INTRODUCTION

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 INTRODUCTION

ORIGIN

The credit card had its beginning in an embarrassing incident that took place in
the early 1950’s in America. The story goes that Mr. McNamara; a New York
businessman took his friends out to dinner. At the end of meal he discovered that
he had forgotten his wallet at home, the proprietor was kind enough to allow him
a later settlement of bill. As McNamara stepped out of the restaurant he had the
brainwave for the introduction of credit cards - system of availing instant credit
upon confirming the identity of cardholder. Thus was born the Diners Club Cards,
the pioneer of today’s multibillion-dollar plastic money business.

Diners Club adopted a promising approach by recruiting various hotels and

restaurants to act as member establishments for accepting the cards. Not only did
these establishments pay a commission on member’s purchases but the members
also paid an annual subscription fee. Diners Club vetted its members for credit
worthiness and guaranteed payment to participating establishment. Thus was born
the first ‘Travel and Entertainment Card’. It was followed by American Express,
which is now a dominant force in the Travel and Entertainment cards industry,
and by 1959 by Carte Blanche, after many vicissitudes is now a part of Citi Bank
Empire Together With Diners Club. In the present time American Express leads
the travel and entertainment (T&E) card industry.

The next great leap-forward came from Bank of America, which in other banks.
Such cardholders could use their card 1966 offered to license its successful blue,
white and gold Bank America card to at any accepting merchant establishments
around the globe. Later in 1977 all the national and international Bank America
licenses were pulled together under the single name of Visa.

Not to be outdone, a rival group of American Banks came together in 1966 under
the name of Interbank, later renamed Master Charge and later still Master Card.

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Ever since Master Card and Visa and their affiliates have carved the world credit
card market.

In the 1980s credit card concept was launched in India through the Diners Club
card, and soon, within a couple of months both Visa and Master card entered
into the Indian market.

What is a Credit Card?

“Credit Cards - It's credit to you!”

A Credit Card is referred to as 'plastic money'. Carrying a lot of cash on you can
be cumbersome, risky and sometimes, you run short of it, just when you most
need it. (Remember the SALE at your favorite ready-mades store?). A Credit card
is the smart solution to these problems. It is a convenient and safe alternative for
cash.

Besides, it says things about you. Most people associate a credit card with a
prestige, which it most certainly bestows on you, but more importantly, it says
that you have taken the onus of being responsible - to be extended credit! So,
when you get yourself a card, remember that, because your bank does!

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 Before i go any further, why not become familiar with the various terms and
jargons used by the credit card industry.

Credit Card – A credit card is a financial instrument, which can be used more
than once to borrow money or buy products and services on credit. Banks, retail
stores and other businesses generally issue these.

Credit limit – The maximum amount of charges a cardholder may apply to the
account.

Annual fee – A bank charge for use of a credit card levied each year, which
ranges depending upon the type of card one possesses. Banks usually take an
initial fixed amount in the first year and then a lower amount as yearly renewal
fees.

Revolving Line Of Credit - An agreement to lend a specific amount to a

borrower and to allow that amount to be borrowed again once it has been repaid.
Most credit cards offer revolving credit.

Personal Identification Number (PIN) - As a security measure, some cards

require a number to be punched into a keypad before a transaction can be
completed. The cardholder can usually change the number.

Teaser Rate - Often called the introductory rate, it is the below-market interest
rate offered to entice customers to switch credit cards.

Joint Credit - Issued to a couple based on both of their assets, incomes and credit
reports. It generally results in a higher credit limit, but makes both parties
responsible for repaying the debt.

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 EXECUTIVE SUMMARY OF CREDIT CARD INDUSTRY

The credit card industry in India has registered an encouraging growth in recent
times, but the usage pattern of credit cards remains a point of conc0ern, those in
the industry say. There has been a seven-fold increase, with the number of
cardholders touching over 38 lakh. These figures point towards the fact that the
credit card industry in India is growing at a brisk annual rate of 30 per cent and is
expected to grow at a similar rate in the coming years.

While issuing the cards may seem to be easy, the challenge for the banks lies in
being able to manage their portfolios by keeping the delinquency levels at the
lowest and customer satisfaction levels at the highest. Customer satisfaction is the
key to success. You want customers to be happy with the products and services
you provide. If they feel they have received good value for their money, your
business will prosper. Getting your customers to tell you what’s good about your
business, and where you need improvement, helps you to be sure that your
business measures up to their expectations.

Apart from attracting potential card users, customer retention is also one of the
most important factors influencing a card issuer’s success. ----. With the influx of
new financial institutions in the card market, people have started using cards on a
more regular basis. The level of services provided by these organizations is
increasing day by day. In order to ensure that the existing customers stay loyal,
Organization has to ascertain whether its existing customers are satisfied with its
current service offerings.

This research has tried to study the satisfaction levels of a sample of 100 credit
card holders. These respondents each hold credit cards, which may be of different
kinds.

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 INDIAN CREDIT CARD SCENARIO

The credit card industry in India has registered an encouraging growth in recent
times, but the usage pattern of credit cards remains a point of concern, those in
the industry say. Seven years back, India had a base of around five lakh credit
cards. There has been a seven-fold increase, with the number of cardholders
touching over 38 lakh. These figures point towards the fact that the credit card
industry in India is growing at a brisk annual rate of 30 per cent and is expected
to grow at a similar rate in the coming years. This fortifies the view that
conservative purchasing ideas are giving way to the big in-thing. But it is the
usability that raises doubts.

According to a survey by the Credit Card & Management Consultancy (CCMC),

71 per cent of first time credit card applicants in the country have expressed the
need for advice on appropriate card selection despite the plethora of cards
available in the market. Through this survey it has come to realize a long felt
need of potential and existing cardholders for advice on suitable selection of a
credit cards. The whole idea behind the introduction of the credit cards was to
increase the purchasing capacity of the cardholder. With this in mind, the foreign
banks launched a credit card blitzkrieg on the Indian customer.

The innovations have already begun to show their effect. The Standard Chartered
Bank has seen its credit card base shoot up after the launch of its Global Rupee
Card in March last year.

It has seen the fresh issuance of global card increase by more than one lakh, and
the bank now has a base of more than half a billion. But the real challenge for the
banks is to make the holder spend more on the card. Going by estimates, India
has a long way to be anywhere near the matured markets. The markets like the
United States and England have an average annual card spend of 1,300 and 3,600
dollars respectively.

The credit card players will have to think about simplifying the foreign exchange
transactions. When one uses the card, it is entirely his responsibility to make sure
that exchange controls have been complied with. The banks that issue the cards

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have made it abundantly clear that one has to look out for him. It is upon him to
find out the facts of regulatory life. The real point of worry is the spending on the
credit cards. According to estimates, the average card spending in India is even
less than that in Indonesia. Those in the credit card business say that per capita
credit card spending in India is about five hundred dollars (Rs 21,500), whereas
in Indonesia, it is about 678 dollars (Rs 29,154). At present there are over a dozen
players in the credit card market in India, and the fact is the foreign banks are
clearly the leaders. The leaders will surely be identified by the innovations for the
card users.

But the alarm has been raised for the banks by the figures that show that while
the average usage in Malaysia is 27 times annually, in India it is only 11 times.
Some of the key factors impacting the cards business in India are limited credit,
wide geographical spread, limited telecommunication infrastructure and emerging
regulatory controls. The other players feel that the card acceptance base in India
has to be widened. Suggestions include credit card usage at petrol pumps and
railway bookings.

They also point out that though the cards business has been in the country for
long, but even today the insurance premium cannot be paid by card. Though LIC
is talking about the introduction of this facility to customers, but its turning into
reality may take time. There is talk of widening the card business with new
features, but the present scenario does not paint a positive picture, with many
loopholes remaining to be plugged.

Of the twenty million taxpayers in India, more than ten per cent of them are
cardholders. Those in the industry point out that this figure is not bad,
considering the fact that; the cards business is still in its initial stages. However,
the players feel that the business has not reached an optimum level to say that
they are making money. Even the largest player in the Indian market does not still
have the economies to make the card business really profitable in India, despite
the fact that it has more than one million credit card holders. Less than two per
cent of private consumption spending in India is done on cards.

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While issuing the cards may seem to be easy, the challenge for the banks lies in
being able to manage their portfolios by keeping the delinquency levels at the
lowest. Huge investments in systems and infrastructure are, therefore, a necessity.
The increase is being attributed to new ideas such as round-the-clock functioning
of card issuing banks and pulling out all stops even at a loss, to grab a sizeable
share of the expanding pie. Not to be left behind in this race, even the big brother,
the State Bank of India in association with GE Capital entered the card business.

The spurt in the card business has gathered momentum during the past couple of
years. For instance, the Hong Kong & Shanghai Banking Corporation (HSBC),
was in the credit cards business since seven years, but from 50,000 card holders
in 1997, it has about three lakh card holders now.

India’s fastest growing credit card company - SBI Cards 2.5 lakh credit cards…
25 cities…16 months. The joint venture between India’s largest bank – State
Bank of India and one of the world’s leading financial services companies – GE
Capital, SBI Cards & Payment Services (SBI Cards) has issued 2.5 lakh credit
cards across 25 cities (the largest distribution network in the payment card
industry) within 16 months. Thereby achieving the target in the fastest period
seen in India’s payment card industry.

SBI Cards & Payments Services attributed this success to SBI’s enormous brand
equity, and unparalleled retail branch network coupled with GE Capital’s
payment card process and technology expertise. He also highlighted Speed,
Simplicity and Service as the key drivers of growth for the SBI Card. Speed
Unique and exclusive 14-day average turnaround time, coupled with availability
of the SBI Card in 25 cities in just 16 months. Simplicity Simple application
process with minimum documentation. Service 24 hours a day/7 days a week
local call access to the SBI Card Help line across 25 cities. As a result of the
focus on the Speed, Simplicity and Service growth platform, SBI Cards today
offers the largest distribution and widest cash advance network for India’s middle
class customers. SBI Cardholders can access cash for emergency purposes from
over 158 SBI branches across 68 locations in India.

INTERMEDIARIES:

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In their attempt to increase their market share, credit card companies are opting
for Direct Sales Agents. These DSAs are paid a flat rate against the approved
applications. The DSA team comprises aggressive salesmen who visit different
organizations and professionals. They collect filled forms and produce them to
the bank for approval. After cards are issued they also deliver the same to the
individuals.

DECIDING ON THE RIGHT CREDIT CARD

How much is the joining fee and the annual fee?

Generally, a card with a higher annual fee enjoys more benefits like higher credit
limit, higher accident insurance cover, accessibility to airport lounges, travel
discounts etc. OF at least the used to be the case. With cutthroat competition
between the card issuing banks, players are ready to waive joining fees and also
one-year membership fees for anyone. Grab these offers, or negotiate this for
yourself.

How much is the Add-on card fee?

If you are interested in buying add-on cards for your children, spouse or friend,
ask for the add-on card fee. Remember that you will be settling the bills on the
add-on card that you so touchingly gift to someone dear to you - the statement
will come to you, and the responsibility for payment is yours (as far as the credit
card company is concerned)

What is the interest rate?

This is actually a question that you should be asking fairly soon in the discussion.
Remember, while the up front one off fees are bread and butter for the credit card
Company, this is the jam! If you are the sort who forgets to pay on time, or likes
to live it up and live off credit, the interest rate would be of paramount
importance. Most credit card companies charge anywhere between 2% to 3 % per
month. (Read a whopping 35% to 43% per year). That's where they make their
gravy, and that's where you pay! It is always advisable to pay off the entire
amount on due date, or, if you have a large bank balance, look for card companies

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that provide the transfer balance facility. The balance transfer rate is lower for a
certain period (say six months) and then the normal rates apply. But again this is
a temporary solution to a chronic problem.

4. What is the reach?

Not an important question - most outlets in India accept both the Master card and
the Visa card, and most credit card companies provide Visa or Master cards. So
its fairly simple, and doesn’t need much head scratching - they're all more or less
the same. One thing you could do is to check out for the Automated Teller
Machines nearest to your house or work place (ATMs - almost all credit card
companies now provide you the facility of withdrawing cash from machines - I
guess for things that cards just cant buy. These machines are called ATMs, and
are helpfully scattered all over the city/country/world). Having more ATM outlets
in Thailand wouldn’t be of any relevance to a person who rarely travels abroad,
though it may certainly be a goal to work towards after buying the card. Please
also remember that Amex credit cards are not part of the Visa/ Master chain, and
have a separate chain of outlets where it’s accepted.

5.Is it a Global card?

Now this could be useful to you if you are an overseas traveler. A Global card can
be used for paying expenses in foreign currency just like you use a credit card to
pay in rupees. Nowadays, a Global card is being issued at the same cost as for a
similar domestic one. It is better to have a global card, especially if there is no
premium attached.

6.How useful are branded or affinity cards?

A partnership between a card issuer and the non-profit, social or lifestyle

association is what results in an affinity card. This is for providing financial
rewards to the group or association. E.g. Citibank Women’s card, Citibank WWF
cards. Citibank WWF Visa card donates a percentage of the transaction value
made through the card to the WWF fund for its environmental conservation
activities. A subscription to such cards helps ease the conscience though it
provides no monetary value.

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A partnership between a bank card issuer and a commercial partner result in a co-
branded card. This entitles the cardholder to lots of freebies, prizes, discounts on
co-branded products. Logic: If a customer is loyal to one brand, he will want to
purchase the other. So if you were loyal to a particular brand, it would make
sense going for those co-branded cards. e.g. Citibank and IOC, Bank of India and
Taj group of hotels etc.

7. What’s the lost card liability?

Most Card issuers mention in the brochures that lost card liability is Rs 1000. Be
careful, that is actually AFTER it is reported to the Bank. The liability is actually
unlimited before reporting (in cases like this, you would actually thank the credit
limit because though the liability is unlimited, the ceiling should logically be your
credit limit, and the outlets accepting your stolen card should actually check that
you (or the person who stole your card) haven’t exceeded your credit limit).
Avoid banks that make you liable for card misuse for a single minute after
reporting it.

8. Are there any freebies?

Citibank gives a Pond’s gift hamper free on subscription to its Citibank Women
card. Personal accident insurance for Air, Road or Otherwise is packaged along
with the subscription. Also Baggage cover, Purchase Protection cover and credit
shield is bundled free of cost along with the card. If you feel one these parameters
are important, and then settle for the one that gives a higher cover.

9. Is immediate cash withdrawal possible?

Check out if the Bank has any ATMs near your house or workplace. This surely
helps in times of emergency. The cost component for a cash withdrawal could be
classified as follows: Service fee (transaction fee) each time you pull out money,
and Interest rate for the period for which you have used the money - until
settlement date. If you are going to withdraw cash frequently, better watch out for
this cost.

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10. How long is the free credit period?

The days of credit one gets depends on the statement date and the date of
transaction. On an average, you could assume you'd get around 20 days of free
credit. However, if you buy just after the statement date, you could end up getting
unto 50 days of credit. Look for cards that give you the highest free credit period!

11. Is a Helpline available?

A 24-hour Helpline service from the Card Company helps the cardholders during
the non-banking hours. Reporting of theft, checking of available credit limit and
other enquiries can be made by the cardholder round-the-clock. In the end, like
everything else in life, the card you want is really up to you - what matters the
most to you - credit, reach, the freebees, international reach or a combination of
parameters. Use our card category on the left bar to simply list out the names of
the cards, or choose by bank name and see the cards they offer. Or look for cards
offering the lowest interest rate. Of the lowest charges on cash withdrawal
(believe me, it gets to be a serious consideration as one goes along). Go to our
shortlist card section, and search for cards based on any criteria that you want.
Happy hunting, and stay careful - you may like to use our section on how to use
the card carefully to minimize the chance of its misuse by someone else.

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 OBJECTIVES OF THE STUDY

Study is the one of the important parts of any study. Following are the
objectives of the study: -

 To find the scope of the credit cards industry in India.

 To know the customer awareness regarding credit cards.

 To analysis the benefits of credit cards.

 To know how it is beneficial to manage the cash risk.

 To understand the market potential of credit card in Delhi.

SCOPE OF THE STUDY

The study on Credit card- increase the volume of profit of this industry.
We have considered geographical Unit of Delhi. It in we analysis the comparison
of different credit cards and their detail reports their branches and values.

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REVIEW OF LITERATURE

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 REVIEW OF LITERATURE

TYPES OF CARDS

 MasterCard – MasterCard is a product of MasterCard International and

along with VISA are distributed by financial institutions around the world.
Cardholders borrow money against a line of credit and pay it back with
interest if the balance is carried over from month to month. 23,000 financial
institutions in 220 countries and territories issue its products. In 1998, it
had almost 700 million cards in circulation, whose users spent $650 billion
in more than 16.2 million locations.

 VISA Card – VISA cards are financial institutions around the world
distribute a product of VISA USA and along with MasterCard. A VISA
cardholder borrows money against a credit line and repays the money
with interest if the balance is carried over from month to month in a
revolving line of credit. Nearly 600 million cards carry one of the VISA
brands and more than 14 million locations accept VISA cards.

 Affinity Cards - A card offered by two organizations, one a lending

institution, the other a non-financial group. Schools, non-profit groups,
pro wrestlers, popular singers and airlines are among those featured on
affinity cards. Usually, use of the card entitles holders to special discounts
or deals from the non-financial group.

 Standard Card – It is the most basic card (sans all frills) offered by
issuers.

 Classic Card – Brand name for the standard card issued by VISA.

 Gold Card/Executive Card – A credit card that offers a higher line of

credit than a standard card. Income eligibility is also higher. In addition,
issuers provide extra perks or incentives to cardholders.

 Platinum Card – A credit card with a higher limit and additional perks
than a gold card.

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 Titanium Card – A card with an even higher limit than a platinum card.

 Secured Card – A credit card that a cardholder secures with a savings

deposit to ensure payment of the outstanding balance if the cardholder
defaults on payments. It is used by people new to credit, or people trying
to rebuild their poor credit ratings.

 Smart Card – Smart cards, sometimes called chip cards, contain a

computer chip embedded in the plastic. Where a typical credit card's
magnetic stripe can hold only a few dozen characters, smart cards are now
available with 16K of memory. When read by a special terminal, the cards
can perform a number of functions or access data stored in the chip. These
cards can be used as cash cards or as credit cards with a preset credit
limit, or used as ID cards with stored-in passwords.

 Charge Card – fall between a debit and credit card. Works like the latter
and you don't have to be an accountholder. Just pay up in full when the
bill arrives with the mail. No outstanding are allowed, in other words, no
revolving credit facility either. American Express and Diners are
providers.

 Rebate Card – This is a card that allows the customer to accumulate

cash, merchandise or services based on card usage.

 Co-Branded Card – This is a marriage of convenience between two

service providers who want a trade-off with the other's strengths. Specific
facilities are made to members through these tie-ups. So, Times Bank and
Citibank have a co-branded card that allows concessional rates for add-on
cards or telephone banking. Stan chart and Hindustan Lever Limited have
a co-branded card to sell Aviance beauty products. SBI-GE Capital has a
co-branded card for retail loans.

 Cash Card – Cash cards, similar to pre-paid phone cards, contain a set
amount of value, which can be read by a special cash card reader.
Participating retailers will use the reader to debit the card in increments

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 until the value is gone. The cards are like cash -- they have no built-in
security, so if lost or stolen, they can be used by anyone.

 Travel Card – these works mostly as debit cards for the limited purpose
of travel. Citibank Dollar Card, American Express, Bob card Global and
Hong bank Thomas Cook International Card are among the players in this
section.

 Debit Card – It is the accountholder's mobile ATM. Open an account

with a bank that offers a debit card, and payments for purchases are
deducted from your bank account. The retailer swipes the card over an
electronic terminal at his outlet, you enter the personal identification
number on a PIN pad and the money is immediately debited at the bank.
Citibank and a few domestic banks like Times Bank offer this.

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 SALIENT FEATURES

 Annual Fee:

All credit card issuers charge an annual fee which is payable at the start of the
year. The start of the year, of course, is your membership year, and not the
calendar year. So, if you got yourself a card in March, you can expect to be billed
the annual fee every March until you cancel your card. As a privilege, this fee is
sometimes waived the first time. When the time comes for renewal of your card,
you can even use the reward points you have accumulated from using the credit
card over the year to settle your annual fee.

 Forwarding Balance (or Revolving):

The most attractive feature of a credit card is that you need not pay off your dues
in whole. You can opt to pay 5% of the total amount on or before the due date,
every month, the rest is carried forward. But there's a price to pay for this
extended credit - interest! Normally, interest varies between 2.5% and 3% per
month.

 APR or Annual percentage Rate:

The interest rate that reflects the yearly cost of the interest the outstanding on
your card is called the annual percentage rate. This rate is charged to the
cardholder on the amounts carried forward beyond the due date for the payment
of balances. Most card issuers will tell you their monthly rate of interest. It might
sound low at 3%, but when you look at the interest rate over the year, it turns out
to be as high as 43%.

 Cash Advance:

An important feature - lets you withdraw cash from designated ATMs using your
credit card. Use discretion when withdrawing cash on your credit card because
the charges for this facility are high, around 2.5% to 3% per transaction!

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BENEFITS:

 Credit:

When you use a Credit card to pay for anything, you get an interest-free
period of 45 days. Billing cycles are structured in such a way that you
definitely get at least 30 days out of these as clean credit time, which is
especially beneficial to salaried people. Better still, you can opt to pay your
bill in full when you receive it or you can carry forward your payments by
paying as little as 5% of the total amount on or before the due date, every
month. You can spend now , pay later.

 Convenience:

With a credit card on you, you don't need to run the risk of carrying a lot of
cash.

 Cash Advance:

Another advantage of a Credit card is that you can use it as an ATM card too!
But remember, there's a fee to it. It typically starts with a flat fee going up to a
percentage-based fee on the amount of the withdrawal.

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DRAWBACKS:

 Greed!

Just because you have credit being extended to you doesn't mean that you should
go on a rampage! Use your card with discretion and caution. Remember, it is an
extremely expensive way to borrow money! View it as a convenient and safe way
to carry cash, a timely help in an emergency or taking advantage of an
opportunity that you would have otherwise lost out on, like an investment!

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Do's & Dont's

 Do not leave your Credit Card lying around the house or on your desk at
work.

 If your card is lost or stolen, or you suspect it is being used fraudulently,

report it immediately to your bank.

 Hold on to receipts from your transactions. In fact, keep your receipts

filed or in one place - you'll find them easily, should the need arise. And
when you want to throw them away, don't just thrash into the bin, shred or
tear them before you do.

 Never give your Credit Card number over the phone, unless you've made
the call, and it is to your bank or someone you trust, and you really, really
need to!

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 RESEARCH
METHODOLOGY

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 RESEARCH METHODOLOGY

Confining our study to the geographical limits of Delhi, we chose a

sample of 100 people - 50 cardholders and 50 non-card users, using the
probability sampling technique where every individual fulfilling the above
criteria had an equal chance of being selected for the survey. Following are some
of the facts that were revealed through the survey.

Sources and Method of Data Collection

The data on the present study will be collected by the investigator himself.
It's customary to distinguish data between primary and secondary.

Collection of Primary Data:

The collection of primary data done with the help of personal meet with
the Managing Director and Supervisory and Official Staff after Securitization of
records maintained.
A personal survey and surprise check are prompt to be carried out to
ascertain the fact on the basis of survey of credit card at personal interest.

Collection of Secondary Data:

 News papers,
 Press Media
 Magazines
 Telecommunication

Research Tools:
 Research design :
 Sampling Unit
 Sampling Size
 Sampling technique :
Exploratory
: Area of Delhi
: 100 people- 50 Cash holder, 50
non- cash user
Probability Sampling

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 ANALYSIS

It was found that for the frequent travelers acceptability was the most important
criteria and was given the highest weightage

Following attributes have been analyzed as per the consumer survey conducted

The attributes are as follows:

 ACCEPTIBILITY

 CREDIT LIMIT

 CREDIT PERIOD

 MEDICAL AND HOSPITAL SERVICES

 OTHERS

PROMOTION STRATEGIES

The changing trends in the payment systems are global and even in India revolve
around the change in customer needs and the evolution of financial markets.
Traditionally Indians like to pay in cash or at the most avail the services of a
bank. As a result credit card companies had to educate the consumers and spread
awareness of the uses of its products. The companies have tried to address this
issue through promotional campaigns:

 Placing of take away firms of credit card at more than a thousand

merchant establishments.

 Appointing of DSAs

 Using business magazines and newspapers for advertisement.

 Mailing of forms along with contests to professionals and middle

management executives etc.

 Tapping the get member route

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 Reducing their minimum eligibility criteria and changing income
documentation structure.

 Introduction of photo cards.

 Tying up with durable consumer goods manufacturer ( e.g. Onida,

0Philips ) to sell their products.

 Providing ATM facility to their card holders

 Travel assistance via tele-banking.

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 COMPARISON OF CREDIT CARDS

Card Issuers Brand Card Type Acceptance

Citibank NA Gold/Preferred Master International

Citibank NA Gold/Preferred Visa International

Citibank NA Indian Oil Master Domestic

Citibank NA Silver/Classic Master International

Citibank NA Silver/Classic Visa International

Citibank NA Women Visa Domestic

Citibank NA WWF Visa Domestic

ICICI Solid Gold Visa International

ICICI Sterling Silver Visa Domestic

ICICI True Blue Visa Domestic

SBI Classic Visa Domestic

Standard Chartered Classic Master International

Standard Chartered Gold Visa International

With the credit card truly becoming an international citizen, issuers have begun
highlighting the value-added features offered along with the basic product. While
some of them are offering attractive interest rates, others are luring customers by
their reward schemes. With a plethora of choices on offer it is not easy to come to
a decision on any particular card.

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TIP’S FROM CITIBANK TO SAVE CHARGES

Fee-heavy foreign transactions

Many major credit card issuers charge a fee for card transactions in foreign
countries. The cost of cash advances is particularly onerous. When traveling
abroad, carry a mix of plastic, cash, debit cards and traveler's checks.

Want a better rate?

Just ask for Acquiring new credit card customers is expensive and time-
consuming, so issuers don't want to lose creditworthy individuals. If you've had a
year of on-time payments, call your credit card issuer and ask for a cut on your
interest rate.

Cut credit card costs

Make payments on time, avoid cash advances and don't exceed your credit limit.
Cash advances are more costly as there's no grace period, so you pay interest
from the day you take the money.

Identity theft

The No. 1 identity theft is credit card fraud. New card accounts are opened or
existing accounts are taken over. The Federal Trade Commission offers a hotline
and Web site for advice and tips.

Save stress with less debt

The stress of credit card debt has been directly linked to physical problems like
heart attacks, insomnia, explosive emotions, smoking, overeating and lack of
concentration.

26
Fraud alert

Placing a fraud alert on your credit files prevents an imposter opening credit in
your name. The downside is that you give up the convenience of "instant credit."
You can't sign up for a new credit card and go shopping with it three minutes
later.

Teen consumers

Credit card companies are targeting the increasingly powerful teen consumer.
Teens get the credit card and the bill, but parents are legally responsible.
Nonprofit organizations caution that teens lack personal finance teaching, and
aren't ready for plastic.

Be careful when you do the card hop

Changing credit cards for a better deal may net attractive teaser rates, but many
cards now deter balance transfers with tough terms and high costs. Read the fine
print carefully.

27
Silencing phone solicitors:

You can pull the plug on telemarketers calling your home. The Telephone
Consumer Protection Act requires telemarketers to record your 'do-not-call'
request and refrain from dialing you for 10 years.

Credit score

During and after a divorce, you need to make a clean financial break to keep
your credit report accurate. A first step is to cancel credit card accounts, even if
you were only an authorized user, and reapply for new accounts.

Digital wallets

Digital wallets, or e-wallets, are extensions of a consumer's credit cards. Basic e-

wallets store cardholder information, filling in account and personal information
at cyber stores. They are convenient, secure solution to shopping online.

28
Don't fill up on gasoline credit cards

Gas company cards offering rebates on purchases can be worthwhile when gas
prices are high. But the annual percentage rate and the annual fee charged are
higher than normal cards. People who carry a revolving balance will find these
cards much less rewarding.

Credit union cards

Credit unions usually have lower interest rates and fees than banks, though they
tend to have fewer choices than bankcards.

Student credit card choices

Students and their families looking for the best student credit card need to focus
primarily on annual fees and interest rates. Generally, students with a work and
credit history will find a regular credit card is the best deal.

Variable-rate cards

The cost of using credit cards has increased. Variable-rate cards, the most
common type in the nation, tend to rise in step with the prime rate. The prime rate
has gone in the Fed's efforts to cool the red-hot economy, but spending hasn't
been significantly reduced.

Financing vacations

Most people finance vacations with their credit cards. Even the average credit
card interest rate can turn your vacation into a financial strain if you spend above
your means and take up to a year to pay it off.

Emerging credit

Tweeners – people with emerging credit or recovering credit -- can find good
credit card deals. To get the best deal they need to compare annual
percentage rates, grace periods, credit limits, and fees, and avoid
credit cards with hefty application and processing fees.

29
Affinity credit cards

Affinity credit cards (aka "charity" cards) may give you a sense of purpose to
your spending, but can cost more than your actual donation. Affinity
cards carry high interest rates and annual fees. They have more
value if you don't carry a card balance.

Paying for vacations

You can enjoy that vacation even after it's over by limiting your credit card use.
Consider planning ahead, setting a budget and saving for your
vacation. If you're still short-funded, a home-equity loan offers a
better interest rate than a credit card.

Student loan debt

Graduating college students face an average loan debt of more than $35,000, and
it needs to be attacked aggressively. First, concentrate on paying
down credit card debt, and then tackle your student loan debt.

Citibank ‘s credit cards debt elimination strategies

In addition to encouraging credit card competition through promoting the most

attractive cards in the country, Citibank help consumers cope with credit card
debt by teaching various debt reduction strategies. We hope that you find the
following tips beneficial.

Interest Rate Awareness:

We cannot stress enough the importance of being aware of interest rates when
using your card(s). Please utilize the lists above!!! High rate cards can be put a
BIG dent in your pocketbook. To illustrate our point again, a cardholder with an
average balance of $2,500 and a 19.99% purchase rate will pay $1000.00 in
interest alone in just two years! The same cardholder would pay only $400.00 in
interest if the rate were lowered to 8.00%, a difference of $600.00! Also, be

30
aware of cash advance rates. Cash advance rates are typically much higher than
purchase rates and usually there is no grace period for cash advances (not to
mention cash advance fees). Therefore, avoid cash advances if at all possible.

Taking Advantage of Promo Rates

While introductory or "teaser rates" are generally short lived and are intended
strictly to entice consumers, savvy consumers can benefit a great deal from
promotional rates. Look for cards that offer longer term introductory rates and
longer term promotional rates on balance transfers (6-12 months). Some cards
even offer very attractive long term promotional rates on balance transfers...rates
that are good until the dollar amount transferred is entirely paid off! Consumers
that have more than one card with available credit can transfer balances between
cards in order to take advantage of promo. Transfer rates (a ploy known as "card
dumping"). Finally, when the promo. rate period ends (for transfers), it is a good
idea to call the card company and request an extension of the rate. Consumers
with a good payment history often get extensions. You must be aggressive when
dealing with credit card companies! You can also negotiate to have your regular
interest rate lowered. Threatening to pay off a given card often puts consumers in
a bargaining position when dealing with credit card cos.

Avoiding the Minimum Payment Pitfall:

One of the greatest card pitfalls is making only the minimum payment each
month. Make every effort to pay over the minimum each month, even if it is only
a few dollars over. The long-term impact of making "just the minimum payment"
is devastating. According to Consumer Credit Counseling Services, paying the
$60 minimum payment on a $3,000 credit card balance would take eight years to
pay off and would translate into $2,780 in interest! By paying only $50 more a
month, however, the debt would be paid off in three years and result in a savings
of $1,800 in interest charges!

Graceless Grace Period:

31
Avoid cards that begin computing their grace period at the time of purchases,
rather than billing. Only a few cards still use this method of interest computing,
but there are still some out there. Keep your eyes peeled!

32
DATA ANALYSIS & INTERPRETATION

33
 DATA ANALYSIS & INTERPRETATION

DO YOU HAVE PLASTIC MONEY?

Plastic money No. Of respondents

Yes 95
No 5

100

80

60
Yes
40 No

20

0
No. of respondents

Analysis:
The above diagram shows that 95% respondents have plastic money
according to the survey and just 5% respondents have not plastic money.

Which type of plastic money?

34
 Type of plastic money No. of respondents
Debit card 40
Credit card 60
Charge card 00

60

50

40 Debit card
Credit card
30
Charge card
20

10

0
No. of respondents

Analysis:
The above diagram shows that 60% respondent’s have credit cards , 40%
respondents have debit cards and 0% respondent’s have charge cards . it
means that peoples don’t know about the charge cards in small towns.

FOR WHICH PURPOSE YOU USE IT?

35
 Purpose of use No. of respondents
SHOPPING 20
SALARY 75
TRAVELLING 2
ANY OTHER 3

80

60
SHOPPING
40 SALARY
TRAVELLING
20 ANY OTHER

0
No. of respondents

Analysis:
The above diagram shows that 20% respondents use cards for shopping,
75% respondent’s use cards for salary, 2% respondent’s use cards for
traveling, 3% respondent’s use cards for other purpose. Majority of the
respondents said that cars are use for salary.

DO YOU THINK ITS SAFE?

Safe No. of respondents

Yes 87
No 13

36
 90
80
70
60
50 Yes
40 No
30
20
10
0
No. of respondents

Analysis:
According to the survey, 87% respondents said that cards are safe and
17% respondents said that cards are not safe because after theft these are
use for the shopping etc where passwords are not required.

37
 HAVE YOU EVER CHANGED YOUR PASSWORD?

Password change No. of respondents

Yes 8
No 92

100

80

60
Yes
40 No

20

0
No. of respondents

Analysis:
The above diagram shows that 8% respondents change password,
92% respondents not change password.

38
 WHAT ARE THE BENEFITS OF PLASTIC MONEY?

Benefit of plastic money No. of respondents

ANY TIME WITHDRAWAL 85

EASY TO PAY 12

SAFETY 2
ANY OTHER 1

90
80
70 ANY TIME
60 WITHDRAWAL
50 EASY TO PAY
40
30 SAFETY
20
10 ANY OTHER
0
No. of
respondents

Analysis:
85% respondents said that the benefit of card is any time withdrawal, 12%
respondents said that easy to pay, 2% respondents said that the benefit of card
is safety of money and 1% respondents said that the benefit of card is any
other. Mainly the cards are use for the withdrawal of the money from the
ATM machines.

39
 HAVE YOU FACED ANY PROBLEM WHILE USING PLASTIC
MONEY?

Faced any problem No. of respondents

Yes 42

No 58

60

50

40

30 Yes
No
20

10

0
No. of respondents

Analysis:
According to the survey, 42% respondents face problem while using
plastic money and 58% respondents not face problem while using plastic
money. The problems like machines not working properly or money is not
available in the ATM machine etc.

WHO MOTIVATED YOU TO USE PLASTIC MONEY?

40
 Motivate for plastic money No. of respondents
FRIENDS 20
FAMILY MEMBERS 15
ADVERTISEMENT 3
ANY OTHER 62

70
60
50
FRIENDS
40
FAMILY MEMBERS
30
ADVERTISEMENT
20 ANY OTHER
10
0
No. of respondents

Analysis:
The friends motivate 20% respondents for ATM cards,
15% respondents by the family members, 3% respondents by the
Advertisements and 62% respondents said that banks provide cards at
the time of new account opening.

DO YOU KNOW WHAT YOU HAVE TO DO IF YOUR PLASTIC MONEY

IS LOST OR STOLEN?

41
 Lost or stolen No. of respondents
Yes 87

No 13

100

80

60
Yes
40 No

20

0
No. of respondents

Analysis:

87% respondents know that what to do if plastic money is lost or

stolen and 13% respondents do not know that what to do if plastic money is
lost or stolen. Mostly respondents know that after lost or stolen plastic money
we inform the bank immediately. The bank will block the card and arrange to
issue you a new card.

WHAT DO YOU THINK ABOUT FUTURE OF PLASTIC MONEY IN

NEXT FIVE YEAR?

Future of plastic money No. of respondents

42
 EXCELLENT 36

VERY GOOD 52
GOOD 12

NOT SO GOOD 00

60

50

40 EXCELLENT
30 VERY GOOD
GOOD
20
NOT SO GOOD
10

0
No. of respondents

Analysis:
36% respondents think that in next five years the future of plastic
money is excellent, 52% respondent think very good, 12% respondents think
good and 00% respondent think not so good.

DOES THE PROMOTIONAL PRACTICES EFFECT YOUR

PURCHASING?

Promotional practices effect No. of respondents

purchasing

43
 Yes 18

No 82

100

80

60
Yes
40 No

20

0
No. of respondents

Analysis:
18% respondents said that the promotional practices effect the
purchasing power. Through these promotional practices they know what are
the uses of cards. 82% respondents said that the promotional practices not
effect the purchasing power because they use cards only for the withdrawal of
the money in small towns.

CONCLUSION

Whenever Internet transactions are discussed, immediately the thought of credit

card comes to everybody’s mind. This is because in US the payments by credit a

44
card is quite common. Even before online purchases have become popular,
normally purchases are made through credit cards only. Therefore in US there
was no problem in making people to switch over to online purchases as this mode
of payment is already in vogue. Even in US, much discussion is going on as to
how to avoid frauds, misappropriation, etc of credit cards once the card number is
given online to a merchant. Encryption technologies. Secure socket layers, etc are
being introduced to avoid such things In spite of all these measures, still reports
keep coming regarding credit card frauds here and there. In other words, there is
no 100% foolproof to make credit card payment a safe mode of payment.

In other countries, where credit cards payment system is not as popular as US,
online shopping through credit cards resulted in great failures. At least in
Singapore, a mega shop had experienced a fraud of huge magnitude and decided
to suspend immediately their online business. Similar stories are not uncommon
in other countries too.

Scenario in India

In India the situation is far from satisfactory to use the credit cards as a means of
making payments for online purchases for the following reasons;

1.Use of credit cards is popular to only a few thousands of executives,

businessmen, etc from big cities.

2.That any person using credit card is liable to declare IT made many people
surrendering their cards. In other words if credit card is made the payment
mechanism, only IT payers will be eligible to buy goods online.

3.Still many leading credit card companies are yet to install their infrastructure to
process the online payments.

4.Then there is the question of sales tax laws Each State has its own rate of tax
structure for each and every commodity. How to charge tax when a transaction
takes place online and at what rate will pose problems of billing.

5.Many establishments do not like to offer credit card facility due to the
service charges to be paid to cr card companies. They get the payment only after

45
a certain period of time once the goods are sold. Both of them make the profit
margin less.

As mentioned earlier, the fraud element is applicable to India also. In view of all
these factors, in India; Use of credit cards cannot be expected to boost the sales of
online sales, particularly business to customer

Then what is the way out?

There are other methods of payments for Indian online business, which are given
below:

 Payments by electronic cash/ cheque may be made legally valid including

electronic signature .I believe once the cyber laws are passed by GOI, this is
possible.

 Each merchant/shopper can allot a secret code number to the existing clients
(customers). On receipt of this code number, the goods can be dispatched by
VPP and other modes of dispatch, which will ensure collection of payment
against delivery. However, this facility can be extended only to existing
customers.

 Banks should be asked to immediately create necessary facilities for any of

the a/c holders to operate the a/c through online. Once a purchase is made, the
a/c holder can transfer the required amount to the merchant A/C online. The
MERCHANT BANK CAN INTIMATE the shopper about the transaction. All
these activities can be carried out instantly though proper programming.
Activity can be made part of the ordering activity.

 Large organizations can issue authorization letters to each of their employee

who wants to avail the online purchasing facility and device a mechanism
through which the company itself pays the merchant his dues. This would
require installation of transaction servers in the companies or can be
integrated with their online business activity.

Similarly all government establishments can device a mechanism to enable their

employees make online purchases. These are all some of the ideas to making the

46
online purchases easier and smoother without affecting the payment due to the
shoppers.

They may look difficult to achieve but with proper programming techniques and
the use of appropriate servers, they can be easily achieved. In conclusion,
payment through credit cards will not result in increasing the online shopping as
generally believed. We need to device different mechanisms taking into account
Indian laws, shopper’s requirements, banking practices prevalent in our country.

47
 SUGGESTIONS OF THE STUDY

The banks battle today is more with cash than with other banks. Considering the
huge potential of the Indian market, it is in the interest of the issuers to educate
the consumers about the benefits of holding credit card. The campaigns must also
be convincing enough to clear the myth that credit cards increase spending. Focus
should be on changing non-card related spending to card related spending. The
issuers must focus on service and pricing and must recognize the importance of
the billing and payment process to retain credit card holders.

The credit cards schemes would be successful only if they meet the customer’s
requirement of wider acceptability rather than fringe benefits like non-crisis
credit or prestige proposition. Emphasis should be on offering a wider basket of
services through credit cards enabling purchases for a wide variety of products
along with ATM usage, backed by much more comprehensive merchant
establishment network. The banks must also increase the number of cardholders
by reducing the initial-one time subscription fee.

The banks should step up advertising that will help to build a brand image and
create a higher brand recall like that of Citibank. With more and more people
willing to adopt to credit cards, banks should undertake innovative strategies to
increase card spends. Simultaneously, to cater to high net worth customers and
those with niche needs, banks should provide more of premium plastic and CO-
cards that piggyback on the existing infrastructure, but provide holders with
exclusive add-ons.

Future promotions could include: Telemarketing, direct sales, direct mail,

promotional advertising through media, common ATM services between banks
(to reduce cost of operations), schemes like card carnival and sales executives
contests and a plethora of augmented services should be introduced to induce
greater number of people to adopt to plastic money.

48
LIMITATIONS OF THE STUDY

 The study is confined to NCR only.

 Most of the information is subjective data collected through personal

interaction with people transacting in the plastic money market. As a result
the personal biases of individuals could affect the study. However, to counter
this the data has been verified from a number of different sources to give it a
measure of authenticity.

 Study was constrained by limited availability of data. Not all banks could
reveal their confidential marketing strategies and statistical information.

49
 RECOMMENDATIONS

HOW TO PROTECT -

The following are my recommendations. There may be other options available as

well.

1. Never give your credit card to the company. Make payment by cheque
instead.

2. Monitor your credit card statements.

3. If there is an unauthorized charge, report it to Micro Forecasts immediately and

demand a charge reversal. Wait several days and then check with your credit card
company to see if you received the credit. Do not wait for your next statement to
see if the credit appears.

4. If the refund is not there, call Micro Forecasts again. Most importantly, deny
the charge immediately with your credit card company.

For this to be effective, it must be done in writing, and must be done within 60
days from the date you received the statement on which the disputed charge
appeared. This time frame is as per federal law. I believe you are much more
likely to get your money back if the credit card company is involved.

5. Report your credit card as lost/stolen so that no further charges can occur. You
will get a new card within a couple of week. Many people have done this,
including myself.

6. Report the problem to authorities as per the next section is?

Very likely

Somewhat likely

Not sure

Somewhat unlikely

50
Very unlikely

To what extent does credit card service exceed your expectations?

Very great extent

Great extent

Some extent

Little extent

Very little extent

Which of the following statements, according to you most representative of your

credit card service provider?

They are Helpful and Friendly.

They are polite, cheerful and are knowledgeable operators

In tune with the needs of its clients

Prompt in dealing with customer complaints

Unwilling to go the extra mile for its customers

Poor customer phone support

You are often put on hold for a long time

How satisfied are you with the efficiency of call handling when placing calls to
credit card service provider?

Very satisfied

Somewhat satisfied

Neutral

Somewhat dissatisfied

51
Very dissatisfied

Credit card service provider understands my service needs.

Strongly agree

Agree

Neutral/Not sure

Disagree

Strongly disagree.

What are the added benefits you wish to acquire from the card?

Acceptability

Longer credit period

Higher credit limit

Lesser charges

Better offers

Please rank the services of the following card issuers in order of your preference.

Citibank

HSBC

Bank of Baroda

Bank Of India

Standard Chartered

ANZ Grindlays

52
Times card

ICICI

SBI

Personal details:

Age:

Profession

Income: 15,000-25,000 25,000-40,000

40,000-60,000 Above 60,000

Thank you for taking the time to complete this survey

53
 BIBLIOGRAPHY

 Marketing management: Philip Kotler

 Financial Management: Khan & jain

 Business Statistics: K.K.Khanna & Jagjit Singh

 Annual report SBI

 Annual report ICICI

 Annual report Citibank

 Annual report FICCI

 PhD. House library

 JAMIA MILLIA ISLIMIA library

 Google search

 Yahoo search

 AltaVista search

 MSN search

 India infoline.com

 MAMA search

 Citibank.com

 Sbi.com

 Icici.com

 Indiatimes.com

 A&m.com

 Business today

 Business week

 Times of India

 Business world

 Business India

54