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Impact of Credit Card Usage on Consumers Expenditure Pattern

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of Credit Card Usage on Consumers Expenditure Pattern

Description

Impact of Credit Card usage on Consumers Expenditure Pattern __________________

A thesis Presented to the faculty of Management Sciences Bahria Institute of Management & Computer Sciences,

Karachi ____________________

In Partial Fulfillment of the Requirements for the Degree Master in Business Administration

ALI AZIZ AHMED DECEMBER,

BAHRIA UNIVERSITY INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES,

KARACHI

RECOMMENDATION FOR ORAL EXAMINATION This Project/thesis hereto attached,

entitled,“__________________________”,

prepared and submitted by ______________,

in partial fulfillment of the requirements for the degree MASTER IN BUSINESS ADMINSTRATION,

is hereby recommended for appropriate action

Date: _______

Name: __________________

PROJECT/ THESIS COMMITTEE

In partial fulfillment of the requirements for the degree of MASTER IN BUSINESS ADMINSTRATION,

“_________________________” is hereby recommended for Oral Examination

_________________________ Chairman Name:__________________ _____________________ Member Name:_____________

__________________ Member Name:_____________ __________________ Date

____________________ Member Name:______________

BAHRIA UNIVERSITY INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES,

KARACHI

Project/Thesis:

“ _________________________________________________”

PANEL OF ORAL EXAMINERS

_________________________ Chairman

Name:_________________

____________________________ Member

Name:_________________

_____________________________ Member

Name:_______________

____________________________ Advisor

Name:______________

BAHRIA UNIVERSITY INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES,

KARACHI

APPROVAL SHEET This Project/ thesis entitled,

“_____________________________________________”,

prepared and submitted by __________________,

in partial fulfillment of the requirements for the degree of MASTER IN BUSINESS ADMINISTRATION has been examined and recommended for acceptance and approval

THESIS COMMITTEE

____________________________ Chairman Name:_________________ __________________ Member Name:____________

_______________ Member Name:____________

_____________ Member Name:____________

PANEL OF EXAMINERS Approved by the Committee on Oral Examination with a Grade of __________ ____________________________ Chairman Name:_______________ __________________ Member Name:_____________

__________________ Member Name:_____________

______________ Member Name:____________

__________________________________ Head of the Department Management Sciences

ORAL EXAMINATION ON PROJECT/THESIS Rating Sheet- MBA WEEKEND PROGRAM Name: __________________________ Registration No

Date: ___________ Year of Entry: _______ Total 60 Points

QUALITY OF THE SCHOLARLY REPORT a

Efforts in Identifying Organization or Activity b

Identification of Problem c

Genuine Effort in Collecting Organizational Data and Their Analyses d

Meaningful Conclusion and Recommendation

Total 40 Points

QUALITY OF THE SCHOLARY DIALOGUE

Understanding of the Data/ Information contained in the Report b

Justification,

Arguments,

Expression and Articulation

Openness,

flexibility and Intellectual Honesty GRAND TOTAL

FINAL RATING

________________________ Head of the Department Management Sciences

Grade Scale: 87-100 A 80-86 B+ 72-79 B 66-71 C+ 60-65 C Below 60 F v

ORAL EXAMINATION ON INTERNSHIP Rating Sheet-MBA WEEKEND PROGRAM Name: __________________________ Registration No: _________

Date:___________ Year of Entry:______

CRITERIA Total 60 Points

QUALITY OF THE WRITTEN REPORT a

Nature of Work b

Training Analysis c

Work Analysis d

Conclusion and Recommendation

QUALITY OF THE PRESENTATION OF REPORT

Articulation of written report

Justification,

Arguments,

Expression and Articulation

Openness,

flexibility and Intellectual Honesty

GRAND TOTAL

FINAL RATING

________________________ Head of the Department Management Sciences

Grade Scale: 87-100 A 80-86 B+ 72-79 B 66-71 C+ 60-65 C Below 60 F vi

ABSTRACT

The research was conducted to check out the affect of credit card usage on consumer’s expenditure patterns

The gathered data were examined in respective with inflation,

interest rate and demographic factors

The approach adopted included quantitative information

Questionnaires were used for gathering data of credit card users in Karachi,

Chi-square,

frequency distribution and One-Sample t test were used to test the hypothesis

The cumulative result conclude that most of the credit card users use their card to facilitate themselves to make purchases in retail stores,

On the contrary credit card usage is not affected by inflation,

interest rate and education level while age,

gender and income level do affect it

Likewise none of the expenditure is affected by either interest rate or inflation as commodities are considered necessitates by consumers

ACKNOWLEDGEMENT

we would like to praise Al-Mighty Allah for giving me the courage and the strength to complete the task of writing this thesis

This thesis would not have been possible without the impeccable support and guidance that I have received from my advisor,

Mumtaz Khan

I would also like to thank all of those provided me the data and my family during the exercise of collecting data,

analyzing and compiling the data which is presented in the form of this thesis

DEDICATION

I would like to dedicate all my work to my late father Mr

Aziz Ahmed,

to my mother Allah bless her with health and keep her shadow on us (Ameen

!) and to my younger brother Master Daniyal Ahmed

TABLE OF CONTENT

RECOMMENDATION FOR ORAL EXAMINATION

BACKGROUND

STATEMENT OF PROBLEM

SIGNIFICANCE OF THE STUDY

SCOPE OF THE STUDY

LIMITATION OF THE STUDY

BASIC ASSUMPTIONS

DEFINITION

CHAPTER # 2 RESEARCH METHADOLOGY AND PROCEDURE

- SAMPLE

CHAPTER # 3 REVIEW OF RELATED LITERATURE & STUDIES

2 GENDER

CHAPTER # 5 SUMMARY OF FINDINGS,

CONCLUSION AND RECOMMENDATIONS

1 FINDINGS

CHAPTER # 1 INTRODUCTION 1

Despite of the convenience concept for which today,

modern credit cards are used for,

this was denied or in better words denied by the credit card issuers who were mainly oil companies followed by departmental stores in early 1900 but issued their own specific cards with credit limits and limited acceptance

In 1946,

Johan Biggins a banker in Brooklyn,

issued the first bank card named as “chargit” and that has resulted in the flourishing of credit card industry worldwide,

taking it up to its extremes with a business of over one trillion US Dollars

When consumer uses credit card as an alternate of cash,

the bank pays to the merchant on behalf of its card holder after the merchant provides the bank with customer invoice

In 1951,

the first credit card was issued by Diners Club after Frank McNamara,

a representative of Diners Club,

realized that he forgot his wallet at home while having a business dinner in one of the major New York’s restaurant and so he decided to have an alternate to cash

As per Diners Club record,

they issued their first credit card to 200 customer’s accepted in 27 restaurants in New York,

who too issued their first credit card in the same year

In 1958,

diner’s issued purple card for traveling and entertainment

In 1959,

the option of maintaining balance was introduced which meant the card holder could carry forward leftover payment after paying part sum of that cycle to the next cycle with inclusion of some financial charges

In Pakistan,

the credit of the introduction of the credit card goes to Habib Bank which issued its first gold card decades ago but in limited sum resulting in limited usage and knowing

Habib Bank’s footsteps were then,

followed by Allied Bank which first issued Master card while Citi Bank introduced its Visa card

Citi Bank could be renowned as the uncrowned king of credit card industry in Pakistan because firstly for doing an uncomment able / marvelous job in educating the people of Pakistan regarding the importance and application of credit cards and for the use of massive technology and for 1

creating throat-cut competition in the marketing of credit cards

From that day onwards,

every Bank has credit card facility included as a part of basic services to its customers like MCB,

National Bank of Pakistan,

Bank Alfalah and Standard Charted Bank

In Pakistan Bank Alfalah claims to be the highest market credit holders during the current period with no annual fee,

acceptance around the globe and facilitations with reward points

Expenditures are the spending of a proportion of one’s individual income expenditures pattern is the way of spending that proportion and is determined by the weights ( Scale of preference i

high percentage for necessities rather than luxuries) followed by spending on each particular goods

An expenditure pattern not only varies with Income Levels but also with Demographic Factors

As income groups have different expenditure patterns as compared to social class and so does gender and each group but expenditure through credit cards are also affected by Inflation and Interest rate

Since the invention of credit cards throughout the world expenditure of individuals have increased as they are facilitated to pay for purchases in the future and this has resulted into individual spending more than his earnings and so does goes for Pakistan

This can be supported by stating a single quarter of 2006 from July to September resulting in billing by Visa Card of Rs

15 billion

During this period the Visa Card experienced 80 percent growth,

but as economy takes a turn currently Visa Card is experiencing 3

As per Visa Card statistics Pakistan card holders mostly use their Credit Cards at retail outlets i

This research is being conducted to check and record the expenditure patterns and its limiting factors

We have seen a lot of purchases are done through credit cards and this applies to the world as plastic money’s application is increasing day by day with the decrease in the spending through cash

As it experiences increase in it usage,

credit card a form of plastic money,

is also experiencing an increase in its acceptance

This is happening as people can buy more irrespective of their incomes,

price of the commodity or even the cash they are having at the time of buying,

this increasing purchases and expenditures overall

To determine the effect of the demographics variables like age,

income level and literacy rate on the credit card usage and consumer expenditure pattern

To determine the influence of inflation and interest rate on expenditure made through credit cards

The study would identify the constraining which hinder the usage of credit card which could help in making long term social and economical planning – a part of contingency planning

The study would revolve around all the credit card users in Pakistan,

sampled as a small proportion of credit card holders of Karachi giving a generalized perceptions effects and statistics regarding people from different cultures and life styles in Pakistan

No other type of plastic money will be studied accept credit cards as our topic states effects of inflation,

interest rate and demographic factor on “credit card”

This study deals only with credit cards and no other type of plastic money will be studied

The study would only analyze the effect of inflation,

interest rate and no other factors that acts as constrains

The basic assumptions taken for this research are credit card expenditures are constant along with any other constraining factor except inflation,

interest rate and demographic factors which are kept as the only variable factors in this study

allows the holder to buy on credit

Expenditure – The act of using or spending money,

Expenditure Pattern – Is the way of spending a proportion of one’s individual income proportion and is determined by the weights (scale of preference i

high percentage for necessities rather than luxuries) followed by spending on each particular goods

Demographic – Socio economic characteristics or variables of a population,

Variables – A characteristic or property that varies from individual to individual and may change with the passage of time

Social Class – Hierarchy in which individuals and groups are classified on the basis of accumulation of wealth

Commonly social class is classified into four groups (1) upper class,

Interest Rate – The cost of borrowing money or the extra amount paid for borrowing of money

Inflation – The persistent increase in the general price level of commodities

CHAPTER # 2 RESEARCH METHADOLOGY AND PROCEDURE 2

It involves the setting up of research methodology along with research design

The research includes the following items are described below

The research is being classified into three different categories

in other words collected data and its analysis will help us determine how factors will influence consumer expenditure patterns with respect to usage of credit card

As per conventions of social sciences data for any kind of research is either collected through qualitative or quantitative method

interest rate and demographic factors influence consumers spending patterns by means of credit card

- SAMPLE

As Karachi is a habited for people from different parts and cultures of Pakistan,

commonly referred as mini Pakistan so our sample would be comprising of 100 credit card users of Karachi representing all the credit card users in Pakistan i

How demographic factors influence credit card usage and expenditures

How inflation affects credit card usage and expenditures

How interest rate affects credit card usage and expenditures

All the primary data about credit card usage and expenditure pattern will be collected through questionnaire filled by our sample

All the secondary information will be collected from mass media example internet,

newspaper and magazines but analysis will be purely conducted on primary data of the study

Hypothesis for this study are as below

Credit card usage is affected by Age

Credit card usage is affected by Gender

Credit card usage is affected by Literacy level

Credit card usage is affected by Income level

Credit card usage is affected by High Inflation

Credit card usage is affected by High Interest Rate

The analysis will be done on the basis of the data collected in the form of questionnaire from the sample and would be shown in descriptive form

Our samples would be assured that privacy would be our first priority and the information collected regarding and through them would be used solely for the purpose of research thus,

after this study it would be buried forever in DAVYJONES locker

CHAPTER # 3 REVIEW OF RELATED LITERATURE & STUDIES A literature review gives the researcher an understanding of how the findings of the study fit into existing body of knowledge

The chapter begins with a brief discussion about the importance of previous research

According to J

the most common mode of payment used by customers is cash,

Depending upon on different situations people prefer different means of payment

Innovations and Inventions in the field of payment mechanism cannot be enforced on consumers,

they gradually accept it over a period of time

such as coins replaced barter system because of the failure of occurrence of coincidence of wants

later coins were replaced by currency as coins were difficult to carry and store

Further coins were replaced by cheques as with the passage of time it became difficult or inevitable to carry large amount of cash

Credit card innovation facilitates consumers more than any mode of payment as it allows them to purchase goods on credit

The latest innovation didn't completely replace the old payment methods,

some of them are still in use today

According to Hirschman,

payment system does influence the purchasing behavior of consumers

As per 1978 empirical studies,

consumers are able enough to differentiate among different credit card payment systems

The primary system of any credit card is to facilitate its user while making purchases through credit card consumers not only decides the mode of payment but also from its various types

The selection is impacted by five factors: firstly the demographic factors i

Secondly the attributes’ of credit card such as billing pattern and markup

Thirdly the type of transaction that means the type of item purchased in terms of its monetary and volumetric value

Another factor includes the place where the transaction is taken place and is regarded to the credit card acceptance and all in all,

the situation in which the transaction will take place such as degree of necessity and urgency of good

The above five factors may be at times complementary and competitor

Consumers had to decide to pay for their purchases from different means

Individual goes through decision making process which 8

cash is eliminated because although it is widely accepted but is difficult to carry,

therefore credit card is preferred over cheque depending upon its acceptance and convenience

Thus purchases made through credit cards urge consumers to purchase more as payment is not to be on spot

A part from this credit card purchases are to influence by the demographic factors and the costs associated with a specific credit card,

these are further followed by credit card acceptance and urgency to make purchase could compel consumers to buy on credit

According to Sienkiewicz,

in a very short span of time credit cards were preferred for purchases by many consumers since 1950

In 1916 only 16% of USA households used credit cards but the end of 1995 almost 65% of the households became the part of credit card usage community

Credit cards are now widely accepted over 4 million places only in USA and over 14 million locations throughout the world

According to 1999 statistics 1 trillion of goods and services where bought through credit cards

Since the advent of Dinners club's purple card and American Expresses' green card,

in the same decade many large banks developed universal card product for consumers allowing them choice to purchase goods and services from many locations

A credit card holder experiences a whole lot of process in its single usage which starts with sweeping a credit card through electronic terminal at the transaction place followed by the amount of transaction and card holder’s specifics that are available to the acquirer

If the acquirer is the issuing body then details can be verified within the system else or otherwise information is passed on to the issuer

The issuer than authorizes or declines the transaction and a message containing either of the two is passed to the merchant via the acquirer

If authorization is given,

the merchant substantiates the card holder by comparing his sign on the voucher with his original one on the card this ends the transaction which is now accepted by the merchant

According to Arano,

credit card usage is a readily available source of funding to finance consumption is steadily on rise

Factors such as acceptance and convenience and facility of borrowing debt allowing higher level of consumption,

are believed to have constituted 9

to the flourishing of credit card industry in terms of increase availability and aggressive marketing

The summary of the factors that are believed to have contributed to the steady rise in credit cards industry are increased availability and acceptance of credit cards followed by aggressive (informative and persuasive) both by the industry to attract potential customers

According to J

in USA wide use of credit cards is one of the salient features of consumer retail purchases

American’s are recorded to have purchased 25% of their retails using credit cards

This is against of consumer behaviors in some highly industrialized nations

Bank statistics such as that annually an individual has 60 card based transaction in USA,

while in Japan it is only four

In Japan borrowing appears in only about one tenth in the credit card transactions while half of the Americans pay of their credit card debt each month,

Its usage depends upon different policies that are being practiced in different countries

In countries where credit cards are frequently used,

their idea is to increase accessibility to expensive purchases cheaply i

more credit purchases with payments in installments while in countries where its use is discourage they state that there are higher chances of Bankruptcy,

also it discourages savings as people can have more than they could pay for it

In 1998 credit card there were over 14 billion credit card transactions equally valued to 1

resulting in a mean of 76 dollar per transaction

The 1998 statistics also indicated that credit card was 18% of all USA transaction for the year

Almost about half of USA citizens take the benefit of differ payment of some or all of their credit card bills,

on the contrary the Japanese statistics indicated that only 20

thus giving an overall average of being three times smaller in monetary value as compared to USA

According to Plummer,

credit cards are more often used by consumers depending upon their purchasing behavior

The two major duo Visa and Master card are issued all around the world by over 6000 banks with each claiming to have about 20 million card holders

A useful relationship persists between social and income class and credit card usage i

the social class uses credit card to avail the availability of installments while,

on the other hand upper class uses credit card as a means of convenience

Although all consumers have positive attitude towards credit card usage however the former (social class) tends to use credit card for installment purpose in order to fulfill their necessities of life while,

the latter uses it to buy luxury items

According to Mathews and Slocum Jr

consumers become more sophisticated purchaser,

purchases on credit has played a major role in flourishing the credit card industry and this has resulted in entrance of many retail stores and financial institutions in this new segment

Credit card usage has risen with the passage of time because consumers prefer to buy more and more of the commodities to have maximum utility from them and credit card issuing bodies have also played a significant role in helping consumers to aware them and making them move towards achieving this utility

Previously a handful number of people in every nation knew about credit cards and its usage but by the time people realized its importance and convenience they moved their attention towards facilitating their expenditure by using credit cards,

this can be substantiated by USA 1999 statistics which show that over one trillion dollars transaction were recorded in that current financial year

Credit card is more of a source of borrowing – an incentives associated with its usage rather than a mode of payment

According to report published by state Bank of Pakistan,

in the current Fiscal year (FY10) of Pakistan a rising drift is continuously seen in both value and volume of Electronic payments

As per State Bank of Pakistan the E-Payment transaction in Pakistan for FY10 have touched Rs 50

Consistent growth is observed on electronic transactions in this quarter with 37

3 percent

In this quarter as per State Bank of Pakistan credit card have observed decreasing trend both in volume and value respectively 3

value as compared to previous quarter

The report published by State Bank of Pakistan mentioned that the number of cards in circulation in the current quarter of the Fiscal year has reached 10

8 percent

According to Brito and Hartley,

borrowing using credit cards at high interest rates might be irrational,

however credit cards would act more attractive compared to bank loans for low cost transactions

Credit cards also provides liquidity services to its users by making them staying away from the opportunity cost of holding money that comprises of devaluation of money,

security concerns and space to store it etc

The effects of alternating interest rates on credit card purchases can give details why markup on credit cards only partially replicates changes in the cost of production

Credit card interest rates that is inflexible to the changes in the cost of funds acts contradictory to a competitive equilibrium resulting in no profits for significant application

Many notable authorizes have argued that despite being a free market of bank credit cards it yet appears to be non competitive although thousands of independent firms mainly comprising of new entrants having million of consumers

According to Geanakoplos and Dubey extensive use of credit cards although increases trading effectiveness but it results in demand pull inflation i

Government monetary interference to lower this inflation might act as an obstacle in decreasing efficiency gains in credit card usage

Further things get worsen if credit card debts are not paid out

In contemporary economies most of the transactions take place via credit cards

Although the credit card effects have not been comprehensively studied by theorist either price level or monetary theorist but still it is believed that credit card effects are non vital and could be easily controlled by monetary interventions,

after all credit card is just plastic money and nothing more than that

Deciding whether to buy commodity using credit card causes increase in general price levels of commodities or 12

the value of money is lowered/ decreased even though increasing feasibility to purchase

Credit card facility is almost availed by every country of the world either in small quantity or in larger quantity

Below mention table shows some statistics of fewer countries in the world

COUNTRY

CREDIT CARD IN CIRCULATION

AUSTRALIA BRAZIL CANADA CHINA FRANCE GERMANY INDIA INDONESIA ISRAEL JAPAN MEXICO PAKISTAN PHILIPPINES RUSSIA SAUDIA ARABIA SOUTH KOREA SPAIN THAILAND TURKEY UNITED KINGDOM UNITED STATES VENEZULA VIETNAM

From the statistics it’s clear seen that USA is the country with largest number of credit card user i

second largest country with credit card user is Japan with 346 million users in Japan using credit card for payment of their expenditures

CREDIT CARD IN CIRCULATION INDONESIA,

ISRAEL,

34,000,000

PHILIPPINES,

CANADA,

72,000,000

PAKISTAN,

1,700,000

MEXICO,

26,000,000

RUSSIA,

80,000,000

BRAZIL,

TURKEY,

45,000,000

AUSTRALIA,

2,000,000

UNITED STATES,

VENEZULA,

6,000,000

China is the third largest country with credit card user with 199 million credit card owners across China followed by Brazil with 191 million users in throughout the country

South Korea is the fifth country in the statistics table with 96 million users followed by United Kingdom in the sixth place in the statistics table with 80 million credit card users

Canada is next in the statistics list with 72 million credit card users followed by turkey with 45 million users

According to the statistics France is ninth country with 34 million 14

credit card holders with Mexico on tenth place with 26 million users

India is next with 24 million users and holding the eleventh place of the statistics table

Pakistan only has 1

According to Hirschman,

there are six demographic variable factors that act as variables in the course of researches on bank credit card and retail card

These variables include total house hold income,

education level of respondee and age,

residency period and stages in one’s family life

These demographic factors are always used as independent variables because in many researches it has been made obvious that these factors do affect purchases

Before insuring them as variables all of the factors were taken into consideration and three hypotheses were tested against them,

alternative credit card payment systems are competitive

the more alternative credit payment system available,

individual will purchase and lastly relative to cash purchases,

credit card purchases are more in term of dollar value

The first hypothesis concluded that bank credit cards are a simple of higher level of income i

the more the income the more the possessions of credit card

The second conclusion suggested that high credit cards usage and possessions are associated with the purchase behavior of its users i

the more the person is shopaholic the more credit card he would use

the conclusion suggested that younger and unmarried people had more than one credit card in their possession

Finally,

third hypothesis indicated that purchases in terms of dollar value or cots of purchases are higher with credit cards,

are higher than cash purchases

Further evaluation showed that credit card possession is also affected by gender

Men like to have more travel and entertainment credit cards while woman like to have retail credit cards this pattern could be attributed to men being the provider of the family while women are restricted to house hold purchases

According to J

consumer’s choice regarding the mode of payment also depends on demographic factors

A researcher chose households from a metropolitan city of Durban

all households had bank accounts which meant either they could facilitate their 15

purchases by paying through cheques or credit cards

The research included age,

gender and marital status of the household head as demographic factors

Data was gathered through bank using monthly bank statements and only transactions that affected only bank account taken into considerations

The result suggested that men found credit cards more convenient way of payment than females

this may be because men buy a Varity of goods

non white credit cards expenditure are lower than those of whites and young people prefer more credit cards frequently as compared to old ones

A general conclusion suggested that different individuals perceive different types of production in terms of monetary value either they pay by cheque or by credit card depending upon ones financial and demographic status

Thus it can be concluded that demographic factors do affect the credit card usage as suggested by different researchers and studies

The factors that are accused of being affecting credit card usage are age,

Male found credit cards a more convenient mode of payment to pay off their variety of purchases as compared to female

Income level does also varies credit card usage,

while higher income groups use credit cards as a means of convenience and luxury goods,

social class use credit cards to facilitate their purchases of their durable and necessities into installments

According to Mathews and Slocum Jr

lower income groups pay less than their balance and instead pay interest on their unpaid balance and thus they are classified as installment users

Higher income groups pay their balance within a specific billing cycle and are classified as convenient user as they prefer credit card over cash

Feinberg has researched on credit cards affecting expenditure patterns and overall increasing it for an individual’s spending

The study also verified whether credit cards were affected by gender and type of the product was used as a dependent variable

The sample included 60 respondents (males and females) 30 from each category and all were individual tested

The research was related to the attitudes of the individuals with consumer products

The sample was asked to look at a collection of pictures in a book labeled as consumer products

The book contained seven photographs of consumer items,

each one labeled as product with a number

the products varied between two dresses a men cardigan,

a chess set and an electric type writer

The sample was asked two questions,

first they would have to indicate the amount of money they would be willing to spend for the items and secondly,

the most distinct aspects of the products were to be pen down by them

The results indicated that with credit cars one would spend more as compared to one without credit card

The results were neither affected by gender nor by the classification of the product

A second experiment was conducted by Feinberg to check the associated spending reactions an individual may have while using credit cards

For example an individual may not only spend more but would also be quick to spend more

The research has shown decision time to be an indicator of scale of preference i

for example short reaction time represents greater product reference as a result experiment two was conducted to serve as a replica of the basic hypothesis and to further test effects concerned with credit card usage like increases motivation and decrease decision time regarding spending

The sample consisted of twenty four female randomly assigned to each of the two experimental condition i

credit card possessed or not possessed

The respondents were let to a desk in an experimental room were a rare projected slide screen was placed on a table

Further on a button labeled as response was attached to the desk in front of them

The sample was asked to evaluate the number of consumer products that would be shown on the screen

With no time limit they were instructed to look at the slide and whenever they wanted they could press the response button as soon as they have decided and then write their response (the willing amount) on an answer sheet provided to them

Three different dependent variable were gathered and analyzed

decision time and the motivation to purchase with credit cards

The results indicated that possession of credit card would facilitate a larger spending per item,

a faster decision time and motivation to purchase

Thus it showed that presence of credit card does facilitate consumers spending with decision time being shortened and with no affect of acceptability of credit card in various purchase situations

CHAPTER # 4 PRESENTATION ANALYSIS This chapter deals with the analysis and interpretation of the collected data

The data collected for this study played a significant role in analyzing the impact of credit card usage on consumer’s expenditure pattern

To analyze data a tool plays the most important role,

in this study SPSS (Statistical Package for the Social Sciences) version 17 is used as an Analytical Tool to process all the required outputs for acceptance or rejection of the hypothesis developed for the study

Collected data were analyzed through different tests of SPSS

Below are the different test performed with their interpretations of the collected data

Cumulative

Frequency

Percent

Valid Percent

Percent

Below 20

40 Plus

The above table shows that out of 100 samples collected from credit card users 7 percent of respondent belongs to the group below 20 years,

Cumulative

Frequency

Percent

Valid Percent

Percent

Cumulative

Frequency

Percent

Valid Percent

Percent

Bachelors

Masters

The above table shows that 42 percent respondents posses Bachelors degree where as 36 percent posses Masters Degree and remaining 22 percent respondent are below Bachelors

Cumulative

Frequency

Percent

Valid Percent

Percent

50 Plus

Above mention table shows different income level respondent,

percent earn between 41,000 to 50,000 Rupees monthly and remaining 29 percent have monthly earning above Rupees 50,000

Cumulative

Frequency

Percent

Valid Percent

Percent

Less than 5

More than 15

The above table shows that 48 percent of the respondent use the credit card less than 5 times monthly,

Cumulative

Frequency

Percent

Valid Percent

Percent

Retail Store

Jewellery

Dine out

Air Travelling

Electronics Goods

Clothing

Education

Utility Bills

The above table shows the different category on which respondents use credit card,

The below table shows the respondent responses for high inflation impact on expenditures,

Cumulative

Frequency

Percent

Valid Percent

Percent

Cumulative

Frequency

Percent

Valid Percent

Percent

The above table shows the respondent responses for high interest rate impact on expenditures,

Cumulative

Frequency

Percent

Valid Percent

Percent

Retail Store

Jewellery

Dine Out

Air Travelling

Furniture

Clothing

Education

Utility Bills

Electronics Goods

The above table shows the different categories which are affected by high inflation,

Cumulative

Frequency

Percent

Valid Percent

Percent

Retail Store

Jewellery

Dine Out

Air Travelling

Furniture

Clothing

Education

Utility Bills

Electronics Goods

The above table shows the different categories which are affected by high interest rate,

Hypothesis for the study were selected in the beginning and on the basis of SPSS tests the hypothesis are either accepted or rejected on the basis of the output of these tests

Two type of test “Chi-Square” and “One-Sample T Test” are used for accepting or rejecting the hypothesis

In Chi-Square test the value of “P” must be greater than 5 percent in order 23

to accept the hypothesis developed for this study and reject the null hypothesis

In onesample T test the value of t must be greater than 0

H0: Credit card usage is not affected by Age

HA: Credit card usage is affected by Age

To verify the acceptance or rejection of this Hypothesis developed for the study,

ChiSquare test is applied on age group and expenditure group to test out the significance

Age_Grp * Exp_Grp Crosstabulation Exp_Grp More Than

Age_Grp

Less Than 30

30 Plus

Less Than 5000

- 11000

Chi-Square Tests Value

Pearson Chi-Square

N of Valid Cases

The researcher can wrap up on the basis of analysis that at 5 percent significance level,

the data provide sufficient evidence to conclude that the usage of credit card is affected by age

therefore the researcher can reject the null hypothesis

H0: Credit card usage is not affected by Gender

HA: Credit card usage is affected by Gender

To verify the acceptance or rejection of this Hypothesis developed for the study,

ChiSquare test is applied on gender and expenditure group to test out the significance

Gender * Exp_Grp Crosstabulation Exp_Grp More Than

Less Than 5000

- 11000

The researcher can wrap up on the basis of analysis that at 5 percent significance level,

the data provide sufficient evidence to conclude that the usage of credit card is affected by gender

therefore the researcher can reject the null hypothesis

Chi-Square Tests Value

Pearson Chi-Square

N of Valid Cases

H0: Credit card usage is not affected by Income Level

HA: Credit card usage is affected by Income Level

To verify the acceptance or rejection of this Hypothesis developed for the study,

ChiSquare test is applied on income level and expenditure group to test out the significance

Income * Exp_Grp Crosstabulation Exp_Grp More Than

50 Plus

Less Than 5000

- 11000

Chi-Square Tests Value Pearson Chi-Square

N of Valid Cases

The researcher can wrap up on the basis of analysis that at 5 percent significance level,

the data provide sufficient evidence to conclude that the usage of credit card is affected by income level

therefore the researcher can reject the null hypothesis

H0: Credit card usage is not affected by Education

HA: Credit card usage is affected by Education

To verify the acceptance or rejection of this Hypothesis developed for the study,

ChiSquare test is applied on education level and expenditure group to test out the significance

Education Level * Exp_Grp Crosstabulation Exp_Grp More Than

Education Level

Bachelors

Masters

Less Than 5000

- 11000