Credit Card Use and Compulsive Buying Behavior

ABSTRACT

Compulsive buying behavior is a negative form of behavior that leads to overspending. In the current study, the author examines the applicability of a compulsive buying behavior scale developed by Valence et al. (1988) with Indian consumers. Compulsive buyers are likely to relate money to power, success, and status. Compulsive buyers perceive their purchases as a way of overcoming negative self-esteem and anxiety. The influence of consumers’ attitude toward credit cards, demographic factors, and credit card use on compulsive buying was studied. The findings suggest the compulsive behavior scale should be modified in the Indian context. Age, income, education, and marital status influence compulsive buying. Consumers’ attitude toward credit cards did not affect compulsive buying.     

Money Attitudes,Materialism, and Compulsiveness: Scale Development and Validation

ABSTRACT

Compulsive buying behavior is a chronic shopping disorder. Compulsive buyers purchase products to quell feelings of anxiety and depression. Past research suggests positive relationship between money attitudes, materialism, and compulsiveness. Money attitude, materialism, and compulsiveness scales have been adapted by researchers to validate their applicability in different countries. Results have revealed new factors. These scales were used to check their validity and applicability on Indian sample. CFA findings revealed that original factors and model could not be confirmed completely on the Indian sample. The study identified new factors: three money attitude factors (power-prestige, anxiety, and price sensitivity), five materialism factors (success, status, centrality, achievement, and happiness), and compulsiveness (one factor).     

What drives Indian consumer credit card loyalty? The perspective of involvement in reward programmes

This study, from the customer involvement perspective, looks at the impact of reward point programmes on the purchasing behaviour of Indian credit card users. A total of 125 valid responses were collected using an online survey of Indian credit card users. The study found that customers’ involvement is not only low, but also does not affect their loyalty (frequency of card use and usage expenditure). As for redemption behaviour, usage frequency and numbers of credit cards showed significantly positive effects. This study has important implications for both scholars and credit card issuers. Consumers’ responses towards loyalty programmes need more evidence from developing markets and companies should dedicate more resources to understand the involvement process of their targets, as well as the design of programmes.     

The effect of control priming on irresponsible financial behavior

Debt has reached staggering levels among North Americans. Unfortunately, there is deficiency of research that investigates effective means of helping consumers control their debt. We examine how control priming changes consumers’ irresponsible financial behavior. We show that control priming reduces credit card spending and intentions to take credit card risk. We also demonstrate that consumers who score high on self-esteem are more likely to benefit from control priming while those who score low on self-esteem show a backlash effect.     

Time to Cut Up Those Debit Cards? Effect of Payment Mode on Willingness to Spend

Financial industry data indicate that consumers increasingly prefer debit cards over credit cards, especially as a means of enforcing financial self-discipline. Given prior research suggesting that credit cards act as spending facilitating stimuli, this move toward reduced credit card use would appear to be in the right direction. Ironically, however, the same logos that were implicated in facilitating spending with credit cards are the logos that appear on debit cards. In what should serve as an eye-opener to consumers, it is found that exposure to debit card logos does result in an increased willingness to spend, similar to credit cards.     

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.     

Brand prominence and social status in luxury consumption: A comparison of emerging and mature markets

This research investigated how the use of a prominent versus subtle branding strategy and status consumption affect consumers’ intention to buy luxury products across emerging and mature markets. To this end, an experimental study with consumers in India (emerging market) and the United States (mature market) was conducted. The results suggest that Indian (but not U.S.) consumers with a higher status consumption tendency are more willing to purchase prominently branded luxury products than subtly branded ones. On the other hand, U.S. (but not Indian) consumers with a lower status consumption tendency are more willing to purchase subtly branded luxury products than prominently branded ones. The paper discusses these findings, highlights their contribution to luxury research, and illustrates their practical value for luxury companies interested in targeting mature and emerging markets.     

Intrinsic factors affecting impulsive buying behaviour—Evidence from India

The goal of this research is to examine the effect of five intrinsic factors, namely, personality, culture, materialism, shopping enjoyment tendency, and impulsive buying tendency on impulsive buying behaviour. Using structural equation modeling, responses from 508 consumers in the different parts of India’s National Capital Region were analysed and results showed that while the three constructs of materialism, shopping enjoyment tendency, and impulsive buying tendency had significant positive relationship with impulsive buying behaviour, the cultural construct of collectivism and two personality constructs of extraversion and conscientiousness too showed significant relationship.The study assumes immense significance because it not only presents useful insight regarding the behaviour of Indian consumers in an ever developing retail sector in India, but also considering the fact that this is the first time an attempt has been made to assess the simultaneous impact of these five intrinsic factors on impulsive buying behaviour. Importantly, the findings also revealed that the influence of intrinsic variables on impulsive buying behaviour did not vary across gender.     

The Employment Act, 1980

A research model was developed to explain the probability of households using major types of credit cards, and empirical tests were performed for differences among the utilisation behaviours of five types of credit card. Many differences were revealed, and support was shown for the overall hypothesis of differences among the types of credit card with regard to utilisation behaviour. These demonstrated differences implied that credit grantors and researchers should recognise that the behaviour of consumers in using credit cards depends on the type of credit card. Separate analyses by type of card are warranted so that the true effects of selected consumer characteristics can be examined.     

Credit: the consumer perspective

The U.K. has seen a considerable expansion in the use of credit during the 1980s. Although the majority of consumers are able to manage their use of credit there are many whose borrowing leads to hardship. There are various ways in which the availability of credit can be controlled but there is a high degree of reluctance to do so, both on the part of government and the credit card companies. A mechanism for assessing credit worthiness and a properly resourced system for assisting those who experience difficulties through using credit is needed. The social and economic consequences for consumers of the overuse of credit cannot be underestimated.     

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.

     

Credit card behavior,financial styles,and heuristics

The paper makes four contributions. First, the paper provides new data and findings about credit card usage segmentation in respect to spending and borrowing behavior. Second, it sets the new findings against the backdrop of the newly emerging literature on financial literacy. A great variability occurs in financial literacy across American consumers. Third, the paper describes fast and frugal heuristics aimed to help consumers make effective, and in some cases better, budgeting decisions when they use credit cards. Fourth, the paper describes the introduction of a new set of online financial tools, offered by a large credit card company, which consumers are now using to make decisions about their spending and borrowing, and links these tools to the heuristics under discussion. Fast and frugal heuristics are likely to be especially valuable to consumers with low confidence in their online skills. Notably, 25% of credit cardholders report that they have low confidence using online technology to manage their finances, with the corresponding figure being 44% for those most at risk.     

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 sustainability of consumer credit growth in late twentieth century Australia

This article reports on a study about the use of credit by Australian consumers between 1980 and 1996. Considerable growth in the use of credit by consumers was coupled with an increasing reliance on credit to finance purchase transactions as consumers’ other sources of purchase finance became depleted. An increasing number of consumers were found to be experiencing difficulty meeting their debt‐ servicing commitments. These results suggest that the growth in use of consumer credit that has occurred in Australia may not be in the long‐term interest of consumers or the economy.     

Does Religion Affect the Materialism of Consumers? An Empirical Investigation of Buddhist Ethics and the Resistance of the Self

This paper investigates the effects of Buddhist ethics on consumers’ materialism, that is, the propensity to attach a fundamental role to possessions. The literature shows that religion and religiosity influence various attitudes and behaviors of consumers, including their ethical beliefs and ethical decisions. However, most studies focus on general religiosity rather than on the specific doctrinal ethical tenets of religions. The current research focuses on Buddhism and argues that it can tame materialism directly, similar to other religions, and through the specific Buddhist ethical doctrines of the Four Immeasurables: compassion, loving kindness, empathetic joy, and equanimity. The empirical results show the following: (1) Buddhism reduces materialism directly and through some of the Four Immeasurables, and (2) despite the doctrine of non-existence of the self, positive emotions toward the self are still present, and the self absorbs the effects of Buddhist ethics on materialism. The latter finding suggests a “resistance of the self” that is coherent with the idea of a consumer who leverages the self to go beyond it.     

A structural analysis of value orientations,price perception and ongoing search behaviour: a cross‐cultural study of American and Korean consumers

The direct impact of value orientations on price perceptions has not received extensive investigation in previous research. We examined the impact of materialism, individualism and collectivism on American and Korean consumers’ perceptions of the positive and negative roles of price. We also examined the influence of price perceptions on consumers’ ongoing search behaviour. Using a structural equation modelling technique, results indicated that these value orientations positively and negatively influenced perceptions of the positive and negative roles of price, which in turn influenced ongoing search behaviour. Implications and future research directions are delineated.     

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.     

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.