FACTORS THAT INFLUENCE CONSUMER SATISFACTION WITH CREDIT

CARDS: A CASE OF THE NIC BANK LIMITED.

BY

CHRISTOPHER MWANGI

UNITED STATES INTERNATIONAL UNIVERSITY

SUMMER 2014
 FACTORS THAT INFLUENCE CONSUMER SATISFACTION WITH
CREDIT CARDS: A CASE OF THE NIC BANK LTD.

BY

CHRISTOPHER MWANGI

A Research Project Submitted to the Chandaria School of Business in Partial

Fulfilment of the Requirement for the Degree Masters of Business Administration
(MBA)

UNITED STATES INTERNATIONAL UNIVERSITY

SUMMER 2014
 STUDENTS DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to
any other college, institution or university other than the United States International
University in Nairobi for academic credit.

Signed: ________________________ Date: ____________________________

Christopher Mwangi (ID 622186)

This project has been presented for examination with my approval as the appointed
supervisor.

Signed: ________________________ Date: ____________________________

Dr. Paul Katuse

Signed: _______________________ Date: ____________________________

Dean, School of Business

ii
 COPYRIGHT

This work is the product of the author, hence no part of this paper shall reproduced or
transmitted electronically, or mechanically including photocopying, reprinted or
redesigned without the prior permission of the author.

2014 by CHRISTOPHER MWANGI

iii
 ABSTRACT

The purpose of the study was to determine the factors that influence consumer
satisfaction with credit cards. The use of credit cards rather than cash at point of sale
(POS) has increased considerably in recent years. Ever-present in society, credit cards
have become a fact of life for most consumers and are part of the consumer culture. A
notable change in consumer financial services over the past few decades has been the
growth of the use of credit cards, both for payments and as sources of revolving credit.
Specifically, the research seeks to identify to what extent the cost of credit cards
affects consumer satisfaction, to identify to what extent the provision of adequate
consumer information influences consumer satisfaction, and to identify to what extent
the customer service provided by credit card service providers influences customer
satisfaction.

The descriptive survey research design was preferred for the study. The population of
the study was over 10,000 credit card holders in NIC Bank. Snow balling sampling
technique was appropriate for this study because credit card customers were not keen
on cooperating because of the sensitivity of information gathered and only cooperated
on referral from friends. Fishers formula was used for calculating the sample size of
an infinite population which amounted to 384 but for the purpose of improving the
response rate, the study added 16 more respondents to total up to 400. The study used
primary data. The study used a questionnaire as the preferred data collection tool.
Information was sorted, coded and input into the statistical package for social sciences
(SPSS) for production of descriptive and inferential statistics. The results were
presented using tables and pie charts to give a clear picture of the research findings.

Results indicated that credit card interest rate was competitive compared to other
offerings in the market but that the penalties were lower than those of competing
products. The study also showed that the credit card joining fees were affordable. The
results also showed that the relationship between cost of credit and customer
satisfaction was positive and significant.

Results also indicated that the organization did not provide enough information to
enable the customers use credit cards wisely. It was concluded that the organization
should aggressively advertise on credit card information through electronic media. The

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findings showed that consumer information has significant positive effect on customer
satisfaction.

The findings suggest that organization must offer their customers quality service. It
was also possible to conclude that customer service was the base for business
expansion because of the stiff competition prevalent in the banking industry. Results
also led to conclusion that the survival of banking business is dependent on customer
service. The findings showed that customer service has significant positive effect on
customer satisfaction.

Following study results, it is recommended that the Government should legalise the
interest rate within the banks and make it affordable to the consumers. In addition, the
banks should: lower the credit card joining fee as this will motivate more customers to
join and therefore an additional benefit the banks; emphasize on leveraging
information on social sites with regard to finding a customers most recent location;
adopt sending credit card information through Twitter and Facebook; invest in
consumer groups to sensitive customers on credit card issues; emphasize that the credit
customer service operatives are honest and give customers a chance to suggest on
noted service failure.

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 ACKNOWLEDGEMENT

Many people, in their unique ways and through their various contributions, have made
this study possible. First and foremost, I would like to thank God for all the doors that
have opened for me as I carried out this research project, and indeed for all the graces
that have been accorded to me throughout my life. For my good health in body and
mind, all praise is to God.

I would like to thank my supervisor, Dr. Paul Katuse, for his support throughout this
research project and for giving this study a clear direction. Without him this thesis
would not have taken shape.

I would like to thank Larry Maeda of NIC Bank Ltd without whom, I would not have
been able to complete this project. His assistance was most valuable in obtaining data
to carry out this research.

Finally, I thank my mother for supporting me at every stage of my studies and personal
growth. She has been a rock in my life, pushing me towards greatness, facilitating each
and every step towards that destination and praying for me without ceasing.

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 DEDICATION

I dedicate this project to my mother for her overwhelming support and facilitation
throughout my studies. I will be forever grateful for her support during my studies at
the university. For her pushing and nudging, for her encouragement, for holding my
hand throughout my life, I thank her.

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 TABLE OF CONTENT

STUDENTS DECLARATION ......................................................................................... ii

COPYRIGHT..................................................................................................................... iii
ABSTRACT ....................................................................................................................... iv
ACKNOWLEDGEMENT ................................................................................................ vi
DEDICATION .................................................................................................................. vii
LIST OF TABLES .............................................................................................................. v
CHAPTER ONE ................................................................................................................. 1

1.0 INTRODUCTION ....................................................................................................1

1.1 Background of the Study .......................................................................................... 1

1.2 Statement of the Problem ......................................................................................... 3

1.3 Purpose of the Study .................................................................................................4

1.4 Research Questions...................................................................................................4

1.5 Significance of the Study .......................................................................................... 5

1.6 Scope of the Study ....................................................................................................6

1.7 Definition of Terms ..................................................................................................6

1.8 Chapter Summary .....................................................................................................6

CHAPTER TWO ................................................................................................................ 8

2.0 LITERATURE REVIEW ......................................................................................... 8

2. 1 Introduction ..............................................................................................................8

2.2 Cost Aspect of Credit Cards on Consumer Satisfaction ...........................................8

2.3 Effect of Customer Service on Customer Satisfaction ...........................................14

2.4 Customer Service Quality to Consumer Satisfaction .............................................19

2.5 Chapter Summary ...................................................................................................23

CHAPTER THREE .......................................................................................................... 24

RESEARCH METHODOLOGY .................................................................................... 24

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3.1 Introduction ............................................................................................................24

3.2 Research Design .....................................................................................................24

3.3 Population and Sampling Design ...........................................................................25

3.4 Data collection procedure ....................................................................................... 27

3.5 Research Procedures ............................................................................................... 28

3.6 Data Analysis and Presentation ..............................................................................28

3.7 Chapter Summary ...................................................................................................29

CHAPTER FOUR ............................................................................................................ 30

4.0 RESULTS AND FINDINGS ...................................................................................... 30

4.1 Introduction ............................................................................................................30

4.2 General Information ............................................................................................... 30

4.3 Cost of Credit Cards ............................................................................................... 36

4.4 Consumer Information ............................................................................................ 40

4.5 Customer Service Quality to Consumer Satisfaction .............................................45

4.6 Further Analysis .....................................................................................................49

4.7 Chapter Summary ...................................................................................................51

CHAPTER FIVE .............................................................................................................. 52

5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ......................... 52

5.1 Introduction ............................................................................................................52

5.2 Summary ................................................................................................................. 52

5.3 Discussion ............................................................................................................... 54

5.4 Conclusions ............................................................................................................58

5.5 Recommendations ..................................................................................................60

5.5.2 Areas for Further Studies ........................................................................................ 61

REFERENCES ................................................................................................................. 62

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APENDIX 1 ....................................................................................................................... 68

APENDIX 2:...................................................................................................................... 69

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 LIST OF TABLES

Table 3. 2: Criteria for selecting sample size ..................................................................... 26

Table 4. 1: As a credit card customer am happy with the credit card services ................... 32

Table 4. 2: As a credit card customer i intend to continue using credit card...................... 33

Table 4. 3: I would highly recommend credit card use to my friends ................................ 33

Table 4. 4: I would highly recommend credit card use to my friends ................................ 34

Table 4. 5: The bank has my best interest at heart ............................................................. 34

Table 4. 6: The bank delivers what it promises .................................................................. 35

Table 4. 7: I have found the credit card to be useful .......................................................... 35

Table 4. 8: I have found credit card to be very convenient ................................................ 36

Table 4. 9: The credit card interest rate is competitive compared to other offerings in the
market ................................................................................................................................. 36

Table 4. 10: The credit card interest rate is better than overdraft rates .............................. 37

Table 4.11. The credit card interest rate is more affordable compared to shylock interest
rates ..................................................................................................................................... 37

Table 4.12. The credit card interest rate is more affordable compared to Sacco interest
rates ..................................................................................................................................... 38

Table 4.13. The credit card joining fee is affordable compared to other products ............. 38

Table 4.14. The credit card joining fee is affordable compared to other products ............. 39

Table 4.15. The penalties are not very high ....................................................................... 39

Table 4.16. The penalties are not very high ....................................................................... 40

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Table 4.17. The organization usually provide enough information to enable the customers
use credit cards wisely ........................................................................................................ 41

Table 4.18. Consumers take up credit cards without sufficient information on the credit
terms ................................................................................................................................... 41

Table 4.19. Consumers have attitudes and perceptions towards credit cards ................... 42

Table 4.20. The proliferation of credit cards and their ease of access have given consumers
increased opportunities for making credit purchases ......................................................... 42

Table 4.21. The organization considers leveraging information on social sites with regard
to finding a customers most recent location ...................................................................... 43

Table 4.22.The organization sends credit card information through twitter and facebook 43

Table 4.23. The organization has aggressively advertised about credit card information
through electronic media .................................................................................................... 44

Table 4.24. The organization has formed consumer groups to sensitive customers on credit
card issues ........................................................................................................................... 44

Table 4.25. The organization offers the customers quality service .................................... 45

Table 4.26. Customer service is the base for business expansion ...................................... 45

Table 4.27. The survival of banking business is dependent on customer service .............. 46

Table 4.28. Customers give firms the chance to correct a service failure .......................... 46

Table 4.29. Customer perception is subjective ................................................................... 47

Table 4.30.The bank has used informational channels to educate the credit card customer
............................................................................................................................................ 47

Table 4.31. The bank has quality service ........................................................................... 48

Table 4.32. The credit customer service operatives are honest .......................................... 48

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Table 4.33: Pearsons Correlation ...................................................................................... 49

Table 4.34: Regression Model Fitness ............................................................................... 50

Table 4.35: Analysis of Variance (ANOVA) ..................................................................... 50

Table 4.36: Regression Coefficients ................................................................................... 51

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 LIST OF FIGURES

Figure 4. 1: Gender ............................................................................................................30

Figure 4. 2: Level of Education ......................................................................................... 31

Figure 4. 3: Work experience ............................................................................................ 32

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 CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

The use of credit cards rather than cash at point of sale (POS) has increased
considerably in recent years. Nowadays consumers charge even relatively small
amounts to their credit accounts. The array of plastic cards in consumers purses is
further evidence of a culture of credit that is expected to turn the world into cashless
societies in the not too distant future (Worthington, 1995). At present the UK and the
USA seem to be the most sophisticated credit card markets in the world (Durkin,
2002). Apart from bank credit cards, store cards giving revolving credit and permitting
for interest-free payments have become a convenient, popular transactional medium
(Chakravorti, 2003).

Ever-present in society, credit cards have become a fact of life for most consumers and
area part of the consumer culture. Staggering credit card statistics provide evidence of
their pervasiveness. As of 2011, seventy-seven percent of US adults owned at least one
credit card, with a total of 1.4 billion cards in circulation. The average cardholder
owned 7.7 cards and uses a credit card 119 times a year charging an average of $88 per
transaction or $10,500 annually (FICO, 2012). By the end of 2011, with the unfolding
of Americas economic crisis, the average household credit card debt reached $16,420
(Federal Reserve G.19 March, 2012).

A notable change in customer financial services over the past few years has been the
growth of the usage of credit cards, for both payments and for revolving credit. From
humble origins in the 1950s as a useful way for the fairly well-to-do to settle restaurant
and store purchases without carrying cash, credit cards have become a universal
financial product held by households in all economic strata (Durkin, 2000). Credit
cards are the fastest form of customer borrowing in the developed world and they have
the biggest impact on most customers financial status. Credit cards are a vital part of
the financial and payment structures of modern societies being used as a convenient
payment mode (in place of traditional paper-based instruments such as cash and checks)
and a method for obtaining short-term revolving credit to make purchases. Evidence

1
suggests that dependence on credit cards has resulted to an increase in customer
indebtedness and an upsurge in personal bankruptcy (Mann, 2007; Zywicki, 2005).

In modern commerce, credit cards have become a means of payment in lieu of cash or
cheques for many routine purchases and other transactions that would have otherwise
been inconvenient, or even impossible to make (Harris, 2006). This trend has been
growing the world over as most of the worlds economies embrace this method of
payment. Credit cards have been widely accepted and used by the public as a form of
payment. But they have also raised concern as regards their use. Durkin (2002) raises
concern on two major areas. One is whether consumers completely understand the
costs and consequences of using credit cards and this, he refers to as the consumer
information-consumer understanding concern. The other is whether credit cards have
promoted extensive over-indebtedness, particularly amongst those least able to pay and
this he calls the indebtedness-financial distress concern. Durkin (2002) claims that the
two issues are inter-related as one of the outcomes of lack of understanding could be
over-indebtedness. He says that both issues remain prominent in public discourse as
debt and personal bankruptcy levels have increased over the decades.

The concept of customer satisfaction has been recognized as a pillar of marketing

literature since its inception and even after several years it is still a dominant
constituent in the present-day services marketing concept (Solomon, 2009). For some
service providers, customer satisfaction is the core of their marketing strategy as well
as the major focus of their marketing activities; implied to improve the company
performance (Martensen, 2000). Literature underlines the importance of consumer
satisfaction, attesting to the fact that consumer satisfaction increases the likelihood of
recurrence buying, boosts word-of-mouth communications, lowers a consumers price
sensitivity, reduces complaints drives customer loyalty reduces the consumer defection
percentage and in the long run positively affects stakeholder value (Anderson, 1994).

Credit cards have been increasingly accepted as the preferred mode of payment. In the
USA, for example, shoppers are using credit cards more than ever. More than 75% of
the adult population in the US has a credit card (Hogarth, 2004). Credit card issuers in
the US are now competing by waiving annual fees, providing enhancements, and since
the early 1990s, reducing interest rates. In the past, credit card issuers presented
programs with a single interest rate but now many of them offer a wide variety of card

2
plans with divergent interest rates depending on the customers credit risk and usage
modes. Interest rates have become increasingly subjective with the clients with good
payment records getting lower interest rates while the higher risk, late paying clients
getting a higher interest rate (Hogarth, 2004).

In Kenya, credit cards have been pushed with zeal and zest especially by Barclays
Bank of Kenya, who are the market leaders. Barclays Bank of Kenya have partnered
with many merchants in the Kenyan market. They even partnered with the Nairobi
Stock Exchange (NSE) to have the NSE members sign up as Barclaycard merchants to
enable investors who want to purchase shares at the NSE to have an alternative
payment option that is more convenient, secure and faster. NIC Bank therefore faces a
huge challenge from competition (Petersen & Rajan, 1995).

NIC Bank Ltd. is seeking to embark on an intense public education campaign to

increase both debit and credit card users and they are now targeting anybody who
earns an income in excess of Ksh 20,000 down from the previous Ksh 40,000 required
previously. Industry figures show that, as at December 2012, about 9,200,000 of
Kenya's over 43 million people have debit and credit cards, through which about
Ksh17 billion ($217.9 million) changes hands annually. This is a sharp increase from
about 100,000 card holders in 2005. With merchants paying an average of 2%
commission to credit card issuers, the banking industry made $340 million from usage
of credit cards only. Charges on credit and debit cards are liberalized, creating
competition among the 12 issuing banks (NIC, 2012).

Kenyans have a cash culture; they are yet to embrace personal cheques and are thus a
long way from accepting credit and debit cards. Banks are having to come up with
products which meet the customers needs rather than coming up with an imaginary
need and seeking to fill that need. Issues such as credit card fraud, over-spending due
to bad planning and bad customer service have plagued this sector. This study seeks to
find out whether the customers, after receiving their credit card, are satisfied with the
product or whether they are generally dissatisfied (NIC, 2012).

1.2 Statement of the Problem

According to PA Consulting (2000), in the sub-Saharan market, Kenya is perhaps

rivaled only by South Africa in the credit card business. Kenyas global share of the

3
card business has recently grown to 0.03 per cent. Traditionally, Kenya has had a cash
culture but is now following the global trend of moving from being a cash based
society to a card based one. More Kenyan consumers have become willing to take up
credit cards and more banks are now ready to offer them to their customers as they
learn more and more about their credit histories. NIC Bank Ltd. has been enjoying a
healthy share of the market with Barclaycard as their main competitor and market
leader, but the challenge is to lure new subscribers while still maintaining the current
customer base amidst the rising number of credit card issuing banks (PA Consulting,
2000).

Durkin (2000), in his studies of credit cards that spanned from 1970 - 2000, examined
the uses of credit cards and consumer attitudes. He looked at how consumers have
adapted to credit card use and also their general attitudes towards credit cards. He,
however, did not look at the aspect of consumer satisfaction. He examined the needs
that credit cards are meant to fulfill but did not delve further to realize whether credit
cards actually satisfy this needs.

According to a survey carried out by Consumer Insight (2006), competition may have
gone up in the banking industry but the level of customer satisfaction has dropped by
21%. Consumer Insight found that most banks had reduced the number of personnel at
banking halls. A survey carried out by Research International, only 19% of the
respondents rated the services offered by banks as very good, 69% rated services as
fair and 11% rated bank services as poor. This study seeks to discover the factors that
influence consumer satisfaction with credit cards.

1.3 Purpose of the Study

The purpose of the study was to determine the factors that influence consumer
satisfaction with credit cards.

1.4 Research Questions

The research was guided by the following specific questions:

i) To what extent does the cost of credit cards affect consumer satisfaction?

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 ii) To what extent does the provision of adequate consumer information influence
consumer satisfaction?

iii) To what extent does the customer service provided by credit card service
providers influence customer satisfaction?

1.5 Significance of the Study

1.5.1. Bank Managers

This study is intended to assist bank managers to understand the needs of their credit
card customers. The bank managers will be interested in knowing what their customers
expect to gain from credit cards when they seek to take up one. They will also seek to
know what the customers use the credit cards for as soon as they receive them. The
bank managers will seek to find out whether there is a difference between what the
consumers expected and what they actually get. From this information they will be
interested to find out whether consumers actually get more than they expected from
credit cards and are, thus, very satisfied or whether the credit cards do not satisfy the
needs that the customer intended to be satisfied.

1.5.2 Credit card companies

Credit card companies will also be interested to know what needs their customers
would like to satisfy with credit cards. This information will assist them in product
design to make their product more suited to their customers needs.

Retail outlets will also be interested to know what consumers would like to use credit
cards for and how they can be able to benefit from the consumers expectations. Retail
outlets may use the information to determine whether it will be profitable to accept
credit cards or not.

1.5.3 Marketing practitioners

Marketing practitioners will also be interested in knowing whether consumers are

satisfied with the credit cards or not. They will be interested in knowing what the
consumer needs are and how to satisfy this needs. Scholars will also find this
information beneficial in studying consumer satisfaction.

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1.6 Scope of the Study

The research was limited to Nairobi area. The research was based on all credit card
products offered by NIC Bank Ltd. This was a descriptive study. The data was
collected from both primary and secondary sources of data. Questionnaires were
distributed to holders of credit cards to collect first-hand information. Available
databases were exploited as a source of secondary data.

1.7 Definition of Terms

1.7.1 Bank- is a financial institution and a financial intermediary that accepts

deposits and channels those deposits into lending activities, either directly or through
capital markets. A bank connects consumers that have capital shortfalls to customers
with capital surpluses (Hoggson, 2006).

1.7.2 Customer Satisfaction - is the core of their marketing strategy as well as the
major focus of their marketing activities; implied to improve the company
performance. It is a measure of how products and services supplied by a company meet
or surpass customer expectation (Ahmet, & Sensoy, 2010).

1.7.3 Credit Card- is a payment card issued to users as a system of payment. It

allows the cardholder to pay for goods and services based on the holder's promise to
pay for them. The issuer of the card creates a revolving account and grants a line of
credit to the consumer (or the user) from which the user can borrow money for
payment to a merchant or as a cash advance to the user (Schneider, 2009).

1.8 Chapter Summary

In summary, this study was an investigation of consumer satisfaction with their credit
cards. The study sought to establish whether the cost aspect of credit cards has an
effect on consumer satisfaction, whether credit card features affect consumer
satisfaction and also whether the customer perception of credit card service providers
has an effect on customer satisfaction.

Such a study will assist bank managers and credit card companies to come up with
better products that are suited to the needs of their customers. The study will also them
understand what their customers require the credit cards for and what specific features

6
of credit cards are likely to affect customer satisfaction. This will be beneficial in
development of new products. Retail outlets will also benefit from this study by
understanding the needs of their customers who pay by credit card. They will be better
placed to serve their customers well by understanding their needs.

Chapter Two of this study examines previous studies done on credit card usage, needs
met by credit cards and consumer satisfaction with credit cards. The reason for this is
to find out what conclusions were drawn from previous studies. Chapter Three
discusses the steps that were taken during data collection. It specifically described the
research design and indicated why that specific design is preferred. In addition, it
pinpointed the population, the sampling frame and the actual sample size. Chapter
Four showed how data was analyzed giving results on which conclusions were based.
Chapter Five discussed and summarized the findings of the study and finally gave
conclusions and recommendations for improvement or practice. All this was done with
justification from the data that was collected and analyzed.

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 CHAPTER TWO

2.0 LITERATURE REVIEW

2. 1 Introduction

This chapter seeks to examine literature done on the credit card industry to provide the
foundation of the study. It will explore studies done on credit card use, needs met by
credit cards and consumer satisfaction with credit cards. The chapter will be divided
into three sections as per the research questions. The first section will cover the
efficiency of credit cards and will examine the strengths and weaknesses of credit
cards. The second section will examine how convenient credit cards are to use and will
try to see how consumers end up using the credit cards after they obtain them and
whether they face any difficulties in trying to use this credit cards. The third section
will examine consumer satisfaction with customer service provision of credit card
service providers and will look at consumer expectations, customer information and
understanding, customer attitudes towards credit card features and customer retainment
levels.

2.2 Cost Aspect of Credit Cards on Consumer Satisfaction

The pricing decisions between credit card players have effects on other mutual
relationships, both downstream and upstream. The decisions by networks to impose
the no surcharge rule and by issuers to offer certain consumers underpriced services
may affect incentives for usage of other payment instruments. Credit card issuers
(banks) have several types of costs (Murphy & Mack, 2007).

2.2.1 Interest expenses

The exorbitant fees should have discouraged use of credit cards, but the opposite
seemed to hold true. Americans seem to be addicted to the convenience of credit, high
costs notwithstanding. Education only made this worse, as college educated consumers
used credit cards 140% more than high school educated consumers. Some of this
difference could be explained by availability of credit, but not all of it. Further, in a
depressed economy, use of credit is even more dangerous, as 94% of people under age
35 consider it proper to borrow for living expenses (Rutherford & DeVaney, 2009).

8
Some actions may stem the tide of debt. The Obama administration has introduced
changes that could see credit card offers on campus significantly decreasing. Several
changes have been important in reforming this area. The CARD (Credit Card
Accountability, Responsibility, and Disclosure) Act of 2009 was designed to protect
college students (Lusardi, Mitchell, & Curto, 2010). Students under 21 yrs will have to
prove financial ability or have a co-signor. Students will also have to demonstrate
means to pay before getting a card. Credit card companies are also barred from
conditioning gifts on applications for cards on campus. The new law also limited
penalties for over-limit purchases. Lenders intend to reduce on reward programs and
increase fees to adjust to the new laws. With the pending of the law change, there was
a rush to sign up credit card holders on campus before the new exclusions took place.
In the last quarter of 2009, the number of credit card offers increased 46% over the
previous quarter, JP Morgan Chase increased mailings of credit cards by 87%, and
almost 400 million offers of credit cards were mailed in last three months. Consumers
Union claimed this will be the last open season on college students (Block, 2009).

A typical credit card will have an interest rate of between 7% and 36% in the U.S.,
depending largely upon the borrower's credit history and the bank's risk evaluation
methods. Brazil has much steeper interest rates which are about 50% over those of
most developing countries, averaging about 200%. A Brazilian bank-issued
MasterCard or Visa to a new account holder may have an annual interest rate as high
as 240% despite the fact that inflation seems under control at around 6% per annum.
Banco do Brazil, in 2005, offered its new checking account holders MasterCard and
Visa credit cards for 192% interest annually, with slightly lower rates of interest
reserved for people with reliable income and assets (Economist May, 2006).

In a study carried out by The Survey Research Center of the University of Michigan in
January 2000, only 3% of the respondents felt that interest rates charged on credit
cards were reasonable, with 97% of the respondents feeling that the interest rates were
exorbitant. According to Estelami and Bergstein (2006), the price of a product is one
of the most important decision variables for both the customer and the retailer.
Competitive conditions in the market have made price an even more significant
distinguishing aspect in formulation of business and marketing strategies. As a result,
price has gradually become a pivotal point in customers' judgements of value of offer
as well as their general assessments of the vendors. However, a survey undertaken by

9
Fay (1994) found that while over 70% of companies classified price as either the first
or second least satisfactory factor, interviews conducted with switchers found that not
more than 10% had changed suppliers with price being the issue.

Research existing in the market has documented several customer shortcomings in

dealing with retail prices. This research has recognised that in general, customers have
very inadequate information on prices and a very poor aptitude to process intricate
price information, often resulting in dissatisfying purchase experiences, with price
being a key contributor to dissatisfaction (Estelami & Bergstein, 2006). A survey by
Thomas Durkin (2000) showed that most consumers, about 80%, feel that the annual
rates charged by credit card companies are too high.

Majority of Americans have no understanding of the terms of their credit cards which
made the banks to profit for the consumer mistakes. America reviewed the credit card
regulations to protect consumers with little effect. The Schumer Box was intended to
help customers make knowledgeable choices but it did not work. For example, cash
advance fees have been overwhelming. Withdrawal of your own cash will cost you,
and you will be paying for the rest of your life. Penalty fees made $20 billion for credit
card issuers in 2009 while the backdated interest rate charges and penalty interest rates
have cost customers $10 billion annually (Samuelson, 2010).

Card holders also have expectations on their ability to pay. According to Sha Yang and
associates (2007), many people are unrealistic about their ability to pay off their debt
each month and thus end up picking a credit card that does not suit their needs. People
who usually accumulate debt on their card are better off choosing a card with a cheap
interest rate even if the annual fee is large. They found out that card holders who have
expectations of paying off their debt at the end of every month but do not end up doing
so were more likely to use cards with high interest rates and less likely to use cards
with a higher one-off annual fee. These findings show that people who are more
subject to unrealistic optimism will be more prone to select cards that are not suited to
their needs. Card holders therefore need to provide the necessary sufficient information
to enable consumers to make informed choices when selecting credit cards.

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2.2.2 Charge offs

When a customer becomes severely delinquent on a debt (often at the point of six
months without payment), the debt may be declared a charge-off by the creditor. The
debt will then be listed as such on the debtor's credit bureau reports (Equifax, for
instance, lists "R9" in the "status" column to denote a charge-off.) Charge-offs are
considered to be written off as not collectable. To banks, fraud and bad debts are
merely part of the costs of trading (Humphrey, Pulley, & Vesala, 1996).

However, the debt would still be legally binding, and the creditor may attempt to
recover the full debt within the time periods permitted under law, which is usually 3 to
7 years. This includes contacts from internal collections staff, or more likely, an
outside collection agency. If the sum due is large (usually over $2,000), there is the
prospect of arbitration or lawsuit (Humphrey, Pulley, & Vesala, 1996).

2.2.3 Rewards

Many credit card customers receive rewards, such as gift certificates, cash backs or
frequent flyer points, as an enticement for card usage. Rewards are usually pegged on
acquiring a service or item using the card, which may or may not include cash
advances, balance transfers, or other special uses. Depending on the type of credit card,
rewards will ordinarily cost the issuer between 0.25% and 2.0% of the spread.
Networks such as MasterCard or Visa have increased their charges to allow issuers to
fund their reward schemes. Some issuers discourage redemption by forcing the holder
of the card to call customer service for rewards. On their servicing website, the feature
for redemption of awards is oftentimes very well hidden by the issuers. With a
competitive and fractured environment, rewards points dramatically cut into an issuer's
bottom line, and rewards points and related incentives must be managed carefully to
ensure a profitable portfolio. Unlike unused gift cards, in whose case the breakage in
certain US states goes to the state's treasury, unredeemed credit card points are retained
by the issuer (Rosato, 2008).

2.2.4 Fraud

In relative numbers the values lost in bank card fraud are minor, calculated in 2006 at 7
cents per 100 dollars worth of transactions (7 basis points). In 2004, in the UK, the

11
cost of fraud was over 500 million. When an unauthorized duplicate made or a card is
stolen, most card issuers will reimburse partial or full charges that the customer has
suffered for commodities they had not purchase. These refunds maybe be at the
expense of the merchants in some cases, especially where the merchant cannot claim
sight of the card such as in mail order cases. In several countries, merchants will lose
the money if no ID card was asked for, therefore merchants usually require ID card in
these countries. Credit card companies generally guarantee the merchant will be paid
on legitimate transactions regardless of whether the consumer pays their credit card
bill. Most banking services have their own credit card services that handle fraud cases
and monitor for any possible attempt at fraud. Employees that are specialized in doing
fraud monitoring and investigation are often placed in Risk Management, Fraud and
Authorization, or Cards and Unsecured Business. Fraud monitoring emphasizes
minimizing fraud losses while making an attempt to track down those responsible and
contain the situation. Credit card fraud is a major white collar crime that has been
around for many decades, even with the advent of the chip based card (EMV) that was
put into practice in some countries to prevent cases such as these. Even with the
implementation of such measures, credit card fraud continues to be a problem (Vamsi,
Kalli & Ajay, 2011).

2.2.1.2 Features of Credit Cards

Before acquiring a credit card, it is essential for one to shop around for a credit card
that has features which match their needs. According to the FDIC Division of
Supervision and Consumer Protection (2008), credit cards have various features that
relate to cost. One of the features of credit cards includes Annual Percentage Rate. A
credit card may have multiple annual percentage rates. It could have a different rate for
purchases, another for cash advances and yet another for balance transfers. A credit
card could also have a tiered annual percentage rate where different rates are applied to
different levels of outstanding balance. A credit card could also have a fixed or a
variable annual percentage rate. Explanation of the most common features of a credit
card including types of credit cards, fees, grace period, interest rate, and finance charge
(Lucia & Kim, 2009).

12
2.2.1.3 Grace Period of Credit Cards

Credit cards also have a grace period. This is the number of days a card holder has to
pay his bill in full without triggering a financial charge. Grace periods usually apply to
purchases only and do not apply to cash advances or balance transfers. Credit cards
give consumers instant access to credit. In the short-run, therefore, credit cards provide
interest free credit for those consumers who pay within the interest-free period.
Another way to use the grace period is to time major purchases immediately after the
closing date of your account. Timing purchases just after the statement closing date
gives you more days before the charge appears on your credit card billing statement
(Brito and Hartley, 1995).

2.2.1.3 Financial Charge Calculation

Another feature of credit cards according to the FDIC (2008) is the financial charge
calculation. The finance charge is the amount you pay to use credit. A credit cards
financial charges are calculated in different ways. The amount depends on the card
holders outstanding balance and the annual percentage rate. A card holder can be
charged over one-billing cycle or two. Other methods include adjusted balance
method, previous balance method or adjusted daily balance method. Some cards have a
minimum finance charge. The financial charge calculation is very important when a
consumer is considering taking up a credit card.

There are also different types of fees charged on credit cards and this is another feature
of credit cards according to the FDIC (2008). The fees charged include cash advance
fees, annual fees, balance transfer fees, over-the-credit-limit fees, set-up fees, late-
payment fees amongst others. It is important for the card holder to know what fees will
be charged on his card. The recent experience of several banks indicates that some
customers will consider moving banks if charges on checking accounts are increased.
There is more evidence to support this view: according to J.D. Power and Associates
(2012) U.S. Bank Customer Acquisition and Switching Study, defection rates at the
mid-sized and large banks in 2012 have increased to as high as 11.3 percent, against
less than 1% amongst credit unions and small banks. The chief reason mentioned for
changing was charges (FDIC, 2008).

13
Yet another feature of credit cards is the Cash Advance Features. Some credit cards let
you borrow cash in addition to making purchases on credit. These cash advances are
usually treated differently from purchases. It is important for the card holder to know
how he can access cash. Some companies let card holders use ATMs to get cash
advances; others send card holders cheques to cash. The card holder should also know
any extra fees charged on cash advances, what the annual percentage rate for cash
advances is, and how payments are credited. Many credit card companies apply
payments to purchases first then to the cash advances later (Thompson, 2005).

2.2.1.4 Credit Card Limits

The credit limit of a credit card is also one of the features. Credit card limits depend on
the type of credit card held, whether it is a secured card where the credit limit is
determined by how much the card holder deposits, regular cards where credit limit is
usually determined by the card holders salary and premium cards which usually have
the highest credit limit. There are other incentives offered by credit card companies
and the FDIC (2008) also considers these additional incentives as features of credit
cards. Credit cards may offer incentives such as rebates on purchases made, frequent-
flier miles or phone call minutes, insurance for some purchases, travel accident
insurance, amongst others (FDIC, 2008).

2.3 Effect of Customer Service on Customer Satisfaction

These days all the organizations are realizing the significance of customer centered
philosophies. One of the key challenges of them is how they manage customer service
quality, which holds a great importance to customer satisfaction (Bowen & Chen,
2001).

2.3.1 Consumer perception of Credit Card Companies Information Provision

Durkin (2000) carried out a survey to find out whether consumers feel that credit card
companies usually provide enough information to enable them to use credit cards
wisely. When queried, about 65% of the respondents felt that credit card companies do
provide enough information to them. But when asked about their perception of the
experience of others, only 49% of the respondents felt that others were provided with
enough information to be able to use credit cards wisely. Another survey carried out by

14
Durkin (2002) reveals that most consumers take up credit cards without sufficient
information on the credit terms.

When asked how difficult it was for them to obtain useful information on credit cards,
only 6% of the respondents felt it was very difficult to get useful information. 26% of
the respondents felt that it was somewhat difficult to obtain this information. But when
queried about their perception of how difficult it was for others to obtain useful
information on credit cards, 11% felt that it was very difficult for other to obtain useful
information on credit cards. A further 36% of the respondents felt that it was somewhat
difficult for others to obtain useful information on credit cards. The distinction
between the respondents own experiences and what they perceived was the experience
of other people has been dubbed the-other-guy effect (Durkin, 2002).

In January 2000, The Survey Research Center of the University of Michigan conducted
a survey of consumers in order to find out consumers attitudes and perceptions
towards credit cards. Nearly 500 households from different states were interviewed.
79% of respondents felt that credit card issuers mislead consumers by offering low
rates but only for a short period of time. 55% of respondents felt that credit card
companies make it hard for people to get out of debt. However 63% of respondents
still felt that overspending was the fault of the consumers themselves and not the fault
of the credit card companies (SRC, 2001).

2.3.2 Customer Expectations

Customer information also has an effect on customer expectations. Customer

expectations are at two levels. There is what the customers expect the credit card issuer
to deliver (in terms of the product). There is also what the customers expect of
themselves in terms of payment of debt and use of the product. Credit card holders
have expectations of both the service provider as well as of themselves. They expect
the service provider to provide a quality product and they also expect to use the
product wisely. If adequate information is not provided, then the customers may end
up expecting something that will not be delivered (Yang, Markoczy & Qi, 2007).

According to Yang (2007), Credit card holders expect that the card will deliver quality
service to him. Some of the services expected include customer service. Card holders
will expect a 24 hour customer service which will also be expected to be helpful. Fraud

15
Protection is another service that the card holder expects from the service provider.
Card holders will expect that they are not held responsible for any fraudulent charges
made on their card without their knowledge. A credit card holder also expects the
credit card company to provide him with a purchases summary. A card holder will
expect the card issuer to provide him with a purchases summary on all the purchases
made to assist him with budgeting as well as verification that the charges made to him
are legitimate purchases made by him.

Credit card companies are also expected to assist in dispute resolution. Card holders
expect the credit card issuer to intervene whenever there is a dispute with a merchant.
Credit card holders will have different expectations of the credit card issuer and it is
important that the credit card issuer clearly communicate to the card holder the level of
service that will be provided. Usually an individuals economic expectation of the
future and his or her consumption patterns of today are closely related. The
phenomenon of over use credit cards in this way is perhaps, increasingly common
among college students, as most college students expect to earn more income in the
future, with which, they will use to pay off the debts they incur today. However, few
college students see the devastating consequences of paying only a minimum on a
monthly debt today. By doing so, the future lives of many students are weighed down
by the gigantic debt outstanding from credit cards they utilized during their time in
college (David, 2006).

The customer service operatives are also expected to be polite when handling the
customers. Customers expect that the customer service operatives will be polite with
them even if the customer is making a complaint. They do not expect to hear abusive
language, to be patronized or to be dismissed curtly. Another expectation of the
customers is that they will be treated with respect. Customers expect to be treated with
respect irrespective of the nature of their complaint or their income level. Follow
through is yet another of the customers expectations. Customers expect that the
organization will keep their promise. Customers expect that when a customer service
representative makes a promise, it will be kept (David, 2006).

Estelami and Bergstein (2006) suggest that consumers will evaluate an experience by
taking into account prior expectations, and that these expectations will significantly
impact their perceptions and resulting judgements. Their research shows that higher

16
expectation levels create a bias in the consumer's mind, which may dilute the negative
effects of a bad experience. Similarly, a negative bias will adversely affect a
consumer's account of the experience, which may be judged more unfavourably than
deserved.

2.3.3 Credit Card Consumers Ability to Pay

The spread of credit cards and their ease of access has provided consumers better
prospects for making credit purchases. However, while many customers are able to use
credit cards astutely, some appear to be incapable of controlling their spending habits.
Over the past two decades, credit card use has turned into an aspect of social and
economic concern. The problems created by credit card usage have caused
apprehension among consumer advocates, public policy administrators, and educators.
Economic concerns have increased in part, as a reaction to the enormous use of credit
cards and the build-up of debt in American society. The most striking feature of this
trend in U.S. household indebtedness is the rise of personal bankruptcy (Ladka 2011).
More than 1.35 million people filed for Chapter 7 or Chapter 13 bankruptcy in the
United States during 2011, which equates to approximately one in every 175 adult
Americans (American Bankruptcy Institute, 2010). This figure was lower than 2010
but the insolvency rate is expected to rise again during 2012. Credit card debt has been
described as the main reason causing Americans to file for personal bankruptcy
(Murray & Light, 2010).

Studies investigating the control construct either addressed self-control or locus of

control and their relationship to credit card attitudes or behaviors. For example, in
2003 two studies found that locus of control was related to attitude toward credit, but
unrelated to levels of credit card debt. In 2009, Watson, (2007) found that locus of
control was related to credit card misuse. When comparing across repayment behavior
categories (installment vs. convenience users) some studies found no significant
change in locus of control, anxiety and self-esteem. However, Robb and Sharpe (2009)
reported that anxiety is connected to a lower possibility of carrying a monthly balance.

Once a credit card is obtained, it is important for the card holder to know where he can
use the credit card. Most merchant outlets accept cards as a means of payment
nowadays but it is important to note that not all merchant outlets accept them. The

17
outlets usually have an arrangement with the card issuing company to accept the cards
at no extra cost to the card holder (Spiller & Lohse, 1997).

On October 17, 2012, the Consumer Financial Protection Bureau (CFPB) issued a
proposed rule (Proposed Rule) to amend the Truth in Lending Acts (TILA)
ability-to-pay requirements, as added by the Credit Card Accountability Responsibility
and Disclosure Act of 2009 (CARD Act) and implemented by Regulation Z. The
condition has been the topic of frequent reproach from policymakers, consumer groups
and the industry as stopping non-working spouses from obtaining credit. Echoing
earlier proclamations from his Congressional testimony, the CFPBs press statement
quotes Director Cordray as stating that when stay-at-home spouses or partners have the
ability to make payments on a credit card, they should be able to obtain a card in their
own name, and today the CFPB is proposing common-sense changes that would
facilitate credit access for spouses or partners who do not work outside the home
(White, 2007).

2.3.4 Provision of Credit Card Information through Social Media

A financial organization may contemplate leveraging information on social media with

respect to finding a consumers most recent whereabouts. A location service provided
by a social network permits a user to log in their current venue and location detail
using a mobile device by picking from a list of locations. Some mobile devices support
users to log in their current position automatically. The service allows a user to know
who else in his network is close to or at that location, and lets their network know
about their current log ins. Financial organizations can encourage their clients to
secretly allow them to use their location information through social media so as to
serve them better and reduce abuse of their debit and credit cards (Robb & Sharpe,
2009).

It has been noted that the traditional role of the banks is slowly changing due to social
media. PayPal allows businesses and individuals to receive and send money online,
and enables credit card usage without revealing the credit card number to the
merchant. Additionally, companies like MyC4.com and Kiva.org enable customers to
get loans from each other, instead of from banks. Customers are increasingly seeking
financial advice from Google Finance and CNBC message boards. Clearly, the

18
perception of value of the customers and their consumption patterns are evolving
rapidly (Murray & Light, 2010).

2.3.5 Provision of Credit Card Information through Electronic Mail

According to Thompson (2005) he asserts that except as specifically set forth herein,
CTI may collect; the e-mail addresses of users that communicate with CTI via e-mail;
information knowingly provided by the user in online informational sections,
registration, or membership forms and financial information provided by a user,
including credit card number and billing address in order to process credit card
payments to CTI. Such financial information, while collected by CTI, is stored and
maintained by its third-party payment processing centre for the purpose of processing
payments and conducting related transactions. Specifically, and in order to register
and/or to purchase certain services of the Site, you may be required to provide
additional personal information about you and your company, such as your name,
address and other relevant personal information. If you do not wish to provide such
information to the Site, you will be unable to register and/or to obtain products or
services from the Site. When a visitor performs a search within the Site, CTI may
record information identifying the visitor or linking the visitor to the search performed
and recording information related to the search request.

According to Centeno (2003) different terms have been used to define E banking, such
as internet banking, and online banking. However, despite its different labels, E
banking indicates the use of the internet and information technology as the delivery
channel to conduct banking activities, for example, transferring funds, paying bills,
viewing checking and savings account balances, applying for credit cards, transferring
money and paying mortgages; Specifically, E-banking is where a customer can access
his or her bank account via the internet using personal computer or mobile phone and
web-browser.

2.4 Customer Service Quality to Consumer Satisfaction

In a survey carried out by Thompson (2005) found that 70% of customers cite poor
customer service as their reason for leaving a firm. 30% cite poor quality, about 25%
cite price as a key factor, and over 10% cited functionality as a factor while about 9%
cited change of needs as their reason for moving.

19
Service quality, in the context of offline and online services, has received considerable
attention within the literature. Generally, service quality has been identified as
consumers comparison between service expectation and service performance as well
as the subjective comparison that customers make between the quality of service that
they wish to receive and what they actually get .Research into the importance of
service quality within the banking industry identifies service quality as a critical factor
in influencing satisfaction (Gefen, 2002).

Service quality is determined by the total utility received by the beneficiary of the
service. This represents the benefits package that he receives from the core and
supplementary services. The consumer assesses the service quality by comparing his
perceived mental image of the service which he constituted from information obtained
via promotions, personal experiences, and the experiences of friends, family and all
those around him, with the level of satisfaction that he receives. As failing to achieve
the required satisfaction will prompt consumers to abstain from purchasing the service
and to purchase services provided by the competition, service quality is correlated with
the organization's service capability of achieving a level of customer satisfaction that
surpasses his expectations (Alsamydai and Rudaina, 2005).

Dee (2009) indicates that the concept of service quality is centered around the benefits
obtained by the consumer of the service, while (Berry et al 1995) find that service
quality depends on the current and past experiences of the customer with the services
that benefited him, which is the main principle in evaluating the service based on the
perceived quality of the service. Furthermore, the more satisfaction is achieved; the
more the mental image will be enhanced, thus encouraging individuals to repeated
purchases. Repeated purchases are the result of the total utility received by the
consumer which determines the service quality from the viewpoint of the consumer.

Bhaskar (2004) analyzed that when good service is extended to a customer, a loyal
customer will work as an ambassador to the bank and facilitate growth of business.
Customer service is the base for business expansion because of the stiff competition
prevalent in the banking industry. The survival of banking business is dependent on
customer service. To conclude, the banking industry is active in India, due to
technological revolution. Banks have to utilize this opportunity to become strong
organizations providing essential service.

20
2.4.1 Customer Complaints

Buttle and Burton (2001) state that outcome is the `primary driver' of consumer
evaluations of service in initial encounters. But process is more important during
service recovery. Buttle and Burton identify two important forms of justice within
recovery: `distributive justice' (fair settlement) and `interactional justice' (polite and
respectful treatment). PA Consulting (2000) conducted studies which suggested that
only 4 to 10 per cent of customers will give firms the chance to correct a service
failure.

Goodman and Ward (1993) conducted a study for the US Office of Consumer Affairs
which suggested that for every five customers who encounter a problem, one will be
lost for good. Non-complainers were found to be the least loyal customers, even more
disloyal than complaining dissatisfied customers whose problems were not resolved.
Spreng, (1995) found out that in both positive and negative recovery outcomes;
recovery can take on greater importance than the original service failure. Service
recovery methods (which include any actions necessary to return a customer who had
experienced service failure to a state of satisfaction) may be employed to make sure
that customers remain satisfied with the companys products. Complaints handling,
when done properly, offers an opportunity for developing customer satisfaction the
retention rate of customers whose problems have been resolved is 50% (Buttle &
Burton, 2001).

On average, customer service representative with any leading credit card company
answer about 100 calls per day, 80% of which are enraged customers calling to
complain. According to a focus group carried out by the Food and Nutrition Service
(2003), when dealing with these complaints, customers expect the customer service
operatives to be efficient customers expect that their complaint will be dealt with in
the shortest time possible. They do not want to be kept waiting unnecessarily.
Customers also expect the credit customer service operatives to be honest; they do not
expect to be lied to regardless of the message.

2.4.2 Customer Percepection

Perception is an opinion about something viewed and assessed and it varies from
customers to customers, as every customer has different beliefs towards certain

21
services and products that play an important role in determining customer satisfaction.
Customer satisfaction is determined by the customers perceptions and expectations of
the quality of the products and services. In many cases, customer perception is
subjective, but it provides some useful insights for organizations to develop their
marketing strategies. Providing high level of quality service has become the selling
point to attract customers attention and is the most important driver that leads to
satisfaction. Therefore, customer perception and customer satisfaction are very closely
linked together, because if the perceived service is close to customers expectations it
leads to satisfaction. Satisfied customers provide recommendations; maintain loyalty
towards the company and customers in turn are more likely to pay price premiums
(Kotler, 2000).

Perceptions of company performance were found to exert a positive influence on

perceived service quality, satisfaction, repurchase intention, and WOM. Kotler (2000)
also provided a review supporting a positive relationship among satisfaction,
repurchase intention, and WOM. Bhaskar (2004) found a strong positive association
between customer value and satisfaction in four lodging markets segmented by price.
He also supported a positive influence of perceived value on customer satisfaction. It is
axiomatic that these variables are all positively related reflecting marketers efforts to
deliver high service quality and customer value that will lead to market retention.
Perceived value is expected to explain both repurchase intention and WOM directly, in
addition to its influence on WOM through customer satisfaction and repurchase
intention.

A positive perception of value may bring customers back to make another transaction.
When customers believe they are being treated fairly in an exchange, they will be
satisfied with the transaction if their outcome-to-input ratio is in some sense adequate.
Customers pointed out that quality, price, and company or brand image were three
factors that comprise the customer value package. In other words, customers will make
an explicit comparison between what they give and what they get. However, customers
expect prices to be lower in an online store than in a traditional sales channel. They
may expect to get more value from an online store than from a physical store
(Minocha, Dawson, Blandford & Millard, 2005).

22
2.5 Chapter Summary

From previous studies it has been found that consumer generally not satisfied with the
cost aspect of credit cards. But although 70% of companies ranked price as the first or
second least satisfactory issue, interviews with switches found that no more than 10%
had changed suppliers because of price.

Most consumers believe that credit card issuers do actually provide them with useful
information on credit cards. Consumers were found to have high expectations of both
the credit card issuer as well as of themselves as they used their credit cards. The
consumers who have unrealistic high expectations of their own ability to pay were
found to be more prone to select a card that does not suit their needs and hence were
more dissatisfied.

23
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter described the design methodology to be used in the study to find out the
factors that affect consumer satisfaction with credit cards. The research methodology
was described in terms of design, methods, population instruments and procedures to
be used for data collection as well as procedures used for data analysis.

This chapter included the research design, the population and sampling methods, the
data collection methods, the research procedures and the data analysis and presentation
methods. The data analysis methods were discussed in this chapter and all the tools
used to analyse data were highlighted.

3.2 Research Design

Research design refers to how data collection and analysis are structured in order to
meet the research objectives through empirical evidence economically. According to
Cooper and Schindler (2007) research design is the structure and plan of examination
so conceived as to obtain solutions to research queries.

A survey research design is an attempt to collect data from the members of a

population in order to determine the current status of that population with respect to
one or more variables. It is therefore a self report study which requires the collection of
quantifiable information from the sample. A survey research could be descriptive,
exploratory or explanatory involving advanced statistical analyses (Mugenda and
Mugenda, 2003).

Descriptive survey research intends to produce accurate depictions of situations, events

and persons and the exploratory research aims at asking questions, looking for new
insights into phenomena, and assessment of phenomena in new light (Sekaran, 2006).

Explanatory survey research focuses on why questions. Answering the `why' questions
involves developing causal explanations. It aims at establishing a cause and effect
between variables (Mugenda and Mugenda, 2003). This explanatory survey design was

24
preferred because the study needs to establish the effect of independent variables on
the use of accounting services.

3.3 Population and Sampling Design

The target population of the study was over 10,000 credit card holders in NIC Bank.
According to Mugenda and Mugenda (2003), a population of more than 10,000
customers is an infinite population.

3.3.1 Sampling Design

Nesbary (2007) asserts that a sample is a subset of a population that has been selected
to reflect or represent characteristics of a population.

3.3.1.1 Sampling Frame

A simple definition of a sampling frame is a set of source materials from which the
sample is selected (Mugenda and Mugenda, 2003). The definition also encompasses
the purpose of sampling frames, which is to provide a means for choosing the
particular members of the target population that are to be interviewed in the survey
(Turner, 2008).

3.3.1.2 Sampling Technique

Convenience sampling was done. Convenience sampling or purposive sampling was a

non-probabilistic sampling technique which solicits data from those who respondents
who are easily available and ready to participate on their will.

The specific convenience sampling technique was snowballing. Snowballing is a

technique that is preferred in cases where sensitive information and resistive
institutions are concerned. The sensitivity of information or institution implies a low
response rate and it is only through referrals from the initial contact units that can
improve the response rate. For instance, consider a group of activists who have a
tendency of fearing victimization or divulging incriminating information or banking
employees or hospital employees who would rather give information if their colleagues
also gave the information. In such a case, snow balling techniques is appropriate.

25
The reason why snow balling was appropriate for this study was because credit card
customers were not keen on cooperating because of the sensitivity of information
gathered and only cooperated on referral from friends. Snowballing alleviated the fears
of divulging sensitive information since the referrals came from friends. It was noted
that customers were more likely to respond if the referral came from a friend.

While the author acknowledges that sound claims of generalization cannot be made in
this case and that random sampling is the most efficient in research, all efforts were
done to ensure that the selected sample was as representative as possible.

3.3.1.3 Sample size

A sample is a part of a population. There are various ways of calculating the sample
size of a population. These include using a census for small populations, imitating a
sample size of similar studies, using published tables, and applying formulas to
calculate a sample size (Mugenda and Mugenda, 2003).

Mugenda and Mugenda (2003) recommend the use of Fishers formula in calculating
the sample size given an infinite population. Since the population is huge and it could
have changed at the time of the study, the researcher used Fishers formula for
calculating the sample size of an infinite population.

Table 3. 2: Criteria for selecting sample size

Confidence Level
Accuracy (+/-) (Margin of error) 90% 95% 99%
1 6765 9604 16576
2 1691 2401 4144
3 752 1067 1848
4 413 600 1036
5 271 384 663
10 68 96 166
20 17 24 41

Mugenda and Mugenda (2003) further recommend the following formula for sample
size determination;

2
z
n p(1 p)
d

26
 384=0.5(0.5)*(1.96/0.05)2

Where:

n= sample size

z= the table value for the level of confidence, for instance 95% level of
confidence =1.96, 90% level of confidence =1.645.

d= margin of error

p= proportion to be estimated, Cochran (1963) and Mugenda and Mugenda

(2003) recommends that if you dont know the value of p then you should
assume p=0.5

For the purpose of improving the response rate, the study added 16 more respondents
to total up to 400.

3.4 Data collection procedure

Primary data is data that you collect yourself using such methods as direct observation
which allows one to focus on details of importance and to see a system in real rather
than theoretical use. Primary data can also be sourced from surveys; written surveys
allow for collection of considerable quantities of detailed data.

The study used a questionnaire as the preferred data collection tool. Structured
questions were used in an effort to conserve time and money as well as to facilitate an
easier analysis as they are in immediate usable form; while the unstructured questions
were used so as to encourage the respondent to give an in-depth and felt response. The
questionnaire had both open ended and close ended questions.

The questionnaire designed in this study comprised of three sections: to what extent
does the cost of credit cards affect consumer satisfaction? To what extent does the
provision of adequate consumer information influence consumer satisfaction and to
what extent does the customer service provided by credit card service providers
influence customer satisfaction?

27
3.5 Research Procedures

Pilot testing, also known as pre-testing is described as the preliminary application of

the data collection technique in order to determine its adequacy. Some of the reasons
for pre-testing include discovering question content, wording and sequencing
problems, exploring ways to improve the overall quality of survey data and
discovering target question groups where researcher training is required. In this survey,
pilot testing was done by having three respondents fill in the questionnaire. This
allowed the researcher to confirm clarity in the questions and remove bias and
ambiguity in the data collection instrument. The member involved in the pre-test was
not form part of the sample that will be analyzed (Cooper and Schindler, 2007).

For the administration of the final questionnaire, the researcher distributed to the
selected customers. A copy of the questionnaire was provided as part of the
appendices. The questionnaires were filled on the spot. .

3.6 Data Analysis and Presentation

This study used the quantitative method of data analysis. Quantitative methods of data
analysis include inferential and descriptive statistics. The rationale for using
quantitative methods for data analysis is because some of the data results required
quantitative interpretation. For instance, descriptive statistics include frequencies and
measures of tendency mainly means and frequencies.

According to Zikmund et al. (2010), data analysis refers to the application of reasoning
to understand the data that has been gathered with the aim of determining consistent
patterns and summarizing the relevant details revealed in the investigation. To
determine the patterns revealed in the data collected regarding the selected variables,
data analysis will be guided by the aims and objectives of the research and the
measurement of the data collected.

Information was sorted, coded and input into the statistical package for social sciences
(SPSS) for production of graphs, tables, descriptive statistics and inferential statistics.
A multiple regression model was used to test the significance of the influence of the
independent variables on the dependent variable. The multiple regression model was as
laid below.

28
Y = 0 + 1X1 + 2X2 + 3X3 +

Where Y = Consumer satisfaction on credit cards

X1 = Cost of credit cards

X2 = Provision of adequate consumer information

X3 = Customer service provided by credit card service providers

Is the error term which is assumed to be normally distributed with mean zero and
constant variance

Parameters to be estimated

Inferential statistics included correlation analysis. The tool for data analysis was
Statistical Package for Social Sciences (SPSS) version 17 program. The results were
presented using tables and pie charts to give a clear picture of the research findings.

3.7 Chapter Summary

Chapter Three discussed the steps that were taken during data collection. It specifically
described the research design and indicated why that specific design is preferred. In
addition, it pinpointed the population, the sampling frame and the actual sample size.
A population size of over 10,000 employees was taken. The preferred data collection
instrument is the questionnaire and it was used to collect primary data. SPSS 17 is the
tool through which data was converted into percentages and correlation analysis
executed.

29
 CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction

In this chapter, the data collected during the research was analysed and reported. This
study was executed to achieve the stated objectives. This chapter looked at the realized
sample in comparison to the planned sample, consequently resulting to the response
rate derived for the study. The realized sample became a representation of the studys
results and findings as per the questionnaires administered to the selected respondents.
The sample respondents were derived from Barclays banks. Data collected was
presented in the form of frequency distribution tables and pie charts. A total of 390
responses/Questionnaires were received out of a possible 400 Questionnaires. This
indicated that a response rate of 98% was obtained.

4.2 General Information

4.2.1. Gender Distribution of the Respondents

The study sought to establish the gender distribution of the respondents. The findings
were presented in Figure 4.1. From the study findings, majority of the respondents
(82%) were male and 18%) were females.

male; 18%

female; 82%

Figure 4. 1: Gender

30
4.2.2. Level of Education

The study sought to establish the level of education of the respondents. The findings
were presented in Figure 4.2. From the study findings, majority of the respondents
(60%) were university graduates while 24% of the respondents were college graduates.
Sixteen percent (16%) of the respondents were post graduates. The findings imply that
most of the respondents were literate thus it is assumed that they were able to interpret
the questions posed to them with ease.

Post graduate;
16%

College; 24%

University; 60%

Figure 4. 2: Level of Education

4.2.3. Work experience

The study sought to establish the work experience of the respondents. The findings
were presented in Figure 4.3. From the study findings, majority of the respondents
(69%) had an experience of 6 to 10 years. while 29% of the respondents had an
experience of 2 to 5 years. Another 1 % had an experience of over 10 years and less
than one year respectively. This implies that the respondents had enough experience
and were more knowledgeable to the question hence reliable information.

31
 Over 10 years; 1% less than 1 year;
1%

2 to 5 years; 29%

6 to 10 years; 69%

Figure 4. 3: Work experience

4.2.4 Customer satisfaction

The study had one dependent variable which sought to determine the customer
satisfaction of credit .The results were presented as follows.

4.2.4.1: As a credit card customer am happy with the credit card services

The respondents were asked if as credit card customers they were happy with the credit
card services. Thirty six point four percent (36.4%) strongly disagreed while another
30.3% disagreed bringing to a total of (66.7%) of those who disagreed. Thirty point
five percent 30.5% strongly agreed and 2.8% agreed. The results are presented in table
4.1.

Table 4. 1: As a credit card customer am happy with the credit card services

Scale Count Percent

As a credit card customer am happy with
Strongly disagree 118 30.30%
the credit card services
Disagree 142 36.40%
Neutral 0 0.00%
Agree 11 2.80%
Strongly Agree 119 30.50%
100.00
Total 390
%

32
4.2.4.2: As a credit card customer i intend to continue using credit card

The respondents were asked if as a credit card customer they intend to continue using
credit card. A majority (34.9%) disagreed while another 31.5% strongly disagreed
bringing to a total of (66.4%) of those who disagreed. Twenty two point eight percent
22.8% strongly agreed and 9% agreed while1.8% was neutral. The results are
presented in table 4.2.

Table 4. 2: As a credit card customer i intend to continue using credit card

Scale Count Percent

As a credit card customer i intend to
Strongly disagree 123 31.5%
continue using credit card
Disagree 136 34.9%
Neutral 7 1.8%
Agree 35 9.0%
Strongly Agree 89 22.8%
Total 390 100.0%

4.2.4.3: I would highly recommend credit card use to my friends

The respondents were asked if they would highly recommend credit card use to their
friends. A majority (43.6%) disagreed while another 30.8% strongly disagreed
bringing to a total of (74.4%) of those who disagreed. Sixteen point nine percent
16.9% strongly agreed and 8.7% agreed. The results are presented in table 4.3.

Table 4. 3: I would highly recommend credit card use to my friends

Scale Count Percent

I would highly recommend credit
Strongly disagree 120 30.8%
card use to my friends
Disagree 170 43.6%
Neutral 0 0.0%
Agree 34 8.7%
Strongly Agree 66 16.9%
Total 390 100.0%

33
4.2.4.4: My friends and relatives use credit cards

The respondents were asked if their friends and relatives used credit cards. A majority
(49.7%) disagreed while another 29.5% strongly disagreed bringing to a total of
(79.2%) of those who disagreed. Fourteen point one percent 14.1% strongly agreed and
5.4% agreed while 1.3 were neutral. The results are presented in table 4.4.

Table 4. 4: I would highly recommend credit card use to my friends

Scale Count Percent

My friends and relatives use credit cards Strongly disagree 115 29.5%
Disagree 194 49.7%
Neutral 5 1.3%
Agree 21 5.4%
Strongly Agree 55 14.1%
Total 390 100.0%

4.2.4.5: The bank has my best interest at heart

The respondents were asked if the bank had their best interest at heart. A majority
(34.4%) disagreed while another 27.4% strongly disagreed bringing to a total of
(61.8%) of those who disagreed. Twenty nine percent 29% strongly agreed and 7.7%
agreed while 1.5 were neutral. The results are presented in table 4.5.

Table 4. 5: The bank has my best interest at heart

Scale Count Percent

The bank has my best interest at heart Strongly disagree 134 34.4%
Disagree 107 27.4%
Neutral 6 1.5%
Agree 30 7.7%
Strongly Agree 113 29.0%
Total 390 100.0%

4.2.4.6: The bank delivers what it promises

The respondents were asked if the bank delivers what it promises. A majority (48.2%)
strongly disagreed while another 27.7% disagreed bringing to a total of (75.9%) of
those who disagreed. Sixteen point nine percent 16.9 strongly agreed and 7.2% agreed
while 1.5 were neutral. The results are presented in table 4.6.

34
Table 4. 6: The bank delivers what it promises

Scale Count Percent

The bank delivers what it promises Strongly disagree 188 48.2%
Disagree 108 27.7%
Neutral 0 0.0%
Agree 28 7.2%
Strongly Agree 66 16.9%
Total 390 100.0%

4.2.4.7: I have found the credit card to be useful

The respondents were asked if they had found the credit card to be useful. A majority
(57.4%) strongly disagreed while another 27.9% disagreed bringing to a total of
(85.3%) of those who disagreed. Nine point two percent (9.2%) strongly agreed and
5.1% agreed while 0.3 were neutral. The results are presented in table 4.7.

Table 4. 7: I have found the credit card to be useful

Scale Count Percent

I have found the credit card to be useful Strongly disagree 224 57.4%
Disagree 109 27.9%
Neutral 1 0.3%
Agree 20 5.1%
Strongly Agree 36 9.2%
Total 390 100.00%

4.2.4.8: I have found credit card to be very convenient

The respondents were asked if they had found the credit card to be useful. A majority
(72.1%) strongly disagreed while another 16.9% disagreed bringing to a total of (89%)
of those who disagreed. Six point two four (6.4%) agreed and 4.6% strongly agreed.
The results are presented in table 4.8.

35
Table 4. 8: I have found credit card to be very convenient

Scale Count Percent

I have found credit card to be very
Strongly disagree 281 72.1%
convenient
Disagree 66 16.9%
Neutral 0 0.0%
Agree 25 6.4%
Strongly Agree 18 4.6%
Total 390 100.0%

4.3 Cost of Credit Cards

The first objective sought to determine the cost of credit cards affecting consumer
satisfaction.The results were presented as follows.

4.3.1: The credit card interest rate is competitive compared to other offerings in
the market

The respondents were asked if the credit card interest rate was competitive compared
to other offerings in the market. A majority (90.2%) strongly disagreed while another
7.2% disagreed bringing to a total of (97.4%) of those who disagreed. Two point two
percent (2.2%) agreed and 4.6% strongly agreed. The results are presented in table 4.9.

Table 4. 9: The credit card interest rate is competitive compared to other

offerings in the market

Scale Count Percent

The credit card interest rate is competitive Strongly
361 90.2%
compared to other offerings in the market disagree
Disagree 29 7.2%
Neutral 1 0.2%
Agree 9 2.2%
Strongly Agree 0 0.0%
Total 400 100.0%

36
4.3.2: The credit card interest rate is competitive compared to other offerings in
the market

The respondents were asked if the credit card interest rate was competitive compared
to other offerings in the market. A majority (88%) strongly disagreed while
another8.8% disagreed bringing to a total of (96%) of those who disagreed. Three
percent (3%) agreed while 0.2% strongly agreed. The results are presented in table
4.10.

Table 4. 10: The credit card interest rate is better than overdraft rates

Scale Count Percent

The credit card interest rate is better than Strongly
overdraft rates disagree 352 88.0%
Disagree 35 8.8%
Neutral 1 0.2%
Agree 12 3.0%
Strongly Agree 0 0.0%
Total 400 100.0%

4.3.3: The credit card interest rate is more affordable compared to shylock
interest rates

The respondents were asked if the credit card interest rate is more affordable compared
to shylock interest rates. A majority (89.2%) strongly disagreed while another 7.2%
disagreed bringing to a total of (96.4%) of those who disagreed. Three point two
percent (3.2%) agreed while 0.2% was neutral. The results are presented in table 4.11.

Table 4.11. The credit card interest rate is more affordable compared to shylock
interest rates

Scale Count Percent

The credit card interest rate is more
affordable compared to shylock interest Strongly disagree 357 89.2%
rates
Disagree 29 7.2%
Neutral 1 0.2%
Agree 13 3.2%
Strongly Agree 0 0.0%
Total 400 100.0%

37
4.3.4: The credit card interest rate is more affordable compared to Sacco interest
rates

The respondents were asked if the credit card interest rate is more affordable compared
to Sacco interest rates. A majority (88%) strongly disagreed while another 9.2%
disagreed bringing to a total of (97.2%) of those who disagreed. Two point eight
percent (2.8%) agreed. The results are presented in table 4.12.

Table 4.12. The credit card interest rate is more affordable compared to Sacco
interest rates

Scale Count Percent

The credit card interest rate is more
Strongly disagree 352 88.0%
affordable compared to Sacco interest rates
Disagree 37 9.2%
Neutral 0 0.0%
Agree 11 2.8%
Strongly Agree 0 0.0%
Total 400 100.0%

4.3.5: The credit card interest rate is more affordable compared to Sacco interest
rates

The respondents were asked if the credit card joining fee affordable was compared to
other products. A majority (87.8%) strongly disagreed while another 9.2% disagreed
bringing to a total of (97%) of those who disagreed. Two point five percent (2.5%)
agreed and 0.5 strongly agreed. The results are presented in table 4.13.

Table 4.13. The credit card joining fee is affordable compared to other products

Scale Count Percent

The credit card joining fee is affordable Strongly
351 87.8%
compared to other products disagree
Disagree 37 9.2%
Neutral 0 0.0%
Agree 10 2.5%
Strongly Agree 2 0.5%
Total 400 100.0%

38
4.3.6: The credit card joining fee is lower than that of competitors

The respondents were asked if the credit card joining fee is lower than that of
competitors. A majority (84.2%) strongly disagreed while another 12.8% disagreed
bringing to a total of (97%) of those who disagreed. Two point two percent (2.2%)
agreed and 0.8 strongly agreed. The results are presented in table 4.14.

Table 4.14. The credit card joining fee is affordable compared to other products

Scale Count Percent

The credit card joining fee is lower than Strongly
337 84.2%
that of competitors disagree
Disagree 51 12.8%
Neutral 0 0.0%
Agree 9 2.2%
Strongly Agree 3 0.8%
Total 400 100.0%

4.3.7: The credit card joining fee is lower than that of competitors

The respondents were asked if the penalties are not very high. A majority (84.5%)
strongly disagreed while another 12.2% disagreed bringing to a total of (96.7%) of
those who disagreed. Two point eight percent (2.8%) agreed and 0.5 strongly agreed.
The results are presented in table 4.15.

Table 4.15. The penalties are not very high

Scale Count Percent

The penalties are not very high Strongly disagree 338 84.5%
Disagree 49 12.2%
Neutral 0 0.0%
Agree 11 2.8%
Strongly Agree 2 0.5%
Total 400 100.0%

39
4.3.8: The credit card joining fee is lower than that of competitors

The respondents were asked if the penalties are lower than those of competitors. A
majority (84%) strongly disagreed while another 13% disagreed bringing to a total of
(97%) of those who disagreed. Two point five percent (2.5%) agreed and 0.5 strongly
agreed. The results are presented in table 4.16.

Table 4.16. The penalties are not very high

Scale Count Percent

The penalties are lower than those of Strongly
336 84.0%
competitors disagree
Disagree 52 13.0%
Neutral 0 0.0%
Agree 10 2.5%
Strongly Agree 2 0.5%
Total 400 100.0%

4.4 Consumer Information

The second objective sought to determine the consumer information affecting

consumer satisfaction.The results were presented as follows.

4.4.1: The organization usually provide enough information to enable the

customers use credit cards wisely

The respondents were asked if the organization usually provide enough information to
enable the customers use credit cards wisely. A majority (85.2%) strongly disagreed
while another 11.2% disagreed bringing to a total of (96.4%) of those who disagreed.
Two percent (2%) agreed and 1.5 strongly agreed. The results are presented in table
4.17.

40
Table 4.17. The organization usually provide enough information to enable the
customers use credit cards wisely

Scale Count Percent

The organization usually provide
enough information to enable the Strongly disagree 341 85.2%
customers use credit cards wisely
Disagree 45 11.2%
Neutral 0 0.0%
Agree 6 1.5%
Strongly Agree 8 2.0%
Total 400 100.0%

4.4.2: Consumers take up credit cards without sufficient information on the

credit terms

The respondents were asked if consumers take up credit cards without sufficient
information on the credit terms. A majority (88%) strongly disagreed while another
9% disagreed bringing to a total of (97%) of those who disagreed. Two percent (2%)
agreed and 1% strongly agreed. The results are presented in table 4.18.

Table 4.18. Consumers take up credit cards without sufficient information on the
credit terms

Scale Count Percent

Consumers take up credit cards without
Strongly disagree 352 88.0%
sufficient information on the credit terms
Disagree 36 9.0%
Neutral 0 0.0%
Agree 4 1.0%
Strongly Agree 8 2.0%
Total 400 100.0%

4.4.3: Consumers have attitudes and perceptions towards credit cards

The respondents were asked if consumers have attitudes and perceptions towards
credit cards. A majority (91.8%) strongly disagreed while another 5.2% disagreed
bringing to a total of (97%) of those who disagreed. Three percent (3%) strongly
agreed. The results are presented in table 4.19.

41
Table 4.19. Consumers have attitudes and perceptions towards credit cards

Scale Count Percent

Consumers have attitudes and perceptions
Strongly disagree 367 91.8%
towards credit cards
Disagree 21 5.2%
Neutral 0 0.0%
Agree 0 0.0%
Strongly Agree 12 3.0%
Total 400 100.0%

4.4.4: The proliferation of credit cards and their ease of access have given
consumers increased opportunities for making credit purchases

The respondents were asked if the proliferation of credit cards and their ease of access
have given consumers increased opportunities for making credit purchases. A majority
(91.5%) strongly disagreed while another 5.2% disagreed bringing to a total of
(96.7%) of those who disagreed. Three percent (3%) strongly agreed and 0.2% agreed.
The results are presented in table 4.20.

Table 4.20. The proliferation of credit cards and their ease of access have given
consumers increased opportunities for making credit purchases

Scale Count Percent

The proliferation of credit cards and their
ease of access have given consumers
Strongly disagree 366 91.5%
increased opportunities for making credit
purchases
Disagree 21 5.2%
Neutral 0 0.0%
Agree 1 0.2%
Strongly Agree 12 3.0%
Total 400 100.0%

4.4.5: The organization considers leveraging information on social sites with

regard to finding a customers most recent location

The respondents were asked if the organization considers leveraging information on

social sites with regard to finding a customers most recent location. A majority
(87.5%) strongly disagreed while another 5.2% disagreed bringing to a total of
(92.7%) of those who disagreed. Four percent (4%) strongly agreed and three point
two 3.2% agreed. The results are presented in table 4.21.

42
Table 4.21. The organization considers leveraging information on social sites with
regard to finding a customers most recent location

Scale Count Percent

The organization considers leveraging
Strongly
information on social sites with regard to finding 350 87.5%
disagree
a customers most recent location
Disagree 21 5.2%
Neutral 0 0.0%
Agree 16 4.0%
Strongly
13 3.2%
Agree
Total 400 100.0%

4.4.6: The organization sends credit card information through twitter and
facebook

The respondents were asked if the organization sends credit card information through
twitter and facebook. A majority (87.2%) strongly disagreed while another 5.8%
disagreed bringing to a total of (93 %) of those who disagreed. Three point five percent
(3.5%) strongly agreed and two point eight 2.8% agreed. The results are presented in
table 4.22.

Table 4.22.The organization sends credit card information through twitter and
facebook

Scale Count Percent

The organization sends credit card information Strongly
through twitter and facebook disagree 349 87.2%
Disagree 23 5.8%
Neutral 3 0.8%
Agree 14 3.5%
Strongly
Agree 11 2.8%
Total 400 100.0%

4.4.7: The organization has aggressively advertised about credit card

information through electronic media

The respondents were asked if the organization has aggressively advertised about
credit card information through electronic media. A majority (87.8%) strongly

43
disagreed while another 5.2% disagreed bringing to a total of (93 %) of those who
disagreed. Three percent (3%) strongly agreed and two point two 2.2% agreed. The
results are presented in table 4.23.

Table 4.23. The organization has aggressively advertised about credit card
information through electronic media

Scale Count Percent

The organization has aggressively advertised
about credit card information through Strongly
electronic media disagree 351 87.8%
Disagree 21 5.2%
Neutral 7 1.8%
Agree 9 2.2%
Strongly
Agree 12 3.0%
Total 400 100.0%

4.4.7: The organization has formed consumer groups to sensitive customers on

credit card issues

The respondents were asked if the organization has formed consumer groups to
sensitive customers on credit card issues. A majority (85.2%) strongly disagreed while
another 6.8% disagreed bringing to a total of (92 %) of those who disagreed. Three
point five percent (3.5%) strongly agreed and two point eight 2.8% agreed. The results
are presented in table 4.24.

Table 4.24. The organization has formed consumer groups to sensitive customers
on credit card issues

Scale Count Percent

The organization has formed consumer groups Strongly
to sensitive customers on credit card issues disagree 341 85.2%
Disagree 27 6.8%
Neutral 7 1.8%
Agree 14 3.5%
Strongly
Agree 11 2.8%
Total 400 100.0%

44
4.5 Customer Service Quality to Consumer Satisfaction

The third objective sought to determine the Customer Service Quality affecting
consumer satisfaction.The results were presented as follows.

4.5.1 The organization offers the customers quality service

The respondents were asked if the organization offers the customers quality service. A
majority (87.9%) strongly disagreed while another 4.9% disagreed bringing to a total
of (92.8%) of those who disagreed. Three point six percent (3.6%) strongly agreed and
one point eight 1.8% agreed. The results are presented in table 4.25.

Table 4.25. The organization offers the customers quality service

Scale Count Percent

The organization offers the customers Strongly
343 87.90%
quality service disagree
Disagree 19 4.90%
Neutral 7 1.80%
Agree 14 3.60%
Strongly Agree 7 1.80%
Total 390 100.00%

4.5.2 Customer service is the base for business expansion

The respondents were asked if the customer service is the base for business expansion
because of the stiff competition prevalent in the banking industry. A majority (85.9%)
strongly disagreed while another 7.2% disagreed bringing to a total of (93.1%) of those
who disagreed. Three point six percent (3.6%) strongly agreed and three point one
3.1% agreed. The results are presented in table 4.26.

Table 4.26. Customer service is the base for business expansion

Scale Count Percent

Customer service is the base for business Strongly
expansion because of the stiff competition 335 85.90%
disagree
prevalent in the banking industry
Disagree 28 7.20%
Neutral 1 0.30%
Agree 14 3.60%
Strongly Agree 12 3.10%
Total 390 100.00%

45
4.5.3 The survival of banking business is dependent on customer service

The respondents were asked if the survival of banking business is dependent on

customer service. A majority (90.5%) strongly disagreed while another 5.4% disagreed
bringing to a total of (95.9%) of those who disagreed. Two point six percent (2.6%)
agreed and one point five 1.5% strongly agreed. The results are presented in table 4.27.

Table 4.27. The survival of banking business is dependent on customer service

Scale Count Percent

The survival of banking business is Strongly
353 90.50%
dependent on customer service disagree
Disagree 21 5.40%
Neutral 0 0.00%
Agree 10 2.60%
Strongly Agree 6 1.50%
Total 390 100.00%

4.5.4 Customers give firms the chance to correct a service failure

The respondents were asked if the customers give firms the chance to correct a service
failure. A majority (82.6%) strongly disagreed while another 8.7% disagreed bringing
to a total of (91.3%) of those who disagreed. Six point four percent (6.4%) agreed and
one point eight 1.8% strongly agreed. The results are presented in table 4.28.

Table 4.28. Customers give firms the chance to correct a service failure

Scale Count Percent

Customers give firms the chance to correct a Strongly
service failure disagree 322 82.60%
Disagree 34 8.70%
Neutral 2 0.50%
Agree 25 6.40%
Strongly Agree 7 1.80%
Total 390 100.00%

4.5.5 Customer perception is subjective

The respondents were asked if the customer perception is subjective, but it provides
some useful insights for organizations to develop their marketing strategies. A majority
(83.1%) strongly disagreed while another 9.2% disagreed bringing to a total of

46
(92.3%) of those who disagreed. Four point four percent (4.4%) agreed and three point
three percent (3.3%) strongly agreed. The results are presented in table 4.29.

Table 4.29. Customer perception is subjective

Scale Count Percent

Customer perception is subjective, but it
provides some useful insights for
organizations to develop their marketing Strongly
strategies disagree 324 83.10%
Disagree 36 9.20%
Neutral 0 0.00%
Agree 17 4.40%
Strongly Agree 13 3.30%
Total 390 100.00%

4.5.6 Informational channels to educate the credit card customer

The respondents were asked if the bank has used informational channels to educate the
credit card customer. A majority (89%) strongly disagreed while another4.9%
disagreed bringing to a total of (93.9%) of those who disagreed. Three point one
percent (3.1%) agreed and two point eight percent (2.8%) strongly agreed. The results
are presented in table 4.30.

Table 4.30.The bank has used informational channels to educate the credit card
customer

Scale Count Percent

The bank has used informational channels to Strongly
educate the credit card customer disagree 347 89.00%
Disagree 19 4.90%
Neutral 1 0.30%
Agree 11 2.80%
Strongly Agree 12 3.10%
Total 390 100.00%

47
4.5.7 The bank has quality service

The respondents were asked if the bank has quality service thus encouraging
individuals to repeated purchases. A majority (89.2%) strongly disagreed while
another 5.4% disagreed bringing to a total of (94.6%) of those who disagreed. Two
point eight percent (2.8%) agreed and two point three percent (2.3%) strongly agreed.
The results are presented in table 4.31.

Table 4.31. The bank has quality service

Scale Count Percent

The bank has quality service thus
encouraging individuals to repeated Strongly
purchases disagree 348 89.20%
Disagree 21 5.40%
Neutral 1 0.30%
Agree 9 2.30%
Strongly
Agree 11 2.80%
Total 390 100.00%

4.5.8 The credit customer service operatives are honest

The respondents were asked if the credit customer service operatives are honest. A
majority (90.5%) strongly disagreed while another 5.6% disagreed bringing to a total
of (96.1%) of those who disagreed. Three point one percent (3.1%) agreed .The results
are presented in table 4.32.

Table 4.32. The credit customer service operatives are honest

Scale Count Percent

The credit customer service operatives are Strongly
honest disagree 353 90.50%
Disagree 22 5.60%
Neutral 2 0.50%
Agree 1 0.30%
Strongly
Agree 12 3.10%
Total 390 100.00%

48
4.6 Further Analysis

4.6.1 Pearsons Bivariate Correlation

Bivariate correlation indicates the relationship between two variables. It ranges from 1
to -1 where 1 indicates a strong positive correlation and a -1 indicates a strong negative
correlation and a zero indicates lack of relationship between the two variables. The
closer the correlation tends to zero the weaker it becomes. The correlation between
customer satisfaction and cost of credit was weak and positive (0.445) and significant
(0.000). This shows that a change in cost of credit and customer satisfaction changed
in the same direction though the relationship was not very strong (0.445). However the
relationship is statistically significant at a p value of 0.000. The correlation between
customer satisfaction and consumer information and customer service was 0.476 and
0.552 respectively and all had statistically significant relationships.

Table 4.33: Pearsons Correlation

Customer Cost of Consumer Customer

Variable Satisfactions Credit Information Service
Customer Pearson
1
Satisfactions Correlation
Sig. (2-tailed)
Cost ofcos Pearson
0.445 1
Credit Correlation
Sig. (2-
0.000
tailed)
Consumer Pearson
0.476 0.975 1
Information Correlation
Sig. (2-
0.000 0.000
tailed)
Customer Pearson
0.552 0.92 0.956 1
Service Correlation
Sig. (2-
0.000 0.000 0.000
tailed)

4.6.2 Regression Analysis

Table 4.34 shows the results for testing the robustness of the regression model. The
results indicate that the regression model best fits in explain customer satisfaction.

49
This is supported by a composite strong and positive correlation of 0.579 and a
coefficient of determination (R Square) of 0.336. This means that the predictor
variables of the study can explain at least 33.6% of the variation in customer
satisfaction. The standard error of estimate (0.67225) is negligible which shows that
the sample is close representative of the study population.

Table 4.34: Regression Model Fitness

Indicator Coefficient
R 0.579
R Square 0.336
Std. Error of the Estimate 0.67225

Table 4.35 shows the results on analysis of variance which indicate that the combined
effect of the predictor variables is significant in explaining customer satisfaction with
an F statistic of 65.011 and a p value of 0.000.

Table 4.35: Analysis of Variance (ANOVA)

Indicator Sum of Squares df Mean Square F Sig.

Regression 88.14 3 29.38 65.011 0.000
Residual 174.441 386 0.452
Total 262.581 389

Table 4.36 displays the regression output of the predictor variables. Results indicate
that cost of credit, consumer information and customer service are statistically
significant factors in influencing customer satisfaction. The beta coefficient indicates
the direction and degree of influence of the predictor variable on the dependent
variable. For example, a beta coefficient of 0.199 of cost of credit means that a unit
change in cost of credit causes or leads to a 0.199 positive unit change in customer
satisfaction. This could further mean that if a competing banking sector reduced the
cost of credit charges customers were more likely take a move which translates to
customer satisfaction.

50
Table 4.36: Regression Coefficients

Variable Beta Std. Error t Sig.

Constant 1.581 0.108 14.7 0.000

Cost of Credit 0.199 0.0309 6.44013 0.000

Consumer Information 0.578 0.0316 18.2911 0.009

Customer Service 1.269 0.165 1.104 0.000

4.7 Chapter Summary

Chapter Four constituted the analysis of data. Specifically correlation and regression
analysis were undertaken. Correlation results revealed that the correlation between cost
of credit, consumer information and customer service all had statistically significant
relationships on customer satisfaction. Regression analysis reveals that cost of credit,
consumer information and customer service are statistically significant factors in
influencing customer satisfaction.

51
 CHAPTER FIVE

5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

The purpose of this chapter was to discuss and summarize the findings of the study and
finally give conclusions and recommendations for improvement or practice. It is also
important to note that all this was done with justification from the data that was
collected and analyzed.

5.2 Summary

The purpose of the study was to determine the factors that influence consumer
satisfaction with credit cards. The specific research questions of this study were: To
what extent does the cost of credit cards affect consumer satisfaction? To what extent
does the provision of adequate consumer information influence consumer satisfaction?
To what extent does the customer service provided by credit card service providers
influence customer satisfaction?

The descriptive survey research design was preferred as it enabled the study to
describe the state of affairs as far as customer satisfaction, cost of credit; consumer
information and customer service was concerned. The population of the study was
over 10,000 credit card holders in NIC Bank. The researcher used Fishers formula for
calculating the sample size of an infinite population which amounted to 384 but for the
purpose of improving the response rate, the study added 16 more respondents to total
up to 400. The study used a questionnaire as the preferred data collection tool.
Descriptive statistics used in the study included frequencies and measures of tendency
mainly means and frequencies. Inferential statistics included correlation analysis. The
tool for data analysis is Statistical Package for Social Sciences (SPSS) version 20
program. The results were presented using tables and pie charts to give a clear picture
of the research findings

One of the research questions was to determine extent does the cost of credit cards
affect consumer satisfaction. Results indicated that majority of the respondents
disagreed with the statements that the credit card interest rate was competitive

52
compared to other offerings in the market, the credit card interest rate is better than
overdraft rates. Results indicated that majority of the respondents disagreed with the
statements that the credit card interest rate was more affordable compared to shylock
interest rates, the penalties are lower than those of competitors. Study results show that
the majority disagreed with the statement that the credit card joining fee was affordable
compared to other products .Results also show that the majority agreed with the
statement that the credit card joining fee is lower than that of competitors. Results also
show that the majority disagreed with the statement that the penalties were not very
high. Study results show that the majority disagreed with the statement that the credit
card interest rate is more affordable compared to Sacco interest. Correlation results
indicates that the relationship between cost of credit cards and customer satisfaction
was positive and significant (r=0. 0.445, p value < 0.000). The findings imply that cost
of credit cards has significant positive effect on customer satisfaction.

The study sought to answer the question of how consumer information can contribute
to customer satisfaction in banking. Results reveal that majority of respondents
disagreed with the statement that the organization usually provide enough information
to enable the customers use credit cards wisely. Majority disagreed with the statement
that Consumers take up credit cards without sufficient information on the credit terms.
Results indicate that majority of respondents disagreed with the statement that
Consumers have attitudes and perceptions towards credit cards. Results indicate that
majority of respondents disagreed with the statement that the proliferation of credit
cards and their ease of access have given consumers increased opportunities for
making credit purchases. Results indicate that that majority of respondents disagreed
with the statement that the organization considers leveraging information on social
sites with regard to finding a customers most recent location. Results indicate that
majority of respondents disagreed with the statement that the organization sends credit
card information through twitter and face book. Majority disagreed with the statement
that the organization has aggressively advertised about credit card information through
electronic media. Results indicate that majority of respondents disagreed with the
statement that the organization has formed consumer groups to sensitive customers on
credit card issues. Correlation results indicates that the relationship between consumer
information and customer satisfaction was positive and significant (r=0.476, p value <

53
0.000). The findings imply that consumer information has significant positive effect
on customer satisfaction.

The study sought to answer the question of how customer service can contribute to
customer satisfaction in banking. Results reveal that majority of respondents disagreed
with the statement that the organization offers the customers quality service. Majority
disagreed with the statement that customer service is the base for business expansion
because of the stiff competition prevalent in the banking industry. Results indicate that
majority of respondents disagreed with the statement that the survival of banking
business is dependent on customer service. Results indicate that majority of
respondents disagreed with the statement that the customers give firms the chance to
correct a service failure. Results indicate that that majority of respondents disagreed
with the statement that the Customer perception is subjective, but it provides some
useful insights for organizations to develop their marketing strategies. Results indicate
that majority of respondents disagreed with the statement that the bank has used
informational channels to educate the credit card customer. Majority disagreed with
the statement that the bank has quality service thus encouraging individuals to repeated
purchases. Results indicate that majority of respondents disagreed with the statement
that the credit customer service operatives are honest.Correlation results indicates that
the relationship between consumer information and customer satisfaction was positive
and significant (r=0.552, p value < 0.000). The findings imply that customer service
has significant positive effect on customer satisfaction.

5.3 Discussion

This section presents the discussion of the key findings of the study based on the
already reported research questions.

5.3.1 Cost of Credit and Customer Satisfactions

Results indicated that 90.2% of the respondents disagreed with the statements that the
credit card interest rate was competitive compared to other offerings in the market, the
credit card interest rate is better than overdraft rates. Results indicated that 88% of the
respondents strongly disagreed with the statements that the credit card interest rate was

54
more affordable compared to shylock interest rates, the penalties are lower than those
of competitors. Study results show that the 89.2% strongly disagreed with the
statement that the credit card joining fee was affordable compared to other products
.Results also show that the 88% disagreed with the statement that the credit card
joining fee is lower than that of competitors. Results also show that the 87.8% strongly
disagreed with the statement that the penalties were not very high. Study results show
that the 84.2% strongly disagreed with the statement that the credit card interest rate is
more affordable compared to Sacco interest. Results also indicated that 84.5% of the
respondents strongly disagreed with the statement that the penalties were very high and
another 84% strongly disagreed that the penalties were lower than those of
competitors.

The findings agree with those of Ludlum & Smith (2010) who noted that the high fees
should have discouraged credit card use, but just the opposite was true. Americans are
addicted to the convenience of credit, despite the high costs. Education only made this
worse, as college educated consumers used credit cards 140% more than high school
educated consumers. Some of this difference could be explained by availability of
credit, but not all of it. Further, in a down economy, credit use is even more dangerous,
as 94% of people under age 35 believe it is proper to borrow money for living
expenses (Rutherford & DeVaney, 2009).

The findings are consistent with those of FDIC (2008) who asserted that there are also
different types of fees charged on credit cards and this is another feature of credit cards
according to the. The fees charged include annual fees, cash advance fees, balance
transfer fees, late-payment fees, over-the-credit-limit fees, set-up fees among others. It
is important for the card holder to know what fees will be charged on his card. The
recent experience of some banks suggests that some customers might consider
switching banks if fees on checking accounts are raised. There is additional evidence
to support this view: according to J.D. Power and Associates 2012 U.S. Bank
Customer Switching and Acquisition Study, defection rates at the large and mid-size
banks in 2012 have risen to as much as 11.3 percent, against less than one percent
among small banks and credit unions.14 the primary reason cited for switching was
fees (FDIC, 2008).

55
5.3.2 Consumer Information and Customer Satisfactions

Results reveal that 96.4% of the respondents disagreed with the statement that the
organization usually provided enough information to enable the customers use credit
cards wisely. 91.8% of the respondents disagreed with the statement that consumers
took up credit cards without sufficient information on the credit terms. Results indicate
that 91.5% of respondents disagreed with the statement that Consumers have attitudes
and perceptions towards credit cards. Results indicate that 87.5% of respondents
disagreed with the statement that the proliferation of credit cards and their ease of
access have given consumers increased opportunities for making credit purchases.
Results indicate that 87.2% of respondents disagreed with the statement that the
organization considers leveraging information on social sites with regard to finding a
customers most recent location. Results indicate that 87.8% of respondents disagreed
with the statement that the organization sends credit card information through twitter
and face book. 85.2% of the respondents disagreed with the statement that the
organization had aggressively advertised about credit card information through
electronic media. Results indicate that 85.2% of respondents disagreed with the
statement that the organization has formed consumer groups to sensitive customers on
credit card issues.

The findings agree with those of Durkin (2000) who carried out a survey to find out
whether consumers feel that credit card companies usually provide enough information
to enable them to use credit cards wisely. When queried, about 65% of the respondents
felt that credit card companies do provide enough information to them. But when
asked about their perception of the experience of others, only 49% of the respondents
felt that others were provided with enough information to be able to use credit cards
wisely. Another survey carried out by Durkin (2002) reveals that most consumers take
up credit cards without sufficient information on the credit terms.

The findings are also consistent with those of Durkin (2002) who when asked how
difficult it was for them to obtain useful information on credit cards, only 6% of the
respondents felt it was very difficult to get useful information. 26% of the respondents
felt that it was somewhat difficult to obtain this information. But when queried about
their perception of how difficult it was for others to obtain useful information on credit
cards, 11% felt that it was very difficult for other to obtain useful information on credit

56
cards. A further 36% of the respondents felt that it was somewhat difficult for others to
obtain useful information on credit cards. The distinction between the respondents own
experiences and what they perceived was the experience of other people has been
dubbed the-other-guy effect.

The findings also agree with those of Robb and Sharpe (2009) who noted that financial
institution might consider leveraging information on social sites with regard to finding
a customers most recent location. A location service provided by a social network
allows a user to check-in his current location and venue detail using a mobile
application by selecting from a list of venues. Some mobile applications help users to
check-in the current location in an automatic manner. The service enables a user to
know who else in his network is near or at that spot, and lets his friends know about
his current check-ins. Financial institutions can encourage their customers to
privately allow them to use their location information through social media in order to
serve them better and reduce misuse of their credit / debit cards

5.3.3 Customer Service and Customer Satisfactions

Results reveal that 87.9% of the respondents disagreed with the statement that the
organization offers the customers quality service. 85.9% of the respondents disagreed
with the statement that customer service was the base for business expansion because
of the stiff competition prevalent in the banking industry. Results indicate that 90.5%
of respondents disagreed with the statement that the survival of banking business is
dependent on customer service. Results indicate that 82.6% of respondents disagreed
with the statement that the customers give firms the chance to correct a service failure.
Results indicate that 83.1% of respondents disagreed with the statement that the
Customer perception was subjective, but it provides some useful insights for
organizations to develop their marketing strategies. Results indicate that 89% of
respondents disagreed with the statement that the bank has used informational channels
to educate the credit card customer. 89.2% disagreed with the statement that the bank
has quality service thus encouraging individuals to repeated purchases. Results indicate
that 96.1% of respondents disagreed with the statement that the credit customer service
operatives are honest.

57
The findings agree with those of Gefen (2002) who found out that service quality, in
the context of offline and online services, has received considerable attention within
the literature. Generally, service quality has been identified as consumers comparison
between service expectation and service performance as well as the subjective
comparison that customers make between the quality of service that they wish to
receive and what they actually get .Research into the importance of service quality
within the banking industry identifies service quality as a critical factor in influencing
satisfaction

The findings are also consistent with those of Minocha, Dawson, Blandford, &
Millard, (2005) who found out that positive perception of value may bring customers
back to make another transaction. When customers believe they are being treated fairly
in an exchange, they will be satisfied with the transaction if their outcome-to-input
ratio is in some sense adequate. Quality, price, and company or brand image were three
factors that comprise the customer value package. In other words, customers will make
an explicit comparison between what they give and what they get. The positive
relationship between equity and satisfaction was supported in the literature. However,
customers expect prices to be lower in an online store than in a traditional sales
channel (Karlsson, Kuttainen, Pitt, & Spyropoulou, 2005). They may expect to get
more value from an online store than from a physical store.

5.4 Conclusions

This section presents the conclusions of the key findings of the study based on the
already reported research questions.

5.4.1 Cost of Credit and Customer Satisfactions

One of the research questions of the study was to determine the effects of cost of credit
on customer satisfaction of banks. Following the study results, it was possible to
conclude that credit card interest rate was competitive compared to other offerings in
the market, the credit card interest rate is better than overdraft rates. It was concluded
that the credit card interest rate was affordable compared to shylock interest rates.
Results led to the conclusion that the penalties were lower than those of competitors.
Study results show that the credit card joining fee was affordable compared to other
products, the credit card joining fee was lower than that of competitors. Results also

58
led to the conclusion that the penalties were very high. Results also led to the
conclusion that credit card interest rate were affordable compared to Sacco interest. It
was possible to conclude that that the relationship between cost of credit and customer
satisfaction is positive and significant. The findings imply that cost of credit has
significant positive effect on customer satisfaction.

5.4.2 Consumer Information and Customer Satisfactions

From the study findings it was possible to conclude that the organization did not
provide enough information to enable the customers use credit cards wisely. Results
also led to conclusion that Consumers should take credit cards with sufficient
information on the credit terms. Results also concluded that that Consumers should
have attitudes and perceptions towards credit cards. Results concluded that the
proliferation of credit cards and their ease of access had given consumers increased
opportunities for making credit purchases. Results also concluded that the organization
should consider leveraging information on social sites with regard to finding a
customers most recent location. Study findings concluded that the organization should
send credit card information through twitter and face book. It was concluded that the
organization should aggressively advertise on credit card information through
electronic media. It was also possible to conclude that the organization should have
formed consumer groups to sensitive customers on credit card issues. The findings
imply that consumer information has significant positive effect on customer
satisfaction.

5.4.3 Customer Service and Customer Satisfactions

The study sought to answer the question of how customer service can contribute to
customer satisfaction in banking. Results concluded that the organization must offer
their customers quality service. It was also possible to conclude that customer service
was the base for business expansion because of the stiff competition prevalent in the
banking industry. Results also led to conclusion that the survival of banking business is
dependent on customer service. Results also led to conclusion that the customers give
firms the chance to correct a service failure. It was also possible to conclude that the
Customer perception is subjective, but it provides some useful insights for
organizations to develop their marketing strategies. Results conclude that the bank

59
should have used informational channels to educate the credit card customer. Results
also led to conclusion that the bank has quality service thus encouraging individuals to
repeated purchases. Results also concluded that the credit customer service operatives
are honest. The findings imply that customer service has significant positive effect on
customer satisfaction.

5.5 Recommendations

This section presents the recommendations of the key findings of the study based on
the already reported research questions.

5.5.1 Recommendations for Improvement

5.5.1.1 Cost of Credit and Customer Satisfactions

Following study results, it is recommended that the Government should legalise the
interest rate within the banks and make it affordable to the consumers. In addition the
banks should lower the credit card joining fee as this will motivate more customers to
join and therefore an additional benefit the banks.

5.5.1.2 Consumer Information and Customer Satisfactions

The study recommends that banks should emphasize on leveraging information on

social sites with regard to finding a customers most recent location. In addition the
study recommends that the banks should adopt sending credit card information through
twitter and facebook. In addition, banks should invest in consumer groups to sensitive
customers on credit card issues.

5.5.1.3 Customer Service and Customer Satisfactions

The study recommends that banks should emphasize that the credit customer service
operatives are honest. In addition the study recommends that the banks should give
customers a chance to suggest on noted service failure.

60
5.5.2 Areas for Further Studies

The study recommends that further investigation be done on the effect of cost,
customer service for non-banking organizations. For instance the study can be
replicated in manufacturing organizations.

61
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67
APENDIX 1

Letter of Introduction for Data Collection

CHRISTOPHER MWANGI,

UNITED STATES INTERNATIONAL UNIVERSITY,

P.O. Box 14634,

NAIROBI.

Dear Respondent,

This study is a requirement for the partial fulfilment of Master of Business

management program (MBA) at the United States International University Africa
(USIU-A). The purpose of this study is to establish the factors that influence consumer
satisfaction with credit cards.

This questionnaire is divided into three short sections that should take only a few
moments of your time to complete. Please respond by ticking the appropriate box or
filling in your answers in the blank spaces provided. This is an academic exercise and
all information collected from respondents will be treated with at strict confidentiality.

Thank you very much for your cooperation

CHRISTOPHER MWANGI.

68
APENDIX 2:

Questionnaire for Data Collection

PART 1: GENERAL INFORMATION

1.Indicate your gender

a) Female
b) Male
2. Level of education
a) College
b) University
c) Post graduate
3. How long have been a NIC Bank credit card customer?

a) less than 1 year

b) 2 to 5 years

c) 6 to 10 years

d) Over 10 years

Customer Satisfaction RESPONSE RATINGS

Strongly Disagree Neither Agree Strongly

disagree agree not agree

disagree

As a credit card customer am

happy with the credit card
services

69
Customer Satisfaction RESPONSE RATINGS

As a credit card customer

intend to continue using credit
card

I would highly recommend

credit card use to my friends

My friends and relatives use

credit cards

The bank has my best interest

at heart

The bank delivers what it

promises

I have found the credit card to

be useful

I have found credit card to be

very convenient

70
SECTION A: Cost of Credit Cards Affecting Consumer Satisfaction

Cost of Credit Cards RESPONSE RATINGS

Strongly Disagree Neither Agree Strongly

disagree agree not agree
disagree

The credit card interest rate

is competitive compared to
other offerings in the market

The credit card interest rate

is better than overdraft rates

The credit card interest rate

is more affordable compared
to shylock interest rates

The credit card interest rate

is more affordable compared
to sacco interest rates

The credit card joining fee

is affordable compared to
other products

The credit card joining fee is

lower than that of

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Cost of Credit Cards RESPONSE RATINGS

competitors

The penalties are not very

high

The penalties are lower than

those of competitors

SECTION B: Provision of Adequate Consumer Information Influence Consumer

Satisfaction

Consumer Information RESPONSE RATINGS

Strongly Disagree Neither Agree Strongl

disagree agree not y agree

disagree

The organization usually

provide enough information
to enable the customers use
credit cards wisely

Consumers take up credit

cards without sufficient

72
Consumer Information RESPONSE RATINGS

information on the credit

terms

Consumers have attitudes

and perceptions towards
credit cards

The proliferation of credit

cards and their ease of
access have given consumers
increased opportunities for
making credit purchases

The organization considers

leveraging information on
social sites with regard to
finding a customers most
recent location

The organization sends

credit card information
through twitter and
Facebook

The organization has

aggressively advertised
about credit card information

73
Consumer Information RESPONSE RATINGS

through electronic media

The organization has formed

consumer groups to sensitive
customers on credit card
issues

SECTION C: Customer Service Provided By Credit Card Service Providers Influence

Customer Satisfaction

Customer Service RESPONSE RATINGS

Strongly Disagree Neither Agree Strongl

disagree agree not y agree

disagree

The organization offers the

customers quality service

Customer service is the base

for business expansion
because of the stiff
competition prevalent in the
banking industry

74
Customer Service RESPONSE RATINGS

The survival of banking

business is dependent on
customer service

Customers give firms the

chance to correct a service
failure

Customer perception is
subjective, but it provides
some useful insights for
organizations to develop
their marketing strategies

The bank has used

informational channels to
educate the credit card
customer

The bank has quality service

thus encouraging individuals
to repeated purchases

The credit customer service

operatives are honest

Thank you for completing this questionnaire.

75