Credit card attitudes and behaviors of college students

Credit card attitudes and behaviors of college students
Henry, Weber, and Yarbrough (2001), writing in this Journal, reported that many college students are living on the verge of a financial crisis. The purpose of this study was to further consider this assertion by examining college students' credit card use behavior and attitudes. A concurrent purpose was to test the factors associated with students' attitude toward credit cards. It was determined that, using a sample of 242 undergraduate and graduate students from a southwestern state university, Ethnic/racial background, academic level, credit card ownership, parents' credit card use, money ethic, and locus of control were associated with college students' credit card attitudes. Henry et al.'s assertion that students are vulnerable to a financial crisis was confirmed.
College students' use of credit cards has recently received increased visibility throughout the media (Hayhoe, 2002). Henry, Weber, and Yarbrough (2001), writing in this Journal, concluded that in addition to credit problems many students do not have a written budget, and of those who do have a budget few young people actually use it. They determined that university students "are vulnerable to financial crisis" (p. 246).
The staggering number of credit cards in circulation exemplifies this crisis, as does the number of cards carried by the average student. Currently, there are 1.3 billion credit cards in circulation, which, when averaged, equals about 12 cards per household (Sullivan, Warren, & Westbrook, 2000). The growth of credit cards on college campuses has tended to minor the credit saturation found in the general public (Xiao, Noring, & Anderson, 1995). More than a decade ago Churaman (1988) reported on college students' use of consumer credit. It was during this period that the banking industry began permeating the student credit card market in the late 1980's (Manning, 2000). Churaman reported that in 1985-86 over half of all college students had bank credit cards. This figure has been on the rise as some 70% of all undergraduates at four-year colleges have at least one credit card today.
The increased number and type of credit cards on university campuses has seen an explosive level of growth in the past decade, with most credit card companies targeting college students. What remains still unanswered is what effect credit card circulation among college students has had on the financial attitudes, behaviors, and outcomes of young Americans.
The purpose of this paper is to extend the research originally reported by Henry et al. (2001) by reporting findings from a study that was designed to examine college students' credit card use behavior and identify the factors associated with credit attitudes. This research also identifies the factors related to college students' attitudes toward credit cards. Attitude toward credit was assumed to be explained with demographic characteristics, socioeconomic characteristics, background factors, and psychological factors.
Methodology
A survey data collection method was used. Questionnaires were distributed to randomly selected classes offered in the College of Human Sciences of one large university in a southwestern state. From the total of 250 questionnaires that were distributed, 242 questionnaires were returned. The survey instrument included questions regarding debit card usage, credit card usage, attitudes toward credit, financial knowledge, demographic characteristics, and other personal finance attitude and behavior.
Attitude toward credit was measured with nine questions adapted from a study by Awh and Waters (1974). Each item was measured with a 4-point Likert-type-type scale that ranged from strongly agree (4) to strongly disagree (1). A summated index was created for use in the multivariate analyses. Those who had higher scores on the attitude toward credit scale were assumed to have a more positive credit attitude. Possible scores ranged from 9 to 36. The mean score for the respondents was 20.94. The reliability coefficient of the index was .8256 (Table 1).
In this study it was hypothesized that credit card possession and use is most likely influenced by four factors: (a) demographic characteristics (e.g., age, gender, marital status); (b) socioeconomic factors (e.g., income, education, and other indices of socioeconomic status); (c) background characteristics (e.g., life events, childhood experiences); and (d) psychological characteristics (e.g., locus of control, self-esteem, materialism)(Churaman, 1988; Davies & Lea, 1995; Tokunaga, 1993). A total of five demographic characteristics were examined: Age, gender, ethnic/racial background, marital status, and birth order. Age was measured at the interval level and considered to be a continuous variable. Gender, ethnic/racial background, marital status, and birth order were dummy coded. Those who were male, White/Caucasian, never married, or first and the only child were coded 1, otherwise, all other categories were 0.
Income, housing situation, employment status, and education were included as socioeconomic factors. Student personal income was measured with an interval scale, which ranged from none to above $10,000. Housing situation was dummy coded. Those who lived off-campus were coded 1 (78.5%), otherwise 0. Employment status was also dummy coded. Those who were employed either full or part-time were assigned 1, otherwise 0. Two education measures were used in this study: Academic level and academic major. Academic level was considered an interval level variable: (1) freshman, (2) sophomore, (3) junior, (4) senior, and (5) graduate student. Academic major was dummy coded. Those who were enrolled in a human sciences college (i.e., child development, family studies, food and nutrition, family and consumer sciences education, restaurant and hotel management, merchandising, family financial planning, and interior design) were assigned 1, otherwise 0.
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