SINGAPORE has seen a tremendous growth in the number of credit cards issued over the past 12 years. Statistical figures from the Monetary Authority of Singapore (MAS) showed that the number of credit cards in circulation has almost tripled to 3.96 million from 1996 to 2006. Over the same period, the number of supplementary cards has almost doubled to 1.12 million. With total card billings having tripled to 18.6 million bills, it seems Singapore is experiencing a general shift towards a cashless society.

Cards 'R' Us?

With the mind-boggling array of credit cards available, how then does one find a credit card most suitable for ourselves? The authors collated information on 71 credit cards from eight banks, namely: OCBC, Maybank, Standard Chartered, HSBC, ABN AMRO, Citibank, UOB and DBS in late 2006, and found that credit cards are differentiated by different features and benefits. We classify them into the following categories:

Tangible factors

> Cost and facilities (for example, annual fees, balance transfer fees, and instalment plan charges; cash advance, balance transfer facility and instalment plan facility)

> Security and assistance (such as online fraud protection guarantee, emergency assistance for card loss or general inquiry)

> Accessibility (via phone, Internet and ATM)

> Physical appearance (design, size and appearance of the card)

> Shopping discounts (at merchant stores, and online shopping privileges)

> Lifestyle discounts (at cinemas, clubs, golf privileges, wining and dining, and beauty and wellness services providers)

> Travelling mileage (allows credit card points to be converted to travel mileage at specific airlines)

> Health and insurance (privileges at gyms, nutritional supplement stores, pharmacies and clinics, as well as discounted premiums and free travel insurance)

> Exclusive events or invitations or previews

> Worldwide privileges

Intangible factors

> Marketing efforts by the issuing bank

> Identification with a referent group (such as certain clubs, alumni group, or social status category. Furthermore, is the card introduced by a friend, a family member, a colleague or a highly admired celebrity?)

> Image and branding

What do people look for when choosing a card?

We conducted a survey early last year on what the most important factors were. There were 150 respondents, of which 39 per cent were students and 61 per cent were aged 21-30.

Results were controlled for salary, gender, ethnic group, education level, age, marital status, nationality and occupation. In general we found that the cost and facility factor is most important in choosing a credit card for possession or usage. This is also the most important factor in determining whether the card holder would hold the card for a long time.

The second most important factor is split between shopping discounts, and security and accessibility. When choosing which card to own or use, the shopping discount factors are more important. When choosing which credit card to keep or abandon, the security and accessibility factors are more important.

The third most important factor for deciding which credit card to possess, use and keep is the lifestyle discount factor. Following this, there is a split between security and accessibility, and shopping factors. Finally the fifth most important factor for possessing, usage and keeping is split between image and branding, physical appearance and worldwide privileges.

Factors such as travelling mileage, health and insurance, exclusive events, marketing efforts and referent group are not ranked as very important in the choosing, usage and keeping of a credit card.

Some like it hot

Does everyone choose credit cards in the same way? We found that the more educated consumers would like to have lower annual card fees, balance transfer rates and a greater availability of cash advance facilities. Furthermore, males indicated a strong preference for beauty and wellness, dining and wining, and shopping card benefits. This could imply that males also value quality life and personal grooming like the females and there could be a market for the male version of a "Lady's Card".

Males, minority ethnic groups and foreigners are exceptionally receptive towards marketing efforts of the bank. Finally, the prestige of banks is only of minimal concern to most consumers.

What does it mean to you?

The survey shows that our young consumers are very conscious of the costs related to a credit card. These costs can be lowered through the discounts and privileges. They can also be indirectly lowered through various forms of protection such as security and insurance.

The accessibility and assistance features of the card help lower the usage cost of the card holder. The image and branding factors raise the satisfaction of the card holder given the fixed cost.

Thus one question to ask when choosing a credit card is: "Is this the credit card that I can get the most out of?" In order to determine this, it would help greatly if you know your consumption patterns and what you want out of the card. Many people also have more than one credit card, with each card intended for a different usage.

Lord of the cards?

In conclusion, credit cards are no longer merely an alternative form of cash in a cashless society. They also reflect the cost perception, consumption and self-image culture of a society. As banks innovate and better customise credit cards for our society, perhaps one day the banks would invent the truly Singaporean card, which all Singaporeans would desire to have in their wallets. And when someone uses such a card overseas, the salesperson would ask with a smile: "Aren't you a Singaporean?"

Gow Yujie, Gwee Li Ping and Ng Mei Shan were final-year business students at Nanyang Technological University when they did the study. Dr Lee Hon Sing is an assistant professor at the school's banking and finance division.

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