Factors determining the Motives for Using a Credit Card: An Empirical Study

Abstract

In today's financial transactions, credit cards are a necessary component. Due to their convenience and flexibility, credit cards have been increasingly popular in India in recent years. With the help of a credit card, people can acquire money from a bank to spend on purchases or bill payments. However, depending on a variety of conditions, people's reasons for using credit cards can differ greatly. The person's financial circumstances are one of the key elements that define their reasons for utilizing a credit card. Individuals who have a reliable source of income and a clean credit history can use credit cards to accrue rewards points, cashback, and other incentives. On the other side, those with inconsistent income may resort to using credit cards to pay for unplanned purchases or fill up financial gaps. Spending patterns are another aspect that affects a person's reasons for using a credit card. Others may use credit cards for regular expenses to accrue incentives or establish credit history, while some people use them to make significant purchases that they cannot afford to pay for in full upfront. For consumers and financial institutions to use credit cards responsibly, it is essential that they have a thorough understanding of the variables that affect why people use them. This study makes a comparison of the single and multiple card holders’ motives for using the credit card with 168 credit card holders (84 from each category).