Debt Judgments as a Reflection of Consumption-Related Debt Problems

In connection with the strengthening and enlargement of financial markets, i.e., financialization, financial services and products play a major role in the everyday lives of consumers. One drawback of this trend is the increase in the number of debt problems. The data used in this article consist of Finnish district-court judgments related to debt that in most cases was consumption-related, and register-based data on debtors. We first compare debtors to the entire population of Finland by age, gender, marital status, and education, and also in different age groups. The focus then turns to the four most common types of debt in the judgments (based on consumer credit, operator services, distance selling, and credit card debts), and how age, gender, marital status, and education related to these debt types. According to the results, consumers under 30 years of age, in particular, men, those with a basic level of education, and the divorced were over-represented in the data, compared to the overall Finnish population. Young single adults were particularly likely to have accrued smaller amounts of debt related to instant loans and operator services, whereas more extensive consumer credit as well as credit card debt tended to be a problem among retirees. Credit card debt, as well as debts to lending firms, were more common among those with tertiary education than among those with a basic education. Overall, the adverse effects of financialization focused especially on young people with a low level of education. The results also indicate that legislation could partly reduce the negative effects of financialization.

     

Changes over Time in College Student Credit Card Attitudes and Debt: Evidence from One Campus

Over the past 10 years, both public awareness of, and research about, college student credit card debt have increased. This study examined changes in college students' debt and possession of credit cards, as well as attitudes toward debt and credit cards over that time at one American college campus. Results indicate that the number of credit cards held and the amount of credit card debt both decreased in the time following the 2009 Credit CARD Act. Attitudes toward debt gradually became more negative over the past 10 years, whereas perceived personal financial well‐being increased. Although debt is decreasing, some students continue to report high levels of debt and correlates of higher levels of debt continue to include year in school, decreased ability to delay gratification, and lower levels of perceived financial well‐being. Overall, it appears that students' relationship with credit cards is changing, but many still have difficulty managing credit.     

Concern with Immediate Consequences Magnifies the Impact of Compulsive Buying Tendencies on College Students' Credit Card Debt

This research examines whether temporal orientation moderates the impact of compulsive buying tendencies (CBT) on credit card debt. Participants completed the consideration of future consequences scale, a compulsive buying scale, and reported their credit card debt. Results revealed that CBT mediated the relationship between concern with immediate consequences and credit card debt, and high concern with immediate consequences magnified the impact of CBT on credit card debt. This suggests that compulsive buyers who focus on maximizing immediate consequences are at a much higher risk of building up significant amounts of credit card debt.     

Shopping behaviour among gay men: issues of internalized homophobia and self‐esteem

Connections among internalized homophobia, self‐esteem and various shopping behaviours are investigated. Internalized homophobia, which affects nearly all gay men to some degree, and self‐esteem may affect shopping behaviours such as credit card debt, venue of shopping, enjoyment from shopping, amount of time spent shopping and frequency of shopping. Data from 213 gay men were collected using an Internet‐survey design. Results demonstrate that internalized homophobia has weak to moderate effects on thrift store shopping, discount store shopping and credit card debt. Although self‐esteem did not predict shopping behaviour, it was correlated with shopping enjoyment. Implications, limitations and future research are discussed.     

Buying behavior,social support and credit card indebtedness of college students

This research examines three factors that are associated with college students' credit card indebtedness. Using survey data, we find that college students' buying patterns and social networks affect their credit card indebtedness. Specifically, students with a tendency towards compulsive buying are more likely and those with greater social support are less likely to hold credit card debts. Depth interview data further illustrate the contexts and causes of overusing credit cards as well as solutions for their debt problem. This research sheds light on reasons why college students fall into credit card debt and suggests strategies for helping them use credit cards wisely.     

The Effects of Credit Attitude and Socioeconomic Factors on Credit Card and Installment Debt

Most previous research on credit use has examined the effect of socioeconomic and attitude variables without considering the possible correlation among these factors. Also, the studies have not considered whether there is a difference between general and specific attitudes toward credit and the use of credit. This study addresses those problems and includes installment debt as well as credit card debt in the analysis. The study used data from the 1998 Survey of Consumer Finances. The findings show the higher the specific attitude index, the higher the outstanding credit card balances, and the more favorable the general attitude toward using credit, the higher the installment debt. The results suggest the need for greater awareness on the part of consumers and consumer educators on the influence of attitude in the use of credit.     

Consumer credit card ownership and usage practices: empirical evidence from Sri Lanka

Knowledge that has been accumulated through research efforts concerning credit card ownership and usage behaviour has been confined to Western societies. Given the importance of cross‐national application of consumer marketing concepts and propositions for academic and practical reasons, investigations are needed to test whether consumer credit card usage patterns that are assumed to exist in the West also exist in non‐Western parts of the world, especially in Asia. Therefore, objectives of this research were to explore credit card ownership and usage practices in Sri Lanka, and to explore the relationship between credit card ownership and usage practices, and demographic and socio‐economic characteristics of credit card users. The findings offer implications for researchers and practitioners.     

Consumer behaviour in the credit card market: a banking case study

This paper analysed the demographic, socio‐economic and banking‐specific determinants that influence the choice of credit cards. A multinomial logit model was run on a recent portfolio of banking customers based in Italy. The model incorporates the type of credit cards as the dependent variable and a set of explanatory variables. The empirical results provided useful insight into the structural characteristics of the card payment system and offered a microeconomics perspective to analyse consumers' behaviour and preferences. Overall, women, older people, residents in the centre of Italy and secondary card owners are more likely to acquire a classic card. Gold cards are preferred by older customers, whereas younger clients have a higher probability to choose a revolving card, which is also preferred by the residents in the North‐east. The analysis on the continuous variables highlighted that Italy can be regarded as a ‘conservative’ market with room for credit card upgrading and expansion into more sophisticated products.     

Using the Family Self‐Sufficiency Program to Help Families with Housing Assistance Improve Earnings,Credit Score,and Debt Levels: A Quasi‐Experimental Analysis

HUD's Family Self‐Sufficiency (FSS) program aims to help housing assistance recipients increase their earnings and build savings to make progress toward economic security. This study examines an asset‐building nonprofit's innovative financial coaching‐based approach to FSS that adds an additional focus on helping clients build assets and financial capability. We use a quasi‐experimental approach to estimate the program's impact on earnings and cash assistance receipt and analyze credit and debt outcomes against a benchmark group. The findings show substantial, significant gains in households' earnings and significant decreases in receipt of some cash benefits. Participants also saw increases in credit score, and success in paying down credit card and derogatory debt. Our results indicate that FSS can be an effective platform for helping participants in subsidized housing make real progress toward economic security and financial health.     

A Profile of Financially At‐Risk College Students

Using a random sample of college students, this study identifies the factors that significantly affect the probability a college student is financially at risk for mismanaging/misusing credit. Financially at‐risk students are more likely to be financially independent, to receive need‐based financial aid, to hold $1000 or more in other debt, and to have acquired their credit card(s) by mail, at a retail store, and/or at a campus table. Students having difficulty making credit card payments are also more likely to be female, black, and/or Hispanic. Campus administrators and financial professionals can use this information to better allocate their resources and develop materials that specifically target those students who need them most.     

Credit Cards: Transactional Convenience or Debt‐Trap?

We survey individuals on their credit card usage. Contrary to popular press, most credit card holders use credit cards in a responsible manner. They tend to use credit cards for transaction convenience and pay little interest. Only a minor subset of people uses credit cards to access expensive credit, with only 7% of credit card holders in our sample never paying the balance in full. Credit card debt is more common among older, less financially literate, and less trusting respondents. Even individuals with credit card debt are well aware about its costs and are likely to make informed financial choices.     

Changing Directions in Consumer Bankruptcy Law and Practice in Europe and USA

The consumer bankruptcy or, rather, consumer debt adjustment, is a fairly recent phenomenon in continental Europe. In the nineties, a number of European countries introduced judicial institutions in order to alleviate an excessive debt burden carried by consumer debtors. In addition to the court proceedings, the European jurisdictions often provide the debtor with debt counselling services, supervision, and payment requirements. In the United States, on the other hand, discharge of debt has been an established principle of bankruptcy law since the late 19th century, and bankruptcy is frequently used by consumer debtors. However, in the US, as well as in Canada, debtors are increasingly encouraged to opt for a payment plan. There seems to be a certain convergent trend between the two different legal cultures. Paradoxically, at the same time scholars have pointed out that the variance in local cultures seems to be a main factor in explanations of how debtors choose either a direct discharge or a payment plan. This finding gives us reason to consider the interplay of counselling and other pre-trial measures and its effect upon the rights and duties of debtors.     

Predictors of credit card use and perceived financial well‐being in female college students: a Brazil‐United States comparative study

This article examines predictors of the financial well‐being of female college students living in São Paulo or New York, focusing upon the relationship with their credit card use behaviour. The results of structural equation models, based on 784 participants, suggest that financial self‐confidence and social comparison have an impact on the use of credit cards and exercise an influence on financial well‐being. Despite the fact that social comparison is more strongly predictive of credit card use among Brazilian women, credit card use behaviour has a greater impact on the well‐being of American women.     

How federally insured reverse mortgages affect the credit outcomes of older adults

This study examines how the extraction of home equity through the federally insured Home Equity Conversion Mortgage (HECM) affects the credit outcomes of older adults. We use data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel, supplemented with a unique credit panel data set of reverse mortgage borrowers. Using matched sample difference-in-differences with individual fixed effects, we estimate credit outcomes for older adults who borrowed through a HECM between 2008 and 2011, relative to older homeowners not borrowing from home equity. Our results indicate that the HECM is associated with a short-term reduction in revolving credit card debt, as well as a reduction in the probability of bankruptcy. We find some evidence of heterogeneous treatment effects, where older adults with higher levels of consumer debt prior to originating a HECM experience larger subsequent declines in debt, increases in credit score, and steeper reductions in bankruptcy rates.     

Social Networks and Credit Card Overspending Among Young Adult Consumers

Research that has looked at the reasons why young individuals overspend using their credit cards has not paid attention to the perceptions that they have about important others' credit card debt, their expectations as to how much to spend when they consume in the presence of them, and how the strength of the social relationships within their social network potentially influences the extent to which they overspend using their credit cards. A survey of 225 US university students composing a culturally diverse sample revealed that these social norms and network variables have interactive effects on credit card overspending. Specifically, the results show that the perceptions that young adult consumers have about important others' credit card debt impact their overspending using credit cards when they feel that they are expected to consume at the same level as important others in shared experiences, and when they are strongly connected to these individuals.     

Debt as a source of financial stress in Australian households

This paper examines the role of demographic, socio‐economic and debt portfolio characteristics as contributors to financial stress in Australian households. The data are drawn from the most recent Household Expenditure Survey and relate to 3268 probability‐weighted households. Financial stress is defined, among other things, in terms of financial reasons for being unable to have a holiday, to have meals with family and friends, to engage in hobbies and other leisure activities, and general money management. Characteristics examined include family structure and composition, source and level of household income, age, gender and marital status, ethnic background, housing value, debt repayment of various types and credit card usage. Binary logit models are used to identify the source and magnitude of factors associated with financial stress. The evidence provided suggests that financial stress is higher in families with more children and those from ethnic minorities, especially when reliant on government pensions and benefits, and lower in families with higher disposable incomes and housing values. There is weak evidence that Australia's historically high levels of household debt cause financial stress.     

The roles of personality and general ethical judgments in intention to not repay credit card expenses

There are no ‘card slaves’ but only cardholders who cannot meet their obligations. Recently, the issue that people are plagued by huge credit card debt has become more serious in Taiwan. This study proposed a model linking personality traits (locus of control (LOC) and risk-taking propensity), general ethical judgments regarding credit card use, and behavioral intention to not repay credit card expenses. External LOC and risk-taking propensity can predict intention to not repay through ethical judgments. Furthermore, external LOC can directly affect the intention. The model has been empirically justified by using the data collected from 448 credit cardholders in Taiwan (at least 20 years old). Those with ethical judgments of actively benefiting from illegal activities or passively benefiting at the expense of others tend to have an intention to not repay. By understanding the causes of not repaying credit card expenses, financial service providers should be able to effectively reduce card bad debts. In particular, relationship marketing strategies are helpful to mitigate cardholders’ intention to passively not repay.     

Changes in factors influencing consumer debt among Scottish families, 1984—1987

The major objective of this study was to determine socio-economic and debt management factors causing debt problems among Scottish families. Data for this study were collected from the records of the debt counselling segment of the Citizens Advice Bureau in Glasgow, Scotland, during 1984–87. The final sample consisted of 404 cases selected at random. Variables selected for the study included the following socio-economic characteristics: sex, household size, marital status, employment status, sources of income, and total income. Debt variables included in the study were total debt, sources of debt, amount of debt from each source, and total monthly debt payment. Total debt owed by debtors increased by 283% over the 4 year period from 295,113 in 1984 to 836,409 in 1986. The majority of the households had debt to income ratio of 0.50 and on the average owed on eight different types of loans. The largest proportion of debtors (87%) borrowed from finance companies and the largest sums of total debt were also owed to finance companies (52%). Finance companies consistently held this position over the 4 year period. The analysis of variance (ANOVA) results indicate that employment status, number of sources of borrowing, marital status and sex significantly explained the variation in total debt burden. The number of sources is an important factor in debt management. As the numbers of sources of borrowing increases, not only the management of transactions gets complicated and one can easily lose sight of total debt burden, but it also indicates that people start borrowing from high cost sources of borrowing, such as store credit and finance companies. Educators need to emphasize the importance of the variation in cost of borrowing related to various sources in their materials, and these educational efforts should be targeted to females, singles and those who are recently separated and divorced.     

The Interdependence between Trade Credit and Bank Lending: Commitment in Intermediary Firm Relationships

This study investigates the interdependence between trade and bank credit among 468 Portuguese small and medium‐sized enterprises (SMEs). The results show that a single bank relationship is prevalent among Portuguese SMEs, indicating that the proprietary borrower information that banks obtain through their relationship results in an information monopoly that creates a holdup problem and leads to high interest rates. Suppliers that can control their customers' credit risk may provide additional credit and thus help alleviate concerns associated with holdup costs. Trade credit is a viable alternative to short‐term debt, especially when firms' main bank is unwilling to increase its exposure to liquidity constraints.     

Debt problems,home‐leaving,and boomeranging: A register‐based perspective on economic consequences of moving away from parental home

This article analyses the development of financial problems after leaving one's parental home, and considers how financial problems are associated with likelihood of boomeranging (i.e., adult children returning to parental home). The 9‐year follow‐up study focused on a nationally representative sample of Finnish young people between the ages of 15 and 25 who moved out from their parental home between 2006 and 2009 (n = 9,196). The measure of debt problems was based on monthly data on debt enforcement, a legal matter which may bring serious consequences for the debtors. The primary within‐individual, longitudinal analyses showed that debt problems increased directly after leaving parental home. Education and family background were significant predictors of debt problems in the four years after leaving parental home. Early leavers had significantly more debt problems than later leavers. Debt problems were associated with a higher likelihood of moving back to parental home. The results imply that it is important to support economic decision‐making during early adulthood.