ukessays.com http://www.ukessays.com/essays/finance/credit-card-among-ipta-and-ipts-students-finance-essay.

php
Credit card among IPTA and IPTS students
2.1 Introduction
The purpose of this chapter is to provide a review of the researchers that has been published in areas
related to the topic. This chapter will begin with a discussion of dependent variable which is usage of credit card
among IPTA and IPTS students. Along the way of discussion, some important issues and benefits are discussed
to support the dependent variable. After that, it followed by the independent variables that affect the usage of
credit card among IPTA and IPTS students which are demographic, knowledge, kind of purchases and attitudes.
Furthermore, sub-variables also included under one of the independent variables. Both independent and
dependent variables will be discussed in details in this study.
Besides, the research literature, along with related theory, will help to examine the potential relationship between
the variable in this study. An understanding of how all the variables relate to each other is very vital as it will help
researchers to understand how the perceptions and behaviors towards credit card usage among the students.
The review also provides support to the objectives of this study and as guidance to the studys design. Finally, it is
followed by a chapter summary.
2.1.1 Credit Card Adoption
The review of the literature shows that many studies on credit card adoption are in the context of United state,
Japan, and Australia. In this 21st century, credit cards have almost replaced the use of cash and personal cheques
among societies. Credit cards are increasingly used to pay all the types of commodity regardless of the price (
Fianu et al., 1998; Soman, 2001 ; Chakravorti, 2003). Despite this, according to Durkin (2002), about 41 % of bank
type credit card holders indicated that they owned three or more different credit cards. In addition, year 2001,
there are about 72% families in 48 US states have their own credit cards, and about 20 % of them confirmed they
had asked for additional credit cards for their own.
Based on the main use of credit cards usage and it benefits, credit card users can be categorized in two groups
which are convenience users and revolvers (Lee and Hogarth, 1999). Convenience users tend to employ credit
cards as an easy payment, typically pay their balance in full while receiving the statement. On the other hand,
revolvers utilize the card as mode of financing and choose to pay interest charges on the unpaid change.
According to Zhao, Zhao.Y, and Song. I (2009), credit card lending is risky for card issuers because the loans are
usually not secured by any assets. Furthermore, unlike traditional loans, which are discrete, typically involve an
individual analysis of credit risk, and have a specific maturity date, credit cards invite a continuous flow of
borrowing with limited subsequent checks of financial status after the initial issuance of the card. It is so important
to card issuers to identify consumer risk types as early stage to prevent risky consumers from borrowing too much
before default appears and customize their marketing strategies to different the customer groups.
Besides, credit cards also serve as an open-ended, easily available credit source (Lee and Kwon, 2002). When
the credit cards consumers use the credit cards as mode of financing when they compete with bank loans and
others forms of financing (Brito and Hartley, 1995). Credits cards allow their customers to borrow their credit limit
without transaction costs. By this way, it can attract many consumers to pay high interest on outstanding credit
card balances, rather than taking the time to apply for a loan with a lower interest rate. As a result, credit cards
account for a substantial and growing share of customers debt (Canner and Luckett, 1992).
As the credit card is vital part of the financial and payment systems, it also used as a convenient payment
medium in place of cash and checks and as a means of obtaining short-term revolving credit. According to
Abdul-Muhmin, A.G. (2007), the study found that in some rich country or known as developing countries, the
credit card ownership is so widespread among consumers that penetration rates are approaching 100 per cent.
Credit cards also play important role in many part of developing world. For example, in Saudi Arabia, the credit
card market has grown significantly over the past decade.
On consumers side, they have different ways for holding the cards. Through Kim,F.
Dunn, and E.Mumy (2005), consumers have also different incentives to incur the
time and psychological costs for searching the lower interest rates. By lower interest
rates charges on credit card, this will make the consumers to use the card more
frequently as their daily needs. Many consumers also value the uncollateralized
credit lines for making purchases when their income is not arrive yet even at
relatively high interest rates. Brito and Hartley (1995) mentioned that because of the
limited alternatives to short-term uncollateralized credit, the demand for such credit
may be fairly in-elastic with respect to price. Yet, Ausubel (1991) suggested that
consumers may not even consider the interest rate when making the purchases because they do not intend to
borrow for an extended period when they make purchases. However, they may change their minds when the bills
arrive.
2.1.2 Credit Card Adoption among Students
As nowadays world, the use of credit cards among students has received much attention. According to Warwick &
Mansfield (2000) indentified that credit card companies aggressively target college students because they are
expected to have higher than average earning power and are seen by credit card companies as a desirable
market. However, United State General Accounting Office (2001) further explanation with policy makers is
concerned about this aggressive marketing of credit cards to the students. On the other words, credit has been
linked to multiple problems in the college students such as anxiety, dropping out of school, filling for bankruptcy
and even most important one is suicide ( Mannix, 1999; McMurtrie, 1999).
Feinberg (1986) mentioned that the more credit cards, the more likely the students are to spend more. This is
because the students do not really understand on the financial implications of having a large numbers of credit
cards and also carrying a large number of credit card debts. Furthermore, Kidwell and Turrisi (2000) noted that if
students do not have enough money or they shy to borrow the money in their checking account to use cash, write
a check, or use debit card, they were more likely to acquire a new credit card as well.
In a recent study of current college students and post-grads, credit cards were the third highest category for brand
loyalty (Hein, 20003). This issue has contributed to a new form of college credit on campuses today. Between 70
percent and 80 percent that of all college students have at least one credit cards (Nellie Mae, 2005; Pinto and
Mansfield, 2006). Nellie Mae (2005) further explains that college students carry an average monthly outstanding
balance of $2,169 and graduate with credit card debt in addition to student loans. On the other hand, Pinto and
Mansfield (2006) also estimated that fifty-nine percent of those who have student loans also have credit card debt.
Since it is legal in most states for a 18 years old to obtain a credit card without parental consent or proof of
employment, students may come to campus and obtain credit cards for the first time with little guidance on how to
manage their debt (Lyons, 2004).
In addition to that, Faber & OGuinn (1988) stated that increased in spending has been associated with
increased debt. For example, there are forty-two percent of former undergraduate students who participated
in the 2002 National Student Loan Survey reported that student loan debt was a major reason for not
attending graduate school ( Baum & OMalley, 2003). When the students find their
credit card spending to be out of hand, they maybe force to leave the school in order
to work part time as to pay their debt. Gallo (2003) mentioned that one large
Midwestern institution was losing more students to credit card debt than to academic
failure. The more serious things are some others have gone so far as to commit
suicide because of credit card debt (Goff-Parker, 2006).
Last but not least, credit card usage among college-age consumers is consistent
with todays consumption-centered trend toward the rise of abstract forms of
payment. Through Bernthal, Crockett and Rose (2005), the use of plastic is
everywhere and credit cards have become a part from it as a lifestyle-facilitating technology. Yet, consumers can
also utilize credit cards for their own advantage. To use a credit with more efficiently, consumers must bear in
mind that they are encouraged to pay their balances in full at the end of the month to reduce the amount of interest
charged and to keep balances from getting higher. Also, Manning (2000) defined 2 types of credit card users
which are convenience users and installment users. Convenience users are individuals who pay their credit card
balance in full each month, considered to be using their card wisely. On the other hand, installment users were
described as individuals who carry a balance month-to-month, using the card as an installment loan.
2.2 Demographic
Gender
Gender has been found to be an important factor as to decide credit card debt of college students. According
Armstrong and Craven (1993) examine the college students credit usage and payment practices and found that
women had more credit cards than men do, but actually had lower balances on those credit cards, compared to
men. A reason has been offered by others researcher. That is, women understand their credit cards better than
their male counterparts, consistent with a study on students knowledge about debt from financial aid (Hira and
Brinkman, 1992). Furthermore, they also found that student respondents, who were female, married, and older
had a better understanding on their financial situations. Similar facts came from a study about the influence of a
consumer education course on college students attitudes and knowledge. Carsky, Lytton & McLaughlin (1984)
found that female and older students to show positive change in their behaviors, following achievement of a
consumer education course.
Beside that, Hayhoe, Leach, Turner, Reuin, and Lawrence (2000) also mentioned that another study regarding
gender and credit card usage was carried out. They tried to identify the differences in spending habits and credit
use of college students. Their path analysis model showed that there was a significant difference in the financial
practices and financial stressors of male and female students. Lyon (2004) also found the same similar results in
the recently study. But, Munro (1997) made a different argument in her masters thesis with the coefficients on
gender and the numbers of the credit cards owned were insignificant in predicting credit card payment practices in
the logistic model.
Lyon (2004) also identified that financially at-risk college student; females do not appear to hold excessive
amounts of credit card debt because they do have a problem making payments on time. Yet, Hayhoe et al.
(2000) also reported that in term of making minimum payments there are no gender differences.
Race
Race also plays an important role in predicting the credit card debt of college
students. According Armstrong and Craven (1993), race is to be significantly related
with the number of credit cards a student owned. On average, white students owned
3.4 cards per person compared with black students only with 2.3 cards per person.
International students have the fewest cards with an average of 1.4 cards. In related
studies, black students were found to feel more pressure when dealing with their
financial situation compared with their white counterparts (Archer & Lamnin, 1985;
Murphy & Archer, 1996).
Furthermore, similar studies found that black students to be more worried about paying their monthly credit card
bill compared with the white students (Brobeck, 1992). Munro (1997) also commented that white students are
better at managing their debt and using their cards than those black students. Lyon (2004) also found that white
students are more likely to make their credit card payments than black students do.
In the study of Louisiana college students, according Lawrence et al. (2003) noted that 45% of the card holders
were Caucasian, 23% were African American, 19% were Asian, about 6% were Hispanic and the remainder were
Native American or other race and ethnicities. This percentage reflected the race and ethnic distribution in the
overall student body, suggesting that ethnicity was not a factor in distribution of credit card holders on the campus.
Age
As for the age, there is limited literature on college students ownership of credit cards. These because most of the
research divides people into some several groups. As compared to grade students to teenagers, grade students
are more to be able to learn money management practices more efficiently from their parents (Garmen & Bach,
1995). This follow by a college student will be more likely to be poor money manager if their parents are poor at
managing their money. According to Brobeck (1992), he studied the effect of age on attitudes towards credit cards.
In addition, he also found that younger card holders worried about paying the minimum monthly credit card bills.
Specially, high school students in college wanted to understand more about their rights as credit card holders, as
well as how to access information on their credit history.
According Schwarz (2003), age plays a very vital role in the consumer decision making process. Based on the
particular age group, consumers lean to support their decisions on different sets of values and as a result they will
behave differently (Peterson, 2007). Previous studies also examined that the influence of age as a continuous
variable. And, through Hamilton and Khan (2001) found that support that age has a negative relationship with
outstanding credit balances. However, Kim and DeVenay (2001) found that age follows the life-cycle hypothesis
pattern (Ando& Modigliani, 1963) and as a result it affects relationship with outstanding credit balances. Kim and
DeVenay further said that the probability of being a credit card revolver increases until around age 37 and it will
decrease after that onwards. This finding suggest that younger consumers are faced with financial obstacles, such
as lower-paying and high expenses of raising a family, so there is a stronger incentive to borrow. Based on all of
these findings, it is rational that older consumers are more likely to be credit card convenience users than the
younger ones.
Academic year
Senior students have been found that spend more money and show less concern over their budget as
compared to the freshman (Anderson, Camp, Kiss, Wakita, Weyeneth &
Fitzsimmons, 1993). Furthermore, through Munro (1997) found that freshmen and
sophomore who acquired cards before college will make a better use of their credit,
compared to minorities, juniors or seniors , graduate students, those who acquired
their cards during college, and those owned more than three cards. In particularly,
how near one perceives their entry into the labor force, this will lead to the greater
their use of credit.
On the other hand, some researchers seem to have the opposite view on these
methods. In one such study, upper-level students and those who lived off-campus
exhibited greater knowledge about their credit cards and general finances than lower-level students and those
who lived on-campus (Danes & Hira, 1986). As a result, academic year demonstrates mixed results on college
students credit card debt.
2.3 Knowledge of financial issue
The ability of manage personal finances has become very important in nowadays. People ought to know that they
must plan for long-term investments for their retirement and also for their childrens education. On the other hand,
they must also decide on their short-term savings. Such as do some borrowing for a vacation, a down payment for
a house, a car loan, and other big-tickets items. A part from that, they must also know how to manage their own
medical and life insurance needs. According to Markovich and De Vaney (1997) found that male college seniors
scored higher on financial knowledge test than female students. They did not explore gender differences in
financial practices. As we know that male is more use to understand about financial knowledge because they are
less spending that women do. Men also were more satisfied with their financial situation than women (Lytton and
Grabe, 1997).
There are two lines of research on financial knowledge. In one group of studies, participants answered questions
related to general financial knowledge (Markovich & DeVaney, 1997; Chen & Volpe, 1998; Avard, Manton, English,
& Walker, 2005; Jones, 2005). The questions that used in these studies related closely to the topics typically
covered in an introductory personal finance course. And the second group of the studies used specific financial
knowledge as a proxy for financial literacy (Warwick & Mansfield, 2000; Joo et al., 2003; Braunsberger et al.,
2004). These studies generally asked individuals to report particular facts about their own credit cards.
Beside that, Chen and Volpe (1998) administered a 36 question survey dealing with various aspects of personal
financial knowledge to college students. The average score of the correct responses was close to 53%, not a
passing score on a typical grading scale. They noted that significant degree-type and class rank effects. Business
majors tended to score better than non-business majors. Also, students with more years of college had higher
financial knowledge scores than students with fewer years of college. Other researchers have also found that
college freshmen have low scores on tests of financial knowledge. Avard et al., (2005) found that college freshmen
were able to answer only about 35% of financial knowledge question correctly. Jones (2005) reported that on
average, incoming freshmen gave correct answers only 56% of the time by using a six-question scale of credit
knowledge to evaluate financial knowledge.
Furthermore, the ability of cardholders to report his or her annual percentage rate (APR) is one of the way to
measures of specific financial knowledge. Through Durkin (2000), Hogarth and IIilgent (2002) noted that
awareness of APRs has grown significantly in 1968. In spite of to this method, research also indicates that
few consumers seem to understand how to use the APR to make effective financial
decisions (Lee & Hogarth, 1999). Same results as Chen and Volpe (1998)
discovered that 67% of the college students surveyed could not correctly answer a
multiple-choice question regarding the APR.
As according to Liebermann and Flint-Goor (1996) suggested that previous
knowledge of an issue is one of the most essential factors that influencing
information processing. Also, the results differ in depending on how financial
knowledge has been measured, what behaviors have been studied, and what
populations have been analyzed (Mandell, 2004; Peng, Bartholomae, Fox, &
Cravener, 2007).
Findings of some studies suggest that life-cycle stage may also influence the perceived salience of individual
financial instruction. Mandell (2004) stated that having a savings account has been associated with higher savings
knowledge among high school students. This because by savings account can make the students get to
understand more on their budgeting. Through this way, they will not simply spend that will exceed their means.
However, using of credit cards has been related with lower credit knowledge among college students as well. By
using the credit cards, students can also spend whenever they want to. With simply spending will make their
knowledge of credit also become weaker. Besides that, Peng et al. (2007) also noted that both high school and
college students that finished a personal finance course displayed improved savings rates following a personal
finance course.
2.4 Kind of purchases
Nowadays, college students are more likely to spent especially female college students. As every day, shopping
mall will be fully with females than males. And probably that student in their third year or final year pretend to had
higher level of money than the students which is in foundation or second year (Davies and Lea, 1995). This is
because that final year students have more wide knowledge on how to spend and they will spend more than the
smaller ones do. For example, the kind of purchases that usually college students do are; clothing, electronics,
entertainment, travel, educational expenses, online transaction, and automobile expenses. Probably clothing is
the most purchase among college students (Armstrong and Craven, 1992; Makela et al.1993; Sholten, 1981).
Clothing is the most favorite goods among college students due to trendy trend improve from day-to-day. On the
other part, students also choose to use online transaction as one kind of their purchases by using credit card.
According Kim and Park (1999) showed that benefits of internet transactions such as time savings and
convenience will enhance consumer purchase intention by the internet.
According Xiao and Noring (1993), in an examination of reasons for saving, found that female heads of household
were more likely to save for daily expenses; they appeared to focus on the most basic level of financial need. In
contrast, male heads of household were more likely to save for retirement, for their children, and for growth. There
was a similar pattern for level of resources in the study, suggesting that female-headed families saved only for the
most basic needs because of their limited incomes. On the other hand, Williams (1991) discovered that men are
less likely than women to have a budget, keep financial records, plan order and sequence of spending, set aside
time for financial management work, pay finance charges, carry through financial plans, and shop for best buys. In
other word, women were less likely than men to estimate expenditures, to figure net worth, and to always
coordinate activities.
2.5 Attitude
Usually attitude somehow can define as positively related to behavior. According to Ajzen & Fishbein (1997)
revealed that some evidence for weak relations between attitude and behavior
appearing in the 1930s motivated many researchers to question the assumption that
attitude influences behavior. For example, people who have good attitude leads
them act with a nice behavior on themselves.
Through social psychology, there are at least 3 different kinds of attitude theories,
and each of them recommends a different relationship between attitude and
behavior. Fishbein & Ajzen (1975) proposed theory of reasoned action that assumes
behavior can be predicted from attitude. This theory mention that when people make
choices, they form their attitudes based on their beliefs about attributes of an object.
In other words, people also form a subjective probability to estimate the attributions of an object and then they
influence their evaluations of those attributes along a dimension from excellent to bad.
Festinger (1957) proposed another theory that is cognitive dissonance theory. This theory is to reduce the
cognitive dissonance occurring when peoples belief system and their behavior are not consistent; they tend to
change their belief system to make it able to explain for their own behavior. Thus, in this case, the formation of
attitude or belief is based on behavior.
Furthermore, Krugmans (1965) indicated that hierarchy of effects, this show how the relationship between attitude
and behavior would differ depending on whether people have high or low involvement and the object is distinctive
or not. Behavior is based on attitude if people have high involvement and the object is distinctive. On the other
hand, attitude is based on behavior if people have low involvement and the object is distinctive. As a result,
attitude and behavior is not related if people have low involvement and the object is not distinctive. For example, a
distinctive object would be an automobile while object that not distinctive can be a notebook.
As previously studies, Xiao, Noring, and Anderson (1995) were among examine the college students attitudes
towards the credit card usage. They also found that students attitudes towards credit cards most likely to be male,
living at campus, and majoring in consumer affairs. Students with the credit card are usually utilize their cards
more frequently and also were signed by their parents all the bills they had paid. Through the researchers,
effective credit program must commence for those students to find the way to change their attitudes about credit
so that they will understand more on how to use their credit more usefully.
Beside that, Joo, Grable, and Bagwell (2001), also examined the factors related with students attitudes towards
credit cards as well as students credit card usage. They use sample of 250 students from university in southwest
state, found that 70.7 % of the students at least own one of their credit card, and more than 10% holding their five
or more that that credit cards as well, and almost half of the students paid their credit card bills in full payment
each month, and lastly 10% only of the students make the minimum payment each month. As conclusion, the
positive attitudes towards credit cards is come from those students who had the cards, in a lower academic year,
their parents also having the cards too, and their parents who do not have any problems on their financing system.
Money attitudes
According to Yamauchi and Templer (1982) had developed a psychometric money attitude scale that
measured five factors related to the attitudes individuals hold towards money. These factors were power/prestige,
retention time, distrust, quality, and also anxiety. They also found that money attitudes to be independent of a
persons income.
However, there are also some related research has been conducted on credit and money attitudes. This can see
through Tokunaga (1993) studied two groups of credit card users, those who had
experienced severe financial problems and control group who had not experienced
such problems. Attitudes towards money were measured using a scale similar to the
one developed by Yamauchi and Templer (1982). Tokunaga found that serious users
of credit cards viewed money as a source of power/prestige, experienced more
anxiety about financial matters than the control group, and were less concerned
about the retaining money as well.
Formans 1987 Money Madness Scale was found in need of further work to improve
its reliability and validity (Fumhum, 1996). Yet, Tang and Gilbert (1995) define that
Tangs 1992 Money Ethic Scale also displayed marginal reliabilities for five of its six sub scales. The most
common ground among the above money attitude scales was found between Yamauchi and Templers 1982
Money Attitude Scale and Fumhams 1984 Money Beliefs and Behavior Scale (MBBS). Both scales produced
dimensions relating to money as a tool of power, budgeting/retaining money, anxiety regarding money, and money
obsession. This obsession with money was a component of the power-prestige dimension of the Yamauchi and
Templer scale. And also Fumhams 1984 MBBS included a sixth factor, which measured the subjects perspective
on how intimately ones efforts are tied to his or her financial well-being.
Risk
Greater information detail with products of high complexity can be associated with greater perceived risk as well
as the need for more control too. Risk is often viewed as an antecedent of involvement especially when the price
is high and the consumers risks losing money. For the strong competition of credit card lenders in the 1990s
induced them to propose credit cards to riskier households. According Black and Morgan (1999) stated that credit
card holders became more risky customers from time to time. And, they also mentioned that in year 1995
cardholders were poorer, single status, carried high balances credit card, and had a high debt ratio.
As nowadays world, the impressive use of credit card among college students has make some concerned that
students credit card behavior is putting them at bigger risk for high debt levels and also the misuse of credit after
their graduation. These concerns also effect to the rising of college costs and also the recent economic slowdown.
According Crook (2001) found that consumers demand less debt when they are relatively risk averse. The study
also recommended that consumers may be cautious of paying more for purchase as a result of additional charges
of interest. On the other hand, Duca and Rosenthal (1993) showed that when consumers are risk averse, there
are many financially-struggling families demand more household debt, such as credit cards. This is because some
of the consumers may scare of committing to a formal bank loan, such as housing loans and also automobile
loans that make them feel the investment are too high for them.
Furthermore, Hazembuller et al. (2007) also found that credit card revolvers as a credit card user that who
had low-risk tolerance. The researchers further explains that consumers with low-risk tolerance are more
likely to feel that credit cards provide low-risk credit chances while consumers with high-risk tolerance are
less likely to view and use credit cards as debt because they feel they have better
opportunities with other loans. As conclusion, high levels of risk tolerance may have
a significant positive impact on being a convenience user.
In addition, risks of the credit card among students incur also when they utilize the
card for the online transactions. According to Kim and Park (1999) they showed that
benefits of internet transactions such as time saving and convenience enhance
consumer purchase intention through the internet. On the other hand, risks
associated with internet transactions such as delivery risk and payment risk
discourage consumers from buying through the internet. This previous research
suggests that if consumers perceive the risks related to product quality, purchase method, payment, and service
with regard to online buying, they may circumvent the internet and choose offline channels for product purchase
even after they have searched information through the internet.
Nowadays, people live in times of increasing dynamism in the natural, social and business environment, and as a
result the discipline of risk management is in the ascendant (Smallman, 1996). Risk measurement has been a
controversial issue (McCarthy, 2000). The value of Internet commerce to the customer is an important construct for
academics and practitioners alike. From this point of view, when a firm uses the internet to engage in E.C, it
exposes itself to security risks, who fall into three general categories: client/server risk, data transfer and
transaction risk, and virus risk. Basically, the term risk defined as the probability of a negative outcome occurring
from some course of action (Liles, 1981). Hertz and Thomas, (1984), continued to define risk as a lack of
predictability about the outcome of a problem, or to a lack of predictability about the consequences of a decision.
Security and privacy issues are particularly important in the B2C area, though privacy protection measures are
constantly being improved. Researchers have not examined the effects of risk across all stages of the consumer
buying process.
Perceived control
According to Ajzen (1991) said on theory of planned behavior, a persons behavior can be predicted by his/her
perceived control of performing desired task. Control is achieved through relevant resources and opportunities for
performing a given behavior (Madden, Ellen, & Ajzen, 1992). Therefore, the more resources and opportunities
individuals think they can have, the greater their perceived control over the behavior.
One important resource is information and knowledge about credit options. Credit knowledge can be obtained by
self-education, such experiences and analyses, or by referring to outside sources for advice. The most common
sources of advice are financial experts (Elmerick, Montalto, & Fox, 2002), friends and family (Zimmermann, 2004),
and mass media outlets (Ford, 1990). Gathering credit information is likely to increase consumers perceived
control of the accuracy of their decisions.
Furthermore, some previous studies have attempted to profile consumers who are the majority use
particular source of advice. According Elmerick et al. (2002), consumers who turn to financial experts for
advice are young and have little knowledge about the subject (Lin & Lee, 2004). Further declaration of Lin &
Lee that consumers who educate themselves by past experiences and mass media
outlets, such as literature, television, radio, internet, and word-of mouth, tend to have
high-risk tolerance, a college education and also income above $100,000. Thus, it is
predicted that households that use financial experts and family as a source of credit
advice are less likely to be convenience users, while households that use mass
media and existing knowledge as a source of credit advice are more likely to be
convenience users.
In addition to that, another way of gaining control over credit card usage is by
actively shopping for credit (Hazembuller et al., 2007; Kerr & Dunn, 2002). Actively
shopping around allows the individual to compare different options and choose the option that is most suitable for
them. Even though convenience users do not have to worry about credit cards interest rates, their motivation for
shopping for credit cards includes no annual fees, merchant acceptance of the card, and rewards (Furletti, 2003).
As the result, more shopping that is done on credit is convenience user, and less shopping for credit is done is
more likely towards a revolver.
Besides, Kim and DeVaney (2001) mentioned that a significant relationship between attaining more education and
credit card usage. On the other hand, Hazembuller et al. (2007) stressed the importance of education in having
control over credit card balances. Therefore, it is predicted that individuals with higher levels of education will be
more likely to be convenience users of credit cards.
Lastly, recent research indicates that there is a significant relationship between household income levels and
credit card usage (Baeck & Kim, 2005; Hazambuler et al., 2007; Kerr & Dunn, 2002). However, the results of these
studies were mixed. Kerr and Dunn, as well as Baeck and Kim, suggested that those higher income were more
likely to be convenience users. However, higher of level incomes also increase individuals perceived control, it is
predicted that those with higher household income will be more likely to be convenience users of credit cards.
Share This Essay
To share this essay on Reddit, Facebook, Twitter, or Google+ just click on the buttons below:
submit
Request Removal
If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays
website then please click on the link below to request removal:
Request the removal of this essay.
More from UK Essays