Men are from Mars, women are responsible credit card users

That old joke about women and their huge shopping bills looks ready to be tossed out of the window, if the testimony of credit card companies is anything to go by.

Surveys conducted by leading banks to chart the perceived spending habits of women and men via their credit cards reveals that contrary to myths about women being spendthrifts, they are generally more responsible spenders. They are also less likely to default on their debts, and what's more, a woman's shopping list is not very different from a man's.

"Women are more responsible towards credit usage"
Viraj Tyagi, Business Manager, Credit Cards, at Standard Chartered Bank, told Moneycontrol.com, "In the first place, women in general, as a credit card segment, are highly under-penetrated. Only about 15% of working women in urban India have a card, according to a recent study. In our portfolios, we see that women cardholders have much lower default rates than men, so they are also more responsible and cautious towards usage. We have experienced 15-20% lower delinquencies on the Women Card accounts."

ICICI Bank seems to share a similar view on the credit worthiness and responsibility of women cardholders. B Madhivanan, Joint GM, Retail Asset, ICICI Bank, said, "Women customers are better risks, generally. This is true, not just in case of credit cards, but also in terms of loans and other financial products. When a family is together, the default risk is low."

Madhivanan says, while women cardholders may be basically broken up into two groups, the working segment and the non-working segment, it is difficult to judge the credit worthiness of the latter group. "But there is a problem here in evaluating the financial strength in the absence of income tax payments, or a PAN number. We are trying to find a surrogate for target recovery," he said.

He also discounts fears that in case of women cardholders, the procedure in case of defaults must necessarily include a greater degree of playing with kid gloves - which may mean, that the bank loses out in the end. However, Madhivanan says, "The default module is uniform: a time gap of 60-90 days, and then we send letters and make calls, and finally we get a bit more aggressive after that. We always use the legal route, and the early calls are more of a reminder."

Tyagi also agrees, saying "In general, women are more responsible spenders, so as a percentage the problem of default arises even less. But I have no concrete information on whether they have an easier default situation. I do not think so."

"Women show only marginally higher retail spending trends compared to men"
Yet another myth than can be busted is the old one about women cardholders spending significantly higher than their male counterparts on cosmetics, fashion accessories and shopping. Banks and financial institutions say, the difference in spend break-up is marginal, at best.

 

Howzzat? Only about 15% of working women in urban India have a card Banks experience 15-20% lower delinquencies on the women Card accounts Women show only marginally higher retail spending trends compared to men

Rajeev Ahuja, Head of Corporate Affairs at Amex, says, "If it is a working woman with her own card, it would probably be inappropriate to say she would choose such a card only for beauty parlours. The choice of a card is more on what you will be spending on, and that would perhaps depend on the profession. So, if she were an architect, she would need to travel and it would be smart to offer a discount on airlines. Perhaps, a preview of fashion trends more for indulgence, than utility's sake. Financial planning is important."

Meanwhile, T R Ramachandran, Business Manager - Cards, at Citibank, says, "Spends by women Citibank card members are similar to other card members with a marginally higher share in retail spending. As a result of the offers from partners, there is also a higher share of spending at partner outlets."

But most financial institutions are loath to term retail spending as primarily 'woman spending', reasoning that if it came to the man of the house to do the shopping, the same amount would be billed. This is why Madhivanan says, ICICI Bank's specialised retail card with the Big Bazaar chain of shopping outlets can hardly be considered a 'women's card'. "It is more of a utilities card, and not a women's card. It makes shopping simple and a day to day affair, rather than a splurge once in three months," he says.