joint use with partner (20%). Motivating factors when choosing a credit card Credit Card holders were asked what factors persuaded them to choose their credit card. Taking all answers into account, the interest rate, not surprisingly, is the choice factor mentioned by the lar gest proportion of card holder s (almost half- 48%) . The brand name/ reputation of the company issuing the card was also a key factor in choice of card, mentioned by four in ten. The balance transfer interest rate (typically 0% for the first 6 months) is a consideration with one in five (22%). Another one in five (19%) did not so much choose their card as have it issued to them when they opened their bank account. Similarly, another 9% say their bank offer ed it to them as an existing customer. Points/reward schemes are a motivating factor with 18%. Along with these factor ther e is one extra factor which only effects in India that is culture. Indians have a great influence of that in their lives and almost half of them are still so traditional in using money instead of a card. Don't know Other Fr ee gift To support a charity Can use anyw here/ convenient To consolidate debts My bank offered me it 3 7 5 4 6 3 7

Timing (leaflet came at right time) Cash back scheme Extended w ar rant/insurance benefits Personal recommendation Points/rewards scheme Offered w hen opened bank a/c Balance transfer interest r ate Brand name/reputation Interest r ate

10 12 13 11 18 20 21 41 46

The young (16- 24) and the old (55+) are more influenced by brand/reputation perhaps for different reasons. The young may be thinking more in terms of trendy brand image while the old are thinking about reputability, trustworthy name. Level of understanding

Card holders were asked whether they:a) Have a very good understanding of credit cards and whats on offer b) Understand a fair bit about how things work and whats available c) Have a limited understanding, or d) Are not really interested in how credit cards work

Only one in five claim to have a very good understanding. The largest proportion claim to understand them a fair bit (45%). However as high a proportion only three in ten admit to having only a limited understanding. 10% are just not interested in how credit cards work (in spite of having one). Not really inter ested Limited understanding Understands a fair bit Very good understanding 10 32 45 13

Credit Card agreement easy to understand information

Cardholder s were asked whether they found the information in the credit car d agr eement easy to understand. Only a quarter found it easy. This varies by demogr aphics with the 55+ less likely to find it easy. Only a minority within each group find the credit card agr eement easy to understand. The main reasons for finding the agreement difficult to understand are as follows. Multiple responses were accepted for this question:Print too small (40%) Too much information (25%) Jargon (19%) Difficult to under stand (14%) Looks complicated (12%) Confusing (9%) Figures need explaining ( 5%) Not laid out well (8%) Other (7%) Dont know (1%)

Awareness of other charges other than interest When cardholders ask about charges other than interest they might be liable to pay, half of them mentioned the late payment fee, almost four in ten, the cash withdrawal fee and one in six, the fee for using the card abroad. 12% mentioned an annual fee and 11%, a fee for r eplacement cards. Late payment penalty fees Cash withdrawal fee Fee for using card abroad Annual fee Fee for replacement card Fee for statement copies Handling fee Balance transfer fee Other 2 DK/None 27 50 36 15 10 10 8 5 2

Just over half are aware that there is often more than one APR quoted on promotional literature.

Advantages of having a credit card Cardholder s asked what advantages do they think the can have with a credit card. There are differ ent answer s from a number of people. Like 2 out of six mentioned easy payment (22). Its easy to carry a single card as compare to big amount of money 33 said. As mentioned in liter ature review above it easy to use, fast, flexible, safe, Easy to use

22 Easy to carry 33 Fast 19 Flexible 17 Safe 20 Extra benefits 15 Helpfull in emergencies 12 Others 10 Dont know 2

Disadvantages of having a credit card Just advantages there some disadvantages as well. When cardholders ask about them they mentioned extra paybacks 3 out 5. Short term finance end up in a big loan 4 out 10 says and as mention above blow your budget, extra cost and most important is credit card frauds. High rates of interest 31 Out of budget 25 Cost 17 Extra expenses 18 Hidden charges 11 Fr auds 16

Dont know 3 Conclusion In 1951, Diner s Club issued the ver y first cr edit card to 200 customer s who could use it at a selection of twenty seven restaurants in New York City. From that modest beginning, credit car ds have grown to become an indispensable part of modern life. Now these cards are status symbol as well as a necessity of life. Even in the traditional country like India the usage of credit card has increase steeply. Cr edit cards ar e convenient way to pay for all kind of products. Many consumer s regard them safer then use of cash Now it the time of online shopping from cloths to shoes, from air tickets to . gar dening tools, groceries to toiletries and to buy all these things u need a card which is an important essential of life now a days. Nowadays consumers rely on their credit cards to help them achieve their lifestyle goals by letting them take advantage of special bar gains, spread payments out over several months, and provide cash in emergencies. Credit cards have become so widespread that they are often accepted as a piece of primary identification. Everybody want a credit card today but according to a survey only 20% total consumers have complete understanding to it all rest either have a bit or no understanding. This thing put them in huge trouble. Little information or sometime no information mostly put them in big amount of debt. Mostly people took out credit cards with one good offer and dont even bother to get information about the rest things in it. Like APR, interest rate service charges, annual fee, late fee charges and many other which can also make great trouble for them in future. One can buy anything he wants with a credit card which usually he dont even afford. Its attractive till here but when it comes to paying back if he is not efficient itll put him in great problem. Short ter m finance can helps one in his bad time but high interest rate can put him in debt as well.

Its easier and safer to carry a card instead of liquid cash but having a card in your pocket makes you spendaholic as well. And extra expenditure makes you out of pocket. And some time its not that safe also if you dont use it carefully, it includes your signature, giving information about your card to just anyone or on any website, not checking your statement r egularly and so on. If one use his credit card wisely it never create trouble for him. Credit cards themselves don't put people in debt. After all, a credit card is just a tool, and tools are only as dangerous as the people who use them. To minimize the dangers to your financial health, choose your cards wisely, think twice befor e using them and, most importantly, don't carry a balance, pay your bills on time. If your credit card doesn't help you save money or provide a useful reward at no cost to you, don't use it. There are plenty of places where your credit card will come in handy just be sure that you dson't let the cost of this convenience get out of hand. All in all credit cards are essential to life now days but they need care and full understanding. You need to use them wisely to have the full advantage of them and stay away from the trouble.

Recommendations Here are some recommendations to get the most from your credit cards and stay away from the problems it involves four main steps: Use your credit cards wisely. y Protect yourself against fraud. y Review your credit hist ory regularly y Get the right card f or your needs. y 1.1 Use your credit cards wisely You need to follow these simple tips to get the most from your card. Pay your credit card bills on time. This is the most impor tant thing you can do to preserve and enhance your credit rating. Always pay at least your minimum payment and allow time for your payment to reach the company. If possible, pay off your balance in full each month . If this is not possible, then make as large a payment as you can comfortably affor d. Paying off or paying down your balance is a sound financial move that will save you money on interest char ges. If you cant pay off your balance in full, then slow down on your credit card use for some time. Take time to step back and have a careful look at how much you earn and how much you spend each month. A little budgeting can save you big money down the road. Check your statement carefully each month. Review your statement carefully. Do all the charges look correct? Have any required credits been applied? Are there any unusual or unexpected char ges? Your credit card company will correct legitimate errors, but only if you bring them to their attention in a timely manner before you pay your bill.

Transfer your balance to a card with a lower interest rate. If you have two or more credit cards with outstanding balances, consider moving the outstanding balances to the card with the lowest interest rate. You will save money each month and simplify your record keeping by receiving only one bill. Negotiate for a lower rate with your credit card company. If you have a good credit histor y, you are a valuable asset to your credit card company. Call them and seek ways to lower your interest rate. This is often possible, but never advertised. If the interest rate you ar e currently paying is very high, imply you may cancel the card and go with a competitor unless they adjust your rate downward. It doesnt hurt to ask, and you may be surprised at the results. 1.2 Protect yourself against fraud While credit card fr aud is a problem, here are a few simple steps you can take to greatly reduce the risk of becoming a victim. Sign new cards immediately. When you receive youre new or replacement y card in the mail, sign it, in ink, right away. If it is a r eplacement card, destroy the old card by cutting it into many small pieces. Shred old credit card receipts. You can purchase an inexpensive paper y shredder at an office supply store. All old r eceipts with your credit card number and any unneeded documents with your social insurance number or other sensitive personal information should be shredded before disposal. This prevents the common practice of criminals going through the trash to find receipts and stealing your identity Never fax your credit card number. Your credit card number can lie for hours y in the fax basket at the other end. Anyone passing by can record your number and begin to use your card number fr audulently. It is even possible for criminals to intercept your credit card number while the fax is in transmission. Use caution when giving your credit card number out on the phone or on y the Internet. Only give out your credit card number on telephone calls you

initiate to business or organizations you trust. Never give your number out to callers who call unannounced, no matter how legitimate the call sounds. On the Internet, look for an Internet addresses that begins https:\\. The s y indicates that it is a secure connection and a small padlock symbol should appear in the bottom right hand corner of your screen, indicating it is safe to transmit your credit card number. Call your credit card company instantly if you suspect trouble. All credit y card companies have 24 hour lost and stolen help lines. If you lose your wallet or pur se or have it stolen, call without delay Much fraud happens within the first hour or two, before the victim realizes the cards are missing. Your credit car d company will block your cards fr om being used and stop you from being responsible for any charges. Take advantage of any securit y features your card offers. Many newer cards y have the option of including your photograph on the car d. This is excellent protection and is highly recommended. 1.3 Review your credit hist ory regularly After you have obtained the best credit card, and are using it wisely, review your credit history on a r egular basis. This helps ensure your history is accurate and that any issues have been resolved to your satisfaction. When checking on your rating, be sure to contact all credit check bureau, as your rating may be held on file at more than one bureau. Check the Yellow Pages, under Credit to find the numbers in your area. And keep our self uptodate. 1.4 Get the right card With all the choices in cards available, chances are good, very good, you can find a better card for your needs. Todays cards can save you money, offer better features, and even support a cause you believe in. Here are some tips on finding the right card and where to check that you have the best card for your needs

Be alert for companies offering a great interest rate for transferring your existing y balance to their card. Usually these r ates are only in effect for a short time, often six months. At the end of this time, the rate can revert to a much higher per manent rate. Keep your eye on the Annual Percentage Rate (APR); this is the figur e that counts in the long run. Lower is better: read the fine print and find the Annual Percentage Rate (APR). y This is the interest rate the companies charge you if you carry a balance. You want the lowest rate possible; as each percentage point drop will save you money on the months you have an outstanding balance. Go for best: Try for a credit card that does not char ge an annual fee. Many y credit cards charge you a fee each year to use their cards. While this may be offset by other benefits the card may offer, you can find car ds that do not charge this annual fee. Why pay for the privilege of using a credit card when you dont have to? Explore the options: Todays cards offer a wide range of excellent features, y including frequent flier points, programs that bank points toward a new car, and cards that support charitable organizations. Other options worth having include car rental insurance coverage, trip cancellation coverage, and extended warranty cover age.

Refer encing : APACS (2006), UK Payment Statistics, Association for Payment Clearing Services, London. Lindley, J.T., Rudolph, P. and Selby, E.B. Jr (1989), "Credit card possession and use: changes over time", Journal of Economics and Business, Vol. 41, pp. 127-42. Slocum, J.W. Jr and Mathews, H.L. ( 1970), "Social class and income as indicators of consumer credit behavior", The Journal of Marketing, Vol. 34, April, pp. 69-74. Ankush Chibber cardline . New York: Mar 19,2010 Vol. 10, Iss. 12; pg. 5 Chibber, A. (2010). India's Rural Banks Asked To Offer 'No-Frills' Credit Cards. Cardline Newyork . 10 (27), 5. Business Monitor International. (2010). India commercial Banking Report. Business Monitor International Q3 . Third Quarter (3), p1. Ausubel, L. (1991). The failure of completion in the credit card market. American Economic Review, 81, 50-81. Ausubel, L. (1999). Adverse selection in the credit card market. University of Maryland, Working paper, 1- 52. Bi, L., & Montalto, C. P. (2004). Emergency funds and alternative forms of saving. Financial Services Review, 13, 93-109. Okan Veli Safakli . Investment Management & Financial Innovations . Sumy: 2007. Vol. 4, Iss. 4; pg. 133, 12 pgs