Dynamics of Households' Income,Debt, and Attitudes Toward Credit, 1983–1989

Using the panel data from the 1983–1989 Survey of Consumer Finances, this research examines the shifts in households' income and debt quintiles and changes in respondents' attitudes toward credit. Households exhibited considerable income mobility during the 1980s, almost as much as during the more volatile decade of the 1970s previously reported by Duncan (1986). Except for a committed group of “no debt” households, there was even more mobility in households' debt status, that is, a majority of households were in a different debt quintile in 1989 than in 1983. Respondents' attitudes toward debt also changed considerably with more respondents' becoming more negative toward credit than more positive. Trend analyses of American households' debt underestimate the extent and variability of such changes.     

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.     

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.     

Changes in the Credit Repayment Performance of Low Income Consumers: An Exploratory Study

This paper examined the credit behavior during the second year of a two-year study of bank credit card use by a group of low income consumers who had had a consumer education course. It reports findings about factors affecting changes in repayment practices over the two-year period. Different variables were found to affect repayment behavior at different points in time with elements from traditional credit scoring schemes becoming important in the second year of study.     

The use of small instant loans among young adults – a gateway to a consumer insolvency?

The aim of this paper is to study 18‐ to 29‐year‐old Finnish consumers' use of instant small loans (i.e. SMS loan) and other consumer credit services that have increased notably in the past few years. We examine what kind of expenditures instant credit is used for and focus also on young consumers' financial situation and their perceptions of themselves as money handlers. The research method is quantitative, and data are derived from an open online survey (n = 1610). Our results reveal that consumer credit is used by young people in all income brackets and employment positions. However, there is a clear connection between certain life‐course stages (young, single parent), financial positions (low income), employment situations (marginal) and the propensity to take instant loans and consumer credit. The young people who take an instant loan once are likely to do it again. Typical purposes of use included buying alcohol, cigarettes and partying. For some consumers, the use of small loans is part of controlled and economical use of money. However, particularly in the low‐income brackets, it is also common to buy food and to repay credit or interest. Young people, who use instant loans recognize flaws in their money management and see themselves as ‘wasteful’ consumers more often than those who do not use instant loans. On the basis of this empirical study, it is unquestioned that young people's consumer education needs to be strengthened. In Finland, this need has already been recognized in both consumer policy and teacher education.     

Retail Credit Users' Awareness of Their Credit Insurance Coverage

Retail credit user's awareness of their credit insurance coverage was investigated in telephone interviews. Respondents were divided into two groups: Aware, those who said they had credit insurance and actually did (63 percent of the respondents); and Unaware, those who said they had no credit insurance but actually did (37 percent). The distribution of awareness differed with age and outstanding credit balance. Awareness did not, however, differ with annual income, sex and education. Misperceptions that credit insurance was required also were investigated.     

The Effect of Debt on Perceived Household Welfare

Much of the traditional literature on consumer credit implies that using consumer credit will make families feel worse off but economic investment theory implies the use of consumer credit will not cause a decrease in utility. The effect of changes in debt-asset ratios and other financial and demographic variables on perceived financial well-being are investigated in this article. The results of the analyses indicate families' utility levels did not decrease when they used consumer credit to acquire commodities.     

Credit card usage and consumer debt burden of households

The primary objectives of this study were to examine changes in credit card usage and the amount of debt between 1982 and 1986 and to identify factors influencing the amount of and changes in consumer debt held by households. Personal interviews were completed in 1982 and again in 1986 with the money managers of households in a small midwestern town in the U.S.A. The sample consisted of the 123 households that were represented both in the 1982 and 1986 surveys. Paired-samples t-tests were used to identify changes over time. Significant differences were found between 1982 and 1986 total household assets and total amount of debt. Regression analysis indicated that significant predictors of the amount of consumer debt burden were age, net income, total assets, and the degree to which managers felt comfortable with debt. Younger money managers were more likely to make larger monthly debt payments and have more consumer debt. Households with larger incomes and higher levels of assets also had higher total debt. Significant predictors of change in debt burden over the 4-year period were change in net income and total assets, with year-end savings being negatively correlated with consumer debt.     

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.     

Consumer Knowledge and Understanding of Consumer Credit

Much has recently been written about the desirability of restrictive usury laws. While low maximum rates may prevent excessive charges to some, they also limit the ability of high-risk persons to borrow. Therefore, if consumers have a sufficient understanding of the credit market to realize what they are paying for and how much they are paying when they borrow, a case can be made against low maximum finance rates. This article reports on a nationwide study designed to measure consumer knowledge and understanding of consumer credit. The results are that while consumers can generally rank lenders correctly in terms of cost, there are serious gaps in their knowledge of the credit market. Education and income are the key determinants of knowledge and understanding of consumer credit.     

Equal Credit Opportunity Legislation and Indicators of Credit Worthiness: An Economic Study of Women Applicants for Credit in California

Although much equal credit opportunity legislation has been passed in recent years, little has been done to ascertain whether the new laws have actually altered lending practices or whether the practices were sex-biased initially. This research makes use of a sample of 241 women from five counties in California to show what factors affect the probability of credit extension to women in that state, and whether these variables are different from those that were associated with lending practices before the law's passage. The results indicate that prior to the passage of the law, several market indices, including home ownership and spousal support, were associated with an applicant's ability to obtain credit. After passage of the law these indices were no longer significant predictors of loan approval. Within the limits of the data and the design used here, the empirical evidence supported the hypothesis that California credit institutions changed their lending criteria after the passage of equal credit opportunity legislation.     

消费信贷对消费需求的影响效应分析

本文选取中国和美国1990-2004年消费信贷与居民消费的数据,对消费信贷对消费需求的影响效应进行分析比较,结果表明,在现阶段,由于我国经济改革造成的不确定性预期增强、居民贫富差距扩大及消费的挤出效应等原因,消费信贷对居民消费的刺激作用很不显著.扩大消费需求的根本举措在于提高居民收入水平,减少收入差距,完善社会保障体系.     

Household Debt Quintiles: Explaining Changes 1983–1989

Households' changes in consumer debt from 1983–89 were examined using the panel dataset of the Survey of Consumer Finances. Logit models of the odds of an increase and a decrease in debt quintile revealed four factors hypothesized by Bryant (1990) to be symmetrically related—household size, respondents marital status, inflationary expectations, and time preferences. Asymmetrical effects of other variables, including life cycle consumption needs, present resources, expected future resources, and preferences were found for either the odds of an increase or decrease in consumer debt, but not both. Households' access to credit markets and changes in economic status between 1983 and 1989 also significantly affected the odds of change in consumer debt status, albeit not consistently across models. Household level change in consumer debt and the factors that affect it are more complex than hypothesized.     

Factors Determining Credit Worthiness of Low Income Consumers

The purpose of this study was to identify variables that can be used in granting credit to low income consumers. Credit behavior, as exemplified by loan repayment, was examined with respect to economic, demographic, and socioeconomic characteristics of borrowers from a credit union that had been established to serve low income people in Columbus, Ohio. Findings indicate that early warning signals—default and delinquency—are given by borrowers when a loan is going bad. Consumer education and financial counseling might help eliminate this problem.     

Relaxed Credit Standards in the U.S. Housing Boom: Changes in Risk Characteristics of Mortgage Recipients*

This paper examines components of credit risk and how their ability to predict the interface between households and mortgage market changed under the relaxed lending standards prevailing during the U.S. housing boom of the 2000s. Using data from the Federal Reserve Board's 1998 and 2007 Survey of Consumer Finances, the paper evaluates changes between 1998 and 2007 in the significance of credit risk characteristics in explaining three variables regarding the purchase of a primary residence by households in low‐, moderate‐, and high‐income groups: the loan‐to‐value ratio of the purchase mortgage, the likelihood of purchase, and the price paid. The study also analyzes the extent to which the period saw increases in the values of those three variables. The findings strongly suggest a decline in the ability of credit risk characteristics in predicting the interface between households and mortgage market over the period.     

Information Disclosure and Consumer Credit Knowledge: A Longitudinal Analysis

Early evaluations of Truth-in-Lending have observed impressive gains in consumer knowledge about interest rates. Contrary to original goals, consumers with more education, income, and debt experience have benefited far more than low-income and minority consumers. How will these results change over time as consumers gain credit experience with the aid of disclosure? Has disclosure improved consumer understanding about finance charges, and what factors beyond socio-economic status might have enhanced consumer knowledge of credit terms? These questions are addressed in this report of a large sample of California households surveyed at two points in time. The longitudinal analysis shows individual changes in knowledge, the effects of credit experience on learning, and a projection of future levels of credit knowledge.     

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.     

Family Composition,Parental Time,and Market Goods: Life Cycle Trade-Offs

The present study supplements Canadian consumer expenditure survey data with unique time use data to analyze family life cycle decisions regarding allocation of full income to market purchased consumption goods, home production, and leisure time. Results confirm that young children's presence causes families to increase their shares of full income allocated to home production and to decrease the shares of full income allocated to leisure. As a share of full income, expenditures for market goods steadily increase while expenditures for women's home production diminish as children age.     

Consumers’ Use of Credit Cards: Store Credit Card Usage as an Alternative Payment and Financing Medium

This paper investigates consumers’ use of store-issued credit cards with particular attention to their function as an alternative payment and financing medium. Using 1998 Survey of Consumer Finances data, the researchers found that credit availability through bankcards is negatively correlated with consumers’ use of store cards as a financing medium, suggesting the role of store cards as a supplementary credit line. A negative relationship is also found to exist between consumers’ bankcard usage and their use of store cards for a transaction purpose, indicating that store cards function as a substitute payment medium. Consumers’ usage of store cards varies according to function and is related to a number of variables, including the use of bank cards, credit history, attitude toward credit, income, education, and ethnicity.     

The role of materialism,religiosity, and demographics in subjective well-being

In appealing to consumers, marketers need to know what the good life means across various consumer segments. The present study seeks to deepen the understanding of consumer subjective well-being (SWB) by exploring its relationship with selected secular and sacred values. SWB, defined as individuals' cognitive and affective assessments regarding their life satisfaction (Diener, 1984), is treated as the dependent variable in investigating how SWB is influenced by individual consumer materialistic attitudes (a secular value), religiosity (a sacred value), and demographics. Significant differences between high and low religiosity consumers regarding the role of income and materialistic attitudes in predicting SWB were found. Although income and some aspects of materialism are positively related to the SWB of low religiosity consumers, these variables are negatively related to the SWB of high religiosity consumers. This study implies that marketers might benefit from considering consumer religiosity as a segmentation and targeting direction in the design of materialistic positionings and communications. © 1997 John Wiley & Sons, Inc.