College Students and Credit Card Use: The Role of Parents, Work Experience, Financial Knowledge, and Credit Card Attitudes

This study examined the influence of parental interactions, years of work experience, financial knowledge, credit card attitudes, and personal characteristics on college students’ credit card behaviors (i.e., number of cards and amount of debt). Based on data collected across seven universities (N = 413), we found that students who had parents who argued about finances, were juniors/seniors, and were comfortable making minimum payments were the most likely to have $500 or more in credit card debt and two or more credit cards. In addition, number of credit cards held was the only dependent variable influenced by gender and fear of credit cards. These results highlight the importance of early interventions in the life of college students including involving parents as positive role models.     

Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China

With the help of a commercial bank in China, we studied consumer credit card debt behavior² in correlation with demographics, attitude, personality, and credit card features factors. The study was conducted by using mail-in questionnaires, which were sent to credit card holders who was using or had used either revolving credit or petty installment plans. According to regression functions, we found that demographic variables and credit card features had limited explanatory power compared to attitude variables and personality variables. Specifically, we found that revolving credit use and petty installment use were closely related to attitudes about credit cards, money and debt. Risk attitude efficiently predicted petty installment use; however, it did not correlate with revolving credit use. Personality factors of self-control, self-esteem, self-efficacy, deferring gratification, internal locus of control and impulsiveness were significantly correlated with revolving credit use; on the other hand, sensation seeking, impulsiveness, and deferring gratification were correlated with petty installment use. We also found that some credit card features easily led to an “illusion of income” that facilitated consumer credit card debt behavior.     

Credit Card Ownership Among American High School Seniors: 1997–2008

The purpose of this study is to investigate the rise in credit card ownership rates among high school seniors in the United States. It uses the Jump$tart Coalition’s cross-sectional surveys from 1997 to 2008 to analyze the determinants of credit card ownership among high school seniors. These results show that students with credit cards are less financially literate than students without credit cards; and students with credit cards in their own names are almost twice as likely to work during the school year for money. These findings help make a case for improved financial education and training, and institutional changes that limit the pervasive issuance of credit cards to high school students.     

Credit Card Practices of Vietnamese and Laotian Newcomers to Canada: A 10-year Longitudinal Perspective

This is the first study to follow a group of refugees (N = 647) for 10 years to identify how they acquired and used credit cards, a novel product to them. Acculturation to Canadian credit card use occurred; there was a dramatic increase in having cards (from 4% to 77%). The main reason initially for not having a card was knowledge barriers; later on, attitudinal, such as preferring to pay cash. Variables accounting for credit card use after 4 and 10 years were: being employed with higher income, having a checking account, being married, younger, and more fluent in English. Changing from not having to having a credit card was fostered by remaining (or becoming) married, employed, and good in English.     

NEW EVIDENCE ON CREDIT CARD BORROWING AND REPAYMENT PATTERNS

A new dataset allows researchers to examine patterns of credit card use for both borrowing and payoff. This article addresses changes in these behaviors for different birth cohorts by estimating cohort‐adjusted age profiles for debt and payoff rates based on a time series of cross sections. Younger consumers are found to be borrowing more heavily and repaying at lower rates than older generations. The accumulation of credit card debt is found to continue over the lifecycle. This has implications for recent changes in laws governing the credit card industry. Increases in minimum required payment rates are examined and are found to increase actual payoff rates more than proportionately. (JEL D12)     

WHY DO PEOPLE USE DEBIT CARDS: EVIDENCE FROM CHECKING ACCOUNTS

Debit cards are the fastest growing consumer payment method despite being more expensive and less versatile than credit cards. In this paper, we investigate some of the oft cited explanations for debit card use. Checking account data shows that debit card use is correlated with age, pay frequency, overdrafting, and ATM use, but not income, gender, crime, or expenditure. The data contain some signs that debit cards might be used as a method of spending restraint. (JEL D14, G21, L14)     

Effects of Family Life-Cycle Stages on Consumer Debts

Using the 1998 Survey of Consumer Finances (SCF), this study examined factors related to two types of consumer debt: installment debt and credit card debt. To address the limitations of the conventional life-cycle hypothesis, the study incorporated ability, willingness, and need to borrow, and prudence as well as life-cycle stages in the conceptual framework. The results of the double-hurdle model showed that life-cycle stages, willingness and ability to borrow, prudence, and the need to borrow were significant factors affecting installment debt and credit card debt. Based on the results, implications for financial counselors and educators, lenders, consumers, and policy makers are discussed.     

TIMING IS MONEY: DOES LUMP‐SUM PAYMENT OF THE EARNED INCOME TAX CREDIT AFFECT SAVINGS AND DEBT?

Earned income tax credit (EITC) benefit income is paid out in a lump‐sum around tax time. We investigate whether savings and debt among EITC‐eligible families reflect the timing of payments. Using nationally representative, individual‐level data on self‐reported debt and savings outcomes, we search for differences in monthly behavior between EITC‐eligible and ‐ineligible households. We find evidence that credit card and unsecured debt holding among EITC‐eligible families reflects the timing of the EITC, with low debt levels at tax time relative to other months. Debt holding among ineligible families with children does not exhibit a similar pattern. We find limited evidence of intrayear patterns in savings behavior among EITC‐eligible families. (JEL D14, I38, H23)     

Age, debt and anxiety

What is the association between debt and anxiety? Is the relationship between age and anxiety in part due to financial debt? Recently there has been a renewed interest for the reconceptualization and measurement of socioeconomic status that moves beyond the standard education, occupation, and income. This paper uses credit card debt and stress regarding debt to examine the relationship among age, debt, and anxiety. Using data from a 1997 representative sample of more than 1,000 adults in Ohio, results show that anxiety does increase with the ratio of credit card debt to income, and with being in default; but credit card debt accounts for little of the age-anxiety association. Stress regarding overall debt does explain some of the age effect. In addition, stress also explains some of the effect of the credit card debt to income ratio, and all of the effect of default on anxiety.     

Effects of informational nudges on consumer debt repayment behaviors

This study examines the impact of billing disclosure changes mandated by the Credit Card Accountability Responsibility and Disclosure (CARD) Act on consumers’ decisions about their monthly credit card debt repayments. The study uses data from a nationally representative monthly survey of households from June 2006 through December 2011. Estimates show that the CARD Act disclosures were effective in inducing households to increase the amounts of credit card debt paid off each month, with the strongest effects seen in the proportion of households who pay off balances in full each month. Among households who continue to carry credit card debt, there is minimal evidence of repayment behavior changes due to CARD. Results are robust to controlling for selection into credit card ownership and to a variety of time controls and subsample periods.     

ON INTERGENERATIONAL IMMOBILITY: EVIDENCE THAT ADULT CREDIT HEALTH REFLECTS THE CHILDHOOD ENVIRONMENT

We examine the persistence of inequality through credit health, linking administrative records from several sources. We document that childhood circumstances are strongly predictive of financial fragility in adulthood, with credit scores among those from disadvantaged backgrounds nearly 100 points lower and 20 percentage points more likely to qualify as subprime. We find evidence this relationship reflects differences in human capital and debt management; still, neither appears to fully explain the relationship. Our results reveal another dimension along which childhood circumstances persist into adulthood and could mean the many settings that evaluate individuals based on their credit health help reinforce inequities.(JEL D12, E24, I32)     

Increased Urge to Gamble Following Near-Miss Outcomes May Drive Purchasing Behaviour in Scratch Card Gambling

Previous research into scratch card gambling has highlighted the effects of these games on players’ arousal and affective states. Specifically, near-miss outcomes in scratch cards (uncovering 2 of 3 needed jackpot symbols) have been associated with high levels of physiological and subjective arousal and negative emotional evaluations, including increased frustration. We sought to extend this research by examining whether near-misses prompted increases in gambling urge, and the subsequent purchasing of additional scratch cards. Participants played two scratch cards with varying outcomes with half of the sample experiencing a near-miss for the jackpot prize, and the other half experiencing a regular loss. Players rated their urge to continue gambling after each game outcome, and following the initial playing phase, were then able to use their winnings to purchase additional cards. Our results indicated that near-misses increased the urge to gamble significantly more than regular losses, and urge to gamble in the near-miss group was significantly correlated with purchasing at least one additional card. Although some players in the loss group purchased another card, there was no correlation between urge to gamble and purchasing in this group. Additionally, participants in the near-miss group who purchased additional cards reported higher levels of urge than those who did not purchase more cards. This was not true for the loss group: participants who experienced solely losing outcomes reported similar levels of urge regardless of whether or not they purchased more scratch cards. Despite near-misses’ objective status as monetary losses, the increased urge that follows near-miss outcomes may translate into further scratch card gambling for a subset of individuals .     

Financial Knowledge and Credit Card Behavior of College Students

This study examined the relationship between financial knowledge and credit card behavior of college students. The widespread availability of credit cards has raised concerns over how college students might use those cards given the negative consequences (both immediate and long-term) associated with credit abuse and mismanagement. Using a sample of 1,354 students from a major southeastern university, results suggest that financial knowledge is a significant factor in the credit card decisions of college students. Students with higher scores on a measure of personal financial knowledge are more likely to engage in more responsible credit card use. Specific behaviors chosen have been associated with greater costs of borrowing and adverse economic consequences in the past.     

Shopping without pain: Compulsive buying and the effects of credit card availability in Europe and the Far East

The financial consequences of compulsive buying are obvious given the large amount of debt reported by compulsive buyers in many studies. Credit cards allow consumers to borrow money very easily in order to satisfy their desire to purchase. In two web-based experiments, we found that compulsive shoppers often overspent and were rarely influenced by price. Their overspending was partially mediated by their excessive use of credit cards. Furthermore, compulsive shoppers were less conscious of their budgets, especially when they used credit cards. They also obtained more pleasure from accomplishing a shopping trip and were more distressed by delayed product delivery than normal shoppers. Finally, compulsive shoppers in Taiwan were more compulsive than those in the United Kingdom: they displayed many of the above symptoms of compulsive buying more saliently.     

Rocking the Vote: Using Personalized Messages to Motivate Voting among Young Adults

We examined a nationwide effort to encourage young adults to vote in the 1996 U.S. presidential election. During the year before the election, individuals were given the chance to sign and self-address one of two kinds of postcards pledging to vote; these cards were mailed back to the individuals within 2 weeks prior to the election. It is important to note that some individuals completed pledge cards that prompted them to provide their own reason for voting by completing the sentence, "I will vote because ______," whereas other individuals completed pledge cards that did not contain this sentence prompt. We conducted a large-scale survey of individuals who filled out pledge cards and determined that receiving a pledge card with the sentence prompt had a positive influence on voting. Moreover, this effect was found above and beyond demographic and psychological predictors of voting. Implications of these findings are discussed.     

Government Debt and Excess Sensitivity of Private Consumption: Estimates from OECD Countries

This article investigates the role of government debt in the degree of excess sensitivity of private consumption to current disposable income. Because this type of excess sensitivity is generally attributed to liquidity constraints, this amounts to a test of the impact of government debt on the amount of credit extended to individuals. Controlling for financial liberalization we find that, for a panel of OECD countries in the 1990s, a high government debt leads to more excess sensitivity. This result supports the idea that a high government debt induces lenders to tighten credit conditions. Our findings survive several robustness checks.     

Parental transfer of financial knowledge and later credit outcomes among low- and moderate-income homeowners

It is well established that acquiring financial skills during childhood is linked with better savings in adulthood. Little is known, however, about the relationship between parental teaching of money management early in life and children's financial outcomes in adulthood. This is particularly true for low- and moderate-income (LMI) households. Using data from Community Advantage Program survey data for 2,389 LMI homeowners, we find that adults who report receiving high levels of money-management teaching in childhood from their parents are associated with higher credit scores and lower credit card debt in adulthood. We also find that the level of parental financial teaching influences the relationship between children's later educational attainment and credit scores. These findings suggest implications for initiatives promoting financial capability for parents and children.     

The person of the category: the pricing of risk and the politics of classification in insurance and credit

In recent years, scholars in the social sciences and humanities have turned their attention to how the rise of digital technologies is reshaping political life in contemporary society. Here, we analyze this issue by distinguishing between two classification technologies typical of pre-digital and digital eras that differently constitute the relationship between individuals and groups. In class-based systems, characteristic of the pre-digital era, one’s status as an individual is gained through membership in a group in which salient social identities are shared in common with other group members. In attribute-based systems, characteristic of the digital era, one’s status as an individual is determined by virtue of possession of a set of attributes that need not be shared with others. We argue that differences between these two types of classification technologies have important implications for how persons attach (or fail to attach) to groups, and therefore what kinds of political mobilization are possible. We illustrate this argument by examining contention over the use of gender as a variable in the pricing of risk in insurance and credit – two markets in which individuals directly encounter class-based and attribute-based systems of classification, respectively.

     

The Kids Say Project: Supporting Children to Talk about their Experiences and to Engage in Decision-making

Research and policy calls for hearing the voices of children and youth in out-of-home care and involving them in decisions about their own lives. The “Kids Say” cards were designed to facilitate this engagement, particularly with Indigenous children and youth. A feasibility study explored the extent to which the Kids Say cards were acceptable to young people, and prompted discussion about their lives and what is important to them. The study involved 47 participants, aged 7 to 18 years, from three cultural groups: Aboriginal n?=?20; culturally and linguistically diverse (CALD) n?=?10; non-Indigenous English-speaking n?=?17. The cards were found to be appealing to all three groups, and to facilitate child and youth voice. Findings also did not differ significantly according to gender or age. These preliminary findings indicate the potential value of appropriate practice tools to support children and youth to share their experiences and participate in decision-making.

IMPLICATIONS

• Engaging resources, such as the Kids Say resource, are potentially valuable in supporting practitioners to encourage children and young people to share their experiences and participate in decision-making about their own care and service needs.

• Training in creating safe sharing contexts for children and young people is essential. While emphasis is often given to gathering child voices, there is a need for at least equal emphasis on respectful adult listening.