MiDM Project

On

Credit Cards
Prepared by.

D.Pradeep Kumar
Exe-MBA, IIPM,Hyderabad

What is Credit Card?

Any card that may be used repeatedly to borrow money or buy products and services on credit . Normally we know Credit cards as Plastic money...! A credit card is a way of payment by using the plastic cards which are issued to customers for their payment. Credit cards are different than the debit cards. It is because using the facility of credit finance it does not remove or decrease the balance of the amount of account holder from his account. Credit Cards gives you a smart way to shop, and offer you flexibility and convenience in managing your finances. Credit cards provide a host of exciting offers and benefits such as low interest rates, rewards programs, and a high credit and cash limit.

Service providers

And many more.!

Types of Credit Cards

Major India Credit Card Types

Following are various types of credit cards available in India:

Premium Credit Cards Cash Back Credit Cards Gold Credit Cards Airline Credit Cards Silver Credit Cards Business Credit Cards Balance Transfer Credit Cards Co-branded Credit Cards Low Interest Credit Cards Lifetime Free Credit Cards Rewards

There are 33 various premium credit cards available in India.

Source : annualcreditreport.co.uk

Source : annualcreditreport.co.uk

Gender Base Usage

As per ICICI BANK About 14% of their credit card base of 3.5 Million comprises Women. This segment constitutes independent career women as well as homemakers from affluent households. As per the survey generally Women use their cards at Grocery and apparel ..while Men use for Travel &Entertainment.. Hotel and Air ticket expenses add about 35% more to credit card spends by men.

80 70 60 50 40 30 20 10 0 Men Women

Source : annualcreditreport.co.uk

 Results as per the survey done in 2007 The largest year-on-year increase, of 16.2% was amongst under 21s Source : annualcreditreport.co.uk

Interpreting the information on Credit Card Statements 80% of those surveyed had seen a copy of their credit file at some point. Respondents reported a significant difference in the understanding of the information contained on credit files. According to the survey, online credit files are easier to interpret than paper versions.

Source : annualcreditreport.co.uk

Source : annualcreditreport.co.uk

Effect of Credit cards in Business & Companies

A recent study of SME finances by Warwick Business School has shown that business credit cards are the most widely used financing tool for small and medium-sized companies. SME's spend in excess of 1.8bn on their business credit cards every month, according to the findings of the study, which was sponsored by the Bank of England, the Treasury, employers' groups and retail banks, and is the most comprehensive study of SME financing in the United Kingdom. An SME is defined as a company with fewer than 250 employees: there are four million such businesses in the UK. The study, which used a sample of 2,500 companies, found that 55 per cent of SME's used business credit cards;

Usage of Credit Card

Over the last three years, the credit card industry in India has grown at a compounded average growth rate of over 30%.

The usage of credit cards at retail outlets has nearly doubled from 30%35% two years ago to 50%-60% - Nirupam Sahay, VP (marketing), SBI Card. Credit cards are typically used for purchases above Rs. 1,000. But nowadays people have started using them for even around Rs. 500 Krishnan Govindan, head (marketing), credit cards, ICICI Bank. The departmental store category along with fuel and restaurant spending

account for the most frequent swipes.

In terms of value, jewellery, electronic goods and telecom account for a major chunk .

Source :www.bizopedia.biz

Nearly 44% Indian credit cards are inactive: Survey ( As on apr 2009) As per RBI there were 28.3mn credit cards as on April 2008 (icici) 71% Indians use credit cards for dining: study 21 million urban Indian internet users in India 5.9 million urban Indians buy online (28% of all urban net users).

Frauds
ICICI Bank topped the list of Credit Card Frauds with a total of 8,280 complaints involving Rs 11 crore [USD 2 mn] between April and Dec of 2008. HSBC came next with total complaints of 2,484 cases involving Rs 4,90 crore while American Express Cards lost Rs 6.04 crore on 703 complaints. Citibank, incurred a loss of Rs 4.73 crore, Deutsche Bank loss of Rs 2.09 crore and Standard Chartered Bank Rs 2.39 crore. Sources : rediff.com contentsutra.com cardbhai.com mydigitalfc.com

Source : annualcreditreport.co.uk

Advantages:

They allow you to make purchases on credit without carrying around a lot of cash. This allows you a lot of flexibility. They allow accurate record-keeping by consolidating purchases into a single statement. They allow convenient remote purchasing - ordering/shopping online or by phone. They allow you to pay for large purchases in small, monthly installments. Under certain circumstances, they allow you to withhold payment for merchandise which proves defective. They are cheaper for short-term borrowing - interest is only paid on the remaining debt, not the full loan amount. Many cards offer additional benefits such as additional insurance cover on purchases, cash back, air miles and discounts on holidays. Disadvantages:
You may become an impulsive buyer and tend to overspend because of the ease of using credit cards. Cards can encourage the purchasing of goods and services you cannot really afford. Credit cards are a relatively expensive way of obtaining credit if you don't use them carefully, especially because of the high interest rates and other costs. Lost or stolen cards may result in some unwanted expense and inconvenience. The use of a large number of credit cards can get you even further into debt. Using a credit card, especially remotely, introduces an element of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve.

Dos
1. Sign on the card immediately on receipt. Unsigned cards are invitations for misuse. Keep the card in a prominent place in wallet / vault. This will help you to notice if any of your cards is missing. Many times cardholders realise very late that their card is missing. Ensure that the card you got back after the transaction is yours before putting in the wallet. Many times, Card Member's cards get exchanged at crowded merchant location like service station /Super market. Keep all card number, expiry date and contact number of the issuing bank at a secure place for ready reference. It has to be kept in a different place than where you normally keep cards. Inform issuing bank immediately if you lose the card or it is stolen from you. Always follow up with a written intimation. Memorise PIN and destroy the mailer PIN is an important validation of your identity. The use of PIN along with card is considered as your authentic signature. Keep it secret always. Inform change of address to card issuing bank immediately. Inform postal authorities also about the forwarding address.

Donts
Throw away the expired card. Always cut the card before disposing. This will ensure that the expired card cannot be used for counterfeit / skimming. Reveal your card number / expiry date /personal details to outsiders. Do not reveal personal details and card numbers in response to any suspicious scheme/ caller. This could be a social engineering attack. Hand over your card to any one including your friends / family members. Card is meant for your use only. Even when you are requested to hand it over to authorised bank representative, always ensure to cut the card into two before handing over. Allow the card to be taken out of your sight in a merchant location. Insist that all verification to be done in your presence.

2.

3.

4.

5.

Attempt to use your Debit Care for internet transaction or Provide your card number details on the internet. ICICI Bank Debit Cards cannot be used for internet transactions. Keep the PIN number written anywhere. Do not reveal your PIN to any one. Do not keep the PIN written anywhere especially in the wallet along with the card.

6.

7.

Expose the card to excessive heat /magnetic field. In a simple case, where the card came into contact with the magnetic lock on the ladies bag, the data on the magnetic stripe of the card got erased.

Suggestions
Most of the best tips for using a credit card wisely are just common sense. And, really, they all boil down to two basic points:

Dont use a credit card for impulse purchases; and Read your statement every month.

The second point is the one that trips up most people. Its surely easier to pay the balance or minimumor some amount in betweenand move on to more interesting things. But keep in mind that errors are fairly common on credit card statements. Even if you dont have all of your credit card receipts handy, compare as many as you have to the items listed in your statement to make sure the dates and amounts are right. Also, credit card issuers are heavily regulated. They have to publish the changes theyre remaking to your accountand they do this in the fine print at the bottom or on the back of the monthly statement. Most count on people not reading these notices.

Dont be that person

Recommendation
if you are a food lover & watch movies regularly apply Kotak Trump Card.

for general purchases apply ABN AMRO One Card.

for petrol and exciting offers apply ICICI Bank Card.

Bibiography
Sources used :

rediff.com contentsutra.com cardbhai.com mydigitalfc.com annualcreditreport.co.uk www.bizopedia.biz icicibank.com

For more Information : Mail: pradeep3673@gmail.com