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.     

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.     

Credit card use and knowledge in Thailand

This study examined the relationship between demographic characteristics of Thai credit card holders and the extent of credit card use, the level of credit card knowledge and the consumer choice perspectives. Data were collected by phone interview from Bangkok Bank credit card holders. Chi-square and Cramer's V were used to analyse the data. Only income and occupation were statistically related to credit card use. The results revealed that Thai credit card holders were not knowledgeable about credit card terms. They were influenced by environmental stimuli and society and group norms when they chose their credit card. They lacked sufficient information to make an informed choice when they applied for their cards. Implications for consumer educators and policy makers in developing nations are discussed.     

Bonus gift card programs: a methodology to measure the impact on revenue and profit

Many retailers are now offering bonus gift cards to entice customers to buy more regular gift cards. The most common offers are a $5 bonus card with $25 worth of gift card purchases or a $10 bonus card with $50 worth of purchases. Unlike regular gift cards, bonus gift cards are not paid for by other customers. Bonus cards provide $5 or $10 of free credit to a customer at the firm’s expense. Most retailers do not understand the potential for cannibalization of revenue and profit when gift card redeemers use a bonus card for a purchase they would have made without it. Nor do they know what proportion of redeemers represent these cannibalized sales versus the proportion of redeemers that represent incremental purchases. We use an in-market study with a large national restaurant chain to demonstrate a methodology and model to properly evaluate the effect of bonus gift card programs on revenue and profit. We found that although bonus gift cards provide incremental revenue, they can significantly reduce profit particularly in certain retail segments. For those who wish to implement a bonus card program, we provide suggestions to maximize the potential for success.     

Who Pays for Credit Cards?

The authors model side payments in a competitive credit‐card market. If competitive retailers absorb the cost of accepting credit cards by charging a higher goods price to everyone, then someone must subsidize convenience users of credit cards to prevent them from defecting to merchants who do not accept cards. The side payment could be financed by card users who roll over balances and pay interest. It is rational for them to do so if their subjective discount rates are high enough. Charging different prices to different customers based on the underlying cost of the payment instrument would be more efficient for retailers. However, banks may offer incentives to attract convenience users because some of them may become interest‐paying users (“revolvers”) in the future.     

Effects of social demographic attributes,knowledge about credit cards and perceived lifestyle outcomes on credit card usage

The aim of this paper is to identify and assess the effects of credit card users' demographic and socio‐economic characteristics, knowledge about credit cards, and perceived lifestyle outcomes of the credit card usage on credit card usage practices. A sample of 177 individuals in Sri Lanka who possess Visa, MasterCard or American Express credit cards responded to the survey. The hypothesized relationships were examined by means of path analysis. The findings offer implications for research and practice.     

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.     

Ethical Issues in Credit Card Solicitation of College Students – The Responsibilities of Credit Card Issuers,Higher Education,and Students

Credit card companies aggressively solicit college students, without regardfor the consequences of high credit car debt for these customers. Theethical conflict of the sale of easy credit to college students too oftenresults in hazardous outcomes akin to the solicitation of youth by cigarettecompanies. This paper will investigate the dangers that credit card use presents to theyoung customer, the unethical manner in which the companies that issue these cards promote their products to this audience, and the role of institutions of higher education. A majority of students are not only using credit unwisely (average balances of over $1000 regardless of who reports the data) but are payingexorbitant interest (18%–22%). The credit card companies call this``responsible' use. They are collecting enough interest and fees to morethan cover losses resulting from bankruptcy. They use a variety ofmarketing techniques to lure college students – glitzy `MTV' type shows,free prizes and gifts, special interest rate offers, and now they can pretendthrough `educational services' to explain to college students why credit cards are important.This paper investigates the ethical considerations of credit card solicitationof college students as a result of research into factors that influence thenumber of credit cards held by these students. Current solicitation policiesof colleges and universities are also presented.     

Payment method and perceptions of ownership

How consumers pay influences how they feel about a transaction. In particular, paying by card has been argued to have an effect on the perception of cost, making it less salient and painful. We propose and show that payment method also influences how consumers feel about the acquired good. Specifically, we focus on effects of the payment method on psychological ownership, i.e., the perception of an object as “mine.” We propose that cash payment results in stronger psychological ownership because it influences the extent of perceived investment in an object. We provide evidence for the proposed effect from field and laboratory settings. Results of a longitudinal exit survey and an experiment show that cash payers report higher levels of immediate psychological ownership than card payers. However, this effect seems to depend on the meanings associated with a payment method. Asian students (who associate credit card payment with investment and debt) do not exhibit this effect. Moreover, the initial boost in psychological ownership seems to be comparably short-lived. While those paying in cash experience no further increase in psychological ownership over time, those paying by card do.     

Consumers' credit cards and international students

This paper focuses on graduate international students' knowledge, attitudes, experiences, practices, and satisfaction relating to credit cards. Respondents (n = 261) were graduate international students (n = 623) attending a western US land-grant university. Findings show students' credit card knowledge was low, attitudes were favourable, and pre-US experiences limited. A majority of respondents had obtained cards, followed commonly recommended practices, and were satisfied with their credit card use.     

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.     

College students' attitudes towards credit cards

Based on previous studies and using an approach of tripartite classification of attitude, an instrument measuring college students' attitudes toward credit was carefully constructed. Its reliability and validity were tested. Chi-square tests indicated that the factors associated with differences in attitude towards credit card use comprising three components - affective, cognitive and behavioural included gender, academic major, living arrangement, number of credit cards owned, number of all cards (store cards, phone cards, and petrol cards) owned, time of using credit cards, and cosignment status. Implications for consumer credit educators and practitioners were specified.     

Understanding Credit Card Use Among Indian Consumers: Role of Materialistic Values and Compulsivity

The current research examines influence of materialism and compulsive-buying behavior on Indian consumers’ credit card use. Research in Western countries posits that materialistic values and compulsiveness influence credit card use. However, results of the research differ from earlier researches. It suggests that Indian consumers’ credit card use is influenced by materialism but not by compulsiveness. Credit cards may be acquired to represent a lifestyle and improve individual’s status. The symbolic value associated with credit card is higher than its functional attributes. Consumers associate it with material possessions that bequeath status to them.     

Differences in the use of bank and retail credit cards in the U.S.A.

Data from the 1989 Survey of Consumer Finances¹ were analysed to find factors related to credit card use in U.S. households. Factors associated with the probability of using only retail cards were being a female-headed household, being older and being in a blue collar occupation. The use of bank cards only was associated with male heads of households, renting and a negative attitude toward credit. The use of both retail and bank cards was associated with a positive attitude toward credit, being in a professional or managerial occupation and home ownership. The results provide insight into credit card use and should help target educational efforts to those most likely to experience debt problems related to extensive use of credit cards.     

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.     

Consumer Credit Use by Low Income Consumers Who Have Had a Consumer Education Course: An Exploratory Study

This research examines the use of bank credit cards by forty-eight low income persons who successfully completed a consumer education course. Data for a twelve-month period showed participants undertaking relatively high credit obligations in relation to repayment capabilities. Banking affiliation and knowledge concerning credit card accounts were significant in explaining variance in credit behavior. The findings suggest it may be useful to identify additional variables beyond those now used for evaluating credit risks among low income people.     

Credit cards,new technology and consumer debt*

There has been a rapid expansion in consumer indebtedness in the U.K. The amount of consumer debt has doubled in real terms during the last 10 years. The majority of consumers are able to cope with their debt repayments, but there are a significant number of credit casualties, often burdened with multiple debts. Credit cards have played a significant but not overwhelming part in this increase in debt. There are now 62 bank credit cards for every 100 adults in the U.K., a much higher incidence than in any other European country. Credit cards have been aggressively marketed and sold, and it is possible that they will now move downmarket, to consumers in lower income groups. This possibility highlights the need for a major consumer education campaign on the cost of credit. U.K. consumers' knowledge of and ability to compare credit interest rates is poor, especially among lower income consumers who are most at risk.