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International Journal of Consumer Studies ISSN 1470-6423

Buying behavior, social support and credit card indebtedness of college students
Jeff Wang1 and Jing J. Xiao2
1 2

Department of Marketing, City University of Hong Kong, Kowloon, Hong Kong Department of Human Development and Family Studies, University of Rhode Island, Transition Center, Kingston, RI, USA

Keywords College student, compulsive buying, credit card, debt, social support. Correspondence Jing Jian Xiao University of Rhode Island, Transition Center, Kingston, RI, USA. E-mail: doi: 10.1111/j.1470-6431.2008.00719.x

This research examines three factors that are associated with college students’ credit card indebtedness. Using survey data, we find that college students’ buying patterns and social networks affect their credit card indebtedness. Specifically, students with a tendency towards compulsive buying are more likely and those with greater social support are less likely to hold credit card debts. Depth interview data further illustrate the contexts and causes of overusing credit cards as well as solutions for their debt problem. This research sheds light on reasons why college students fall into credit card debt and suggests strategies for helping them use credit cards wisely.

The credit card debt syndrome in college has drawn increasing attention from academics and policy makers in America. Growing number of college students are having trouble managing their debt (Hayhoe et al., 2000; Lyons, 2004) and they may stumble into serious indebtedness later in life. This research begins with a basic question: What kinds of students are more likely to carry revolving credit card balances? While demographics and socioeconomic backgrounds influence credit card debt, little is known about effects of students’ buying behaviour and social networks. We examine this question in the light of two consumption factors, namely compulsive buying and impulse buying, and one social factor, namely social support. These factors are important to college students because they are simultaneously gaining more purchasing freedom and experiencing drastic social network changes at this stage of their lives (Arnett, 2004). To understand college students’ credit card indebtedness, a pertinent question is how they spend with their cards. College students use their credit cards for a variety of purposes ranging from basic needs to entertainment, from emergencies to routine personal expenses (General Accounting Office, 2001). Some research highlights students’ problematic spending patterns (Hayhoe et al., 2000) and other research finds that college students use cards to pay for basics like school supplies, room and board, and even tuition because of lack of financial support from elsewhere (Manning, 1999, 2000). Incidental expenses also account for a large portion of college students’ living costs, and they may be less willing to ask for help with these expenses than tuition and fees (Manning, 1999). The new consumption freedom and obligations bring more challenges to college students. Credit cards, to many a new and exciting tool, grant them more spending power but also more financial responsibilities.

College students, like anyone else, are ultimately accountable for what they spend, how much they consume and how they pay for their purchases. Parents may sever financial ties – either fully or partially – with their children after they finish high school, forcing these young adults to rely more on themselves. If their credit cards are not co-signed by parents, these young adults bear full legal responsibility for paying back their balances. Using credit cards, however, can be risky because improper use would result in paying high interest rates and penalties such as late-payment fees and over-the-limit fees. Nevertheless, 83% of college undergraduate students in the US have credit cards, an average of 4.25 cards each in their own name (Davidson, 2004). The average outstanding balance on their credit cards was as high as $2169 in 2004, although it seems to have decreased slightly in the past decade (Nellie Mae, 2005). In terms of credit card payment, more than 80% of college students pay their own credit card bills, but only 21% pay their balances in full each month (Nellie Mae, 2005). Although a majority of students handle their cards responsibly, this rapidly growing group of credit card users has a low degree of financial literacy and faces foreseeable risks (Palmer et al., 2001). College students are experiencing a unique transition period in their lives. Financially, they are going through the process from financial dependence to independence. They may have learned consumer skills in cash management at home before coming to college but it is in college where they start to learn how to use credit because they are just old enough to be able to sign legal contracts including credit card contracts (Xiao et al., 2007). Research on credit card use of college students has commenced (Xiao et al., 1995; Hayhoe et al., 2000; Joo et al., 2003; Lyons, 2004). Nevertheless, more research is needed to better understand why college students hold credit card debts. Students’ buying habits are directly related to their spending and are likely to affect

International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd

Money is often necessary to participate in activities. p. 2006). Third. Compulsive buyers may be more likely to feel this obligation and transfer this pressure to their consumption patterns. Compared with previous studies. 2004). compulsive buyers may dislike their behaviours. we use both quantitative and qualitative methods to explore the research questions. College students are likely to be confused about interest and are prone to underestimate interest when there is a longer repayment period (Lewis and van Venrooij. and less wealthy students are more likely to choose the minimum monthly payment scheme to deal with their debts (Lewis and van Venrooij. 2000). Thus. Even though college students can have their own credit cards now. the more likely s/he carries a credit card balance. 1992). Moreover. 1989. they may overspend their limits and carry hefty monthly balances despite knowing the outcome of their overcharges. Compulsive buyers feel obli- gated to purchase things. 1998). found that female students are more likely than male students to have difficulty making credit card payment (Lyons. but consequently worsen their financial status. acquire material goods. repetitive purchasing that becomes a primary response to negative events or feelings’ (O’Guinn and Faber. compulsive buyers feel ‘a sense of conflict’ over their spending (Hanley and Wilhelm. but they do not differ in their practices of paying interest and making minimum payments (Hayhoe et al. however. Literature review Some research links students’ demographic and socioeconomic backgrounds to their credit card attitudes and behaviours. Hirschman. Some research has linked compulsive buying with consumer financial attitudes and behaviours. First. 1992. they may know little about how to use their cards correctly. Although compulsive buying gives an individual short-term positive reward. Xiao College students’ credit card debt their use of credit cards.J. They routinely buy things to alleviate their negative feelings and charge their credit cards when they cannot afford to pay cash. Wang and J.. They treat money as a status tool and enhance their self-esteem with purchases (Hanley and Wilhelm. Another line of research investigates how credit knowledge. it results in long-term negative consequences. College students who are compulsive buyers living with remote parental supervision and under constant peer pressure are more likely to depend on credit cards for spending in excess of their means. some patterned buying behaviour can have long and significant impact on their financial situations. we consider the research questions in the context of lifespan transition of college students. guidance and support seem to be crucial. 2000). 1998). These individuals may temporarily elevate their self-esteem with spending. Compulsive buyers may realize the negative consequences of credit cards but they lack the ability to establish and maintain discipline to constrain their buying. students’ attitudes towards credit cards may not reflect their real financial situations. Their social environment is also important in influencing their consumption and money management. Compulsive buyers are likely to have more credit cards and use credit cards more irrationally than normal consumers (O’Guinn and Faber. on credit card indebtedness among college students. In this study. they turn to credit cards. we explore the effects of three factors. Their status gain leads to their financial loss. Students from backgrounds of greater income are more knowledgeable about credit cards but also carry higher credit card debts (Davies and Lea. Credit cards allow them to shroud their actual financial condition and appear acceptable in peers’ eyes. impulse buying and social network.J. In credit card usage. Roberts. and attend events so that they can obtain desired peer approval and group affiliation. we have the following hypothesis. They may continually use credit cards to appease their compulsivity.. 1995). Young adults may spend beyond their financial capacity because of peer pressure. Specifically. Lyons. often powerful and persistent urge to buy something immediately.. Students from minority ethnic groups have been found to be more likely to have revolving credit card debt than the general student population (Munro and Hirt. H1: The greater a college student’s compulsive buying tendency. often beyond their economic means. Grable and Joo. students with low socioeconomic status are more likely to be burdened by credit card debt given their low financial capacity. 2004. 155). 1989). compulsive buying. Some research estimates that while only a small proportion of college students are compulsive buyers. Compulsive buyers face great difficulty in controlling their buying and cannot stop engaging in their spending patterns despite recognizing and realizing its detrimental effects (O’Guinn and Faber. 1989. no research has empirically tested if compulsive buyers are more likely to carry credit card debt. There are high levels of stress and social pressure for college students to behave in line with the peer groups they aspire to belong to (Moffatt. Impulse buying ‘Impulse buying occurs when a consumer experiences a sudden. 17). male students are found to have more favourable attitudes towards credit cards (Xiao et al. impulse buying and social network. Second. When they do not have money. 1992). p. but they are compelled to repeat their behaviours. 2001). 1995). Therefore. For instance. One study. many more have tendency to buy out of compulsivity (Roberts and Jones. students may not necessarily engage in more prudent fiscal practices (Munro and Hirt. College is an arena where students define new roles and identities. For instance. They do not necessarily require material acquisition. 3 International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . 1998. However. 1995). we examine compulsive buying. Overall. That is. which may affect credit card debt of college students but are not empirically tested in previous research. experiences and attitudes are associated with students’ credit card practices and satisfaction. However. a favourable credit attitude is found to be positively related to the purchase of leisure goods by college students and the credit card balances carried as a result of such purchases (Hayhoe et al. but they need to alleviate their anxiety or tension through buying. Hypotheses Compulsive buying Compulsive buying is defined as ‘chronic. even with greater knowledge about credit and finances. 1989. 1995) than female students. the present study has three features. They spend in order to deal with psychological desires and not necessarily to assuage a desire for the material acquisition. Paradoxically.

1989). When young adults leave home. Social support College students are in a transition from home to school and from dependence to independence (Moffatt. Credit cards may even accelerate the process and speed up the gratification of buying because there is no need to count cash or write a check. p. Therefore. For example. 1987. 306). Also.. may grow into an uncontrollable amount over time. they can also learn how to handle balances when they accrue. Some press articles report that almost 90% of shoppers occasionally make purchases on impulse (Welles. including their financial behaviour. causes credit card debt among the sample group.. group definitions and obligations (Becker et al. asking for assistance. as small as it might be. The desire to have the item is alleviated by the purchase. International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . We intend to find whether impulse buying. Also. 1998. Those who have adequate guidance. Both buying patterns involve mixed emotions during and after the purchase. 2003). often concurrent with a feeling of excitement and urgency. a behavioural pattern. It is different from unplanned buying because it involves an experiential urge to buy. Family communication has been found to greatly affect young people’s socialization process (Moschis. Some may enjoy credit’s buying power and purchasing freedom but do not know or ignore the potential consequences. 1987. Their changing self-concept is turbulent in the midst of changes in social support and geographic relocation. Impulse buying may result from transient self-control failure (Baumeister. Some research suggests that parents’ views about credit influences children’s successful credit use (Tokunaga. young adults feel more secure if they have some reliable people with whom they can communicate and share advice (Bryant. In college. and young adults reconsider to what extent they can or should rely on previous sources. One characteristic of impulse buying is that people tend to succumb to their buying impulses even though they are aware of the potentially negative consequences (Rook. Impulse buying is a common experience for American consumers. For example. although the process is often difficult. 2002). Impulse buying can cause negative consequences for consumers. A revolving balance on credit cards. This suggests that parents’ involvement and supervision exert a positive influence on their children’s credit card use. engage in impulsive purchases frequently in their shopping trips (e.. 2001). They aspire to grow 4 more mature and independent. 1987). they are likely to handle life difficulties and better manage their life. parental involvement in students’ acquisition of credit cards significantly reduces credit card balances later on (Palmer et al. the likely consequences of their spending..g. Impulse buying is an immediate experience. For example. the financial consequences are delayed because of payment schedules.College students’ credit card debt J. Impulsive buyers are driven by emotions such as excitement and pleasure whereas less impulsive buyers largely rely on utilitarian considerations. 170). H2: The greater a college student’s impulse buying tendency. impulse buying usually occurs ‘without pre-shopping intentions to buy the specific product category or to fulfill a specific buying task’ (Beatty and Ferrell. p. Students who aspire to have more independence and forfeit previous support are especially at risk. which increases the likelihood of unintended and undesirable outcomes’ (Rook and Fisher. 1968). while simultaneously building networks in a new environment. Those with little or no social support may get stuck with their finances and trapped by the penalties of credit cards. including their finances. they often live in a new and complicated network of social relations. Support from strong social networks is beneficial to young adults.. Impulsive buyers use credit cards as a convenient and quick means for spending and an easy way to ignore. Generally. When impulse buying becomes habitual because of frequent occurrences over time. While parental impact begins to fade once their children are on their own. 2007). They need to forge new relationships with their parents and old friends. Beatty and Ferrell. Lacking close parental supervision. Their social support sources change greatly in college. stressful and even anxiety-ridden (Arnett. at least for the moment. They find credit cards useful in abetting their spontaneous desire for things. impulse buying comes from an acute loss of control when shopping and is a less severe problem for consumers. College students’ ability to cope with stressful life events is related to their levels of social support (Brissette et al. Most students live away from their families for the first time in their lives. It compels a consumer to buy a product at that moment instead of cautiously contemplating a purchase.J. the less likely s/he carries a credit card balance. advice and recommendations from their social networks are likely to manage their finances successfully. H3: The more social support a college student has. Wang and J. they tend to do so quickly and nonreflectively. they may be inclined to misuse the unprecedented spending power of credit cards and spend recklessly. An impulse comes on as a sudden urge that drives a person to a certain behaviour. Xiao The impulse to buy is hedonically complex and may stimulate emotional conflict. parents can still have major influences on young adults’ various life domains. 2002) and compulsive buying is chronic loss of control despite realizations by consumers. buyers are likely to overcharge their credit cards. the more likely s/he carries a credit card balance. 1998). the sudden decrease in parental supervision and consultation may cause drastic changes in their behaviour. 1989). Rook. Credit card management is a new subject to them. 1985). several studies find that a large portion of consumers. 1995. While nationally representative research on impulse buying is lacking. they can learn about credit card interest and penalties from more experienced users. Compared with compulsive buying. impulse buying is prone to occur with diminished regard for its consequences’ (Rook. ranging from 30% to 50%. impulsive individuals are more likely to misuse their credit cards (Pirog and Roberts. With sufficient social support and optimal coping strategies. and sharing feelings and concerns. 1986). 1993) and children’s credit card attitudes are associated with their parents’ credit card use (Joo et al. The urge to buy impulsively can be resisted if a person goes through full rationalization. Inadequate social support may cause college students to engage in problematic behaviour. 191). such as buying an item instantly without thought and without delay. Positive social support includes a broad spectrum such as seeking advice. p. Students whose parents co-sign their credit card applications are likely to have fewer credit cards and carry lower balances. 2004). ‘When individuals act on impulse.

Besides the focal variables in the hypotheses. In addition. Social support was evaluated by a six-item scale (Yi and Baumgartner. Three hundred and eleven students voluntarily participated in this study to receive extra credits for the course. using a scale (a = 0. 0 = no balance) and the results are presented in Table 2. Hypothesis 1 Compulsive buying is predicted to cause credit card debt. We included their parents’ annual income as an objective measure of economic status.02 No-debt group 22. 1995). p. We asked details of students’ credit card usage such as the number of credit cards (min = 1. One item in the original compulsive buying scale is termed ‘made only the minimum payments on my credit cards.013 Social support -0. The remaining questions generate acceptable reliability (a = 0. Survey results Both bivariate and multivariate analyses were conducted to test the hypotheses. P < 0. Xiao College students’ credit card debt A survey study Sample The survey study was used to test the links between the focal variables and credit card indebtedness as hypothesized. The analysis focused only on credit cards they held in their own names. Students with a credit card balance are treated as one group as opposed to those with no balance. immediately. unreflectively.008 Male (vs. In the present study. of which 45% were female.95 vs.001* 0.73) of Perceived Budget Constraints (Urbany et al. and kinetically’ (Rook and Fisher.’ This question is likely to be confounded with the dependent variable. Therefore. The independent variables are compulsive buying. max = $100 000. Table 1 ANOVA results (debt vs. we removed this question from the compulsive buying scale in the binary logit models. and 1% were African American. Impulse buying was measured by the Buying Impulsiveness Scale (Rook and Fisher. max = 18.174 Survey measurement: dependent variable To differentiate credit cards affiliated with their parents. Results of analysis of variance (ANOVA) are presented in Table 1. 5 Survey measurement: independent variables The Compulsive Buying Scale was used in this study (Faber and O’Guinn. 9% were Asian.02 7. Table 2 Logistic regression analysis of credit card indebtedness Independent variables Beta P-value Dependent variable: credit card balance (0 vs. a final sample of 272 remained. 306). 2004).05).69) to measure people’s compulsive buying tendency. The score of compulsive buying of the debt group is significantly higher than the no-debt group (25. Because previous literature has found differences in credit card usage in school years.J. median = 2) and total credit limit (min = $100.93). we selected a class taken mostly by juniors.80 15.63* 16. The study was anonymous and students’ identities were not recorded in the questionnaire.007* 0.207 Parental income -0. In the logistic model.285 Impulse buying -0. Wang and J. we treat compulsive buying as a continuous tendency ranging from low to high.057 Budget constraint 0. They are more likely than freshmen or sophomores to possess their own credit cards and carry credit card balances. 22. family income and gender as control variables. After removing questionnaires rendered unusable because of missing data. impulse buying and social support. It is a uni-dimensional construct (a = 0.82 *The coefficient is significant at P < 0.052.95 23. 16% were Latino.05. *The coefficient is significant at P < 0. Students were asked to sum up the total balances outstanding on their accounts after the last payment. Fortyfour per cent of the respondents had revolving balances on their own credit cards.61 8. confirming a positive relationship between compulsive buying and credit card indebtedness.29. Log likelihood in logistic regression A = 232. Our purpose was to compare these economic factors with the consumption and social factors as hypothesized. 1992. Both bivariate and multivariate analyses provided supportive evidence. The dependent variable is dichotomous: whether or not the student has a revolving balance on his/her credit cards. the relationship between compulsive buying and credit card indebtedness is significant (b = 0.78) that describes a consumer’s tendency to ‘buy spontaneously.. we also asked respondents’ their economic backgrounds. 69% were white.042* 0. 1995. we include budget constraint. their median age was 21 (range: 18–30).63 6.05. Per cent Concordant = 70. Therefore. female) 0. and use the scale (a = 0. see Appendix A). we identified their own credit cards and those affiliated with their parents.659 0.876 0. no debt group) Independent variables Compulsive buying Impulse buying Seek social support Budget constraint Parental income Debt group 25. median = $3000). The scale was developed to distinguish compulsive buyers from non-compulsive buyers. We also asked them to evaluate their budget conditions by International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . Participants in the survey study were a convenient sample drawn from an introductory class at a large state university in the US. which measures the extent to which people use their social networks to obtain advice and emotional support (a = 0. This profile roughly corresponds to the student population from which the sample was drawn. 1996). 1) Compulsive buying 0. ranging from $50 to $9000 (median = $875). Hypothesis 1 is supported.269 0.34* 7.J.69).95).6%.93* 21. Binary logit models were used to test the hypotheses on college students’ credit card indebtedness (1 = with balance vs.

especially credit card usage. Since the result of the logit model is more conclusive than the ANOVA. you got no money.06.27. The prediction is not supported by the ANOVA but supported by the logit model. Most of the time. and some have difficulty resisting the urge to buy. 6 Impulse buying is common among college students. The result is also supported in ANOVA. contexts and life events of college students and explore why they hold credit card debts. he did not plan to buy nor did he need the purchases. This student found himself caught by the products and could not resist buying when he was in the store. the evidence is mixed. 1997).21. and stuff like that. we randomly contacted undergraduate students from the university student directory and invited them to participate in an academic study.02 vs. One student talked about his buying habits in on-campus stores. In the next section. the less likely they carry credit card balances. Because the aim was to understand credit card indebtedness.’ he nevertheless pulled out his credit cards. Then. and then link them with their credit card usage. confirming that the more social support students have. The interview data can illustrate specific scenarios of students’ credit card use. In analysing 22 depth interviews. We find that budget constraint is likely to cause credit card balance (b = 0. follow-up questions were asked to probe the deeper meanings of informants’ responses.05) in the logit model. they were given a few qualifying questions. If they were interested.63) but in the logit model the relationship between impulsive buying and credit card indebtedness is not significant (b = -0. Specifically. Robert: You (the bookstore) have so many binders that I just bought that. Hypothesis 3 is supported. I didn’t even use it. The score of perceived budget constraint is significantly higher than the no-debt group (8. NS). I don’t know.01. After buying. He was aroused to take something spontaneously and refused to wait. Initial conversation was also used to create intimacy with the informants and prepare them for later in-depth questions. NS). In addition to the interview guideline. The interviews started with questions about the informants’ various life domains including school. Xiao Hypothesis 2 Impulse buying is predicted to cause credit card debt. he did not International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . Hypothesis 3 More social support is predicted to reduce the probability of credit card debt. only those who had revolving balances on their credit cards were selected. Wang and J. 21.College students’ credit card debt J. we illustrate informants’ experiences in handling their credit cards. However. individual observations were cross-analysed and compared to develop more general themes. Even after he warned himself that ‘you got no money. The guideline was used to generate further and deeper conversations with informants.04). All interviews were audio-taped and then transcribed verbatim to text for analysis. In contrast. Impulse buying. compulsive buying and credit card usage A qualitative study Sample The purpose of this qualitative study is to seek evidence about the causes. life trajectories. We also included gender of the respondent as a control variable and find no gender difference in the respondents’ indebtedness (b = 0. the respondent was assured of anonymity. Depth interview findings Control Variables We include budget constraint and parental income as measures of students’ subjective and objective economic resources respectively. consumption. we focus on impacts of consumption behaviour and social networks on their credit card usage.80 vs.05). just walk out of the store. Twenty-two students were interviewed and each interview lasted between one hour and a little over two hours. The urge to acquire things at that moment was so strong that he disregarded the consequences. social activities. His buying impulse drove him to get something before he could leave. He noted that his impulse buying became a routine. in which the relationship between social support and credit card indebtedness is significant (b = -0. usage of credit cards and payment of credit card balances. Interview method An interview guideline was developed (see Appendix B) to understand various aspects of informants’ backgrounds and to cover different stages of the phenomenon. Qualitative techniques were employed to gain a comprehensive understanding of college students’ backgrounds. 6. 1994). sometimes I just walk into a store and I feel like I have to get something. In the qualitative study. Then. Instead of just turning away and saying ‘okay. and he felt uneasy if he left a store without buying anything. In this way. Prior to each interview. Coming from a working-class family. he could not rationally explain his behaviour and usually regretted his purchases.’ I walk in and grab something and pay for it. Each informant was paid $20 at the end of the interview. social relationships and consumption behaviour. the focus switched to their financial situations. we went through the interview transcripts from indebted students several times to sort out the relevant and important details and separate them from tangential and unimportant ones (Spiggle. We also asked about their parents’ and friends’ roles in the process of credit consumption. P < 0.01.J. The score of impulse buying in the debt group is significantly higher than the no-debt group (23. parental income does not affect one’s credit card indebtedness (b = -0. including whether he had the money to pay for them. We sought to learn about their experiences with credit cards by including their acquisition of credit cards. convergent themes were extracted from the depth interviews and the general outlines of the interviews became apparent (Thompson. P < 0. They are surrounded by abundant material goods on and off campus. and told that all information provided would be used for research purposes only. NS). employment and family.

In a competitive social environment. she did not care at that moment when a sudden and strong force was pushing her. and she felt that credit card debt was a sensitive topic to discuss with acquaintances. One student’s credit card debt ballooned after she obtained eight credit cards without realizing the potential consequences. When I first moved out of my own family at 18. Her impulse drove her to spend more than she could afford. some students feel obligated to spend like their desired social groups. Some impulse consumption appears in college students’ social activities and entertainments. let’s go out and have some drinks and go do this and go do that. unless somebody you know tells you about it. Credit card’s detrimental impact. She went to parties because she regarded them as appropriate and necessary events to mingle with her peers. Wang and J. Some students find people in their new environment a more accessible and empathetic resource than 7 International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . Compulsive buying often occurs as a response to negative events or feelings (O’Guinn and Faber. Those lacking financial means quickly turn to their credit cards for peer-approved spending. I didn’t know how expensive things are. She never mentioned her debt to anybody because it was a sensitive and personal issue and because her debt situations might ruin her reputation and status among her peers. As independent as she wanted to be. Gradually. Students who come from less privileged families or have less monetary support from parents rely on credit cards to keep up with the ‘required’ consumption objects and lifestyles. So I got into trouble right from the start where I had a couple of credit cards. her spending impulse overpowered her conscience of money management. She wanted to be debt-free when she started medical school. They want more autonomy and privacy in their financial management and believe they can handle their finances on their own. Notably. however. When everyone can pull out a credit card to pay. but was compelled to engage with her friends and hide her money problems. This conscious evaluation of her current and future financial situations was contradictory with her spending behaviour in some of her social activities. so I don’t hang with those people as much because that’s what they do. College students find that they can avoid parental scrutiny and hide their financial situations with their credit cards. This student used her credit cards. they are likely to encounter problems when they manage credit and debt on their own. but also cut herself off from their guidance and support. Although she already had balances on her credit cards. her buying patterns mixed impulse buying with compulsive buying. Students may encounter difficulty. and frustration in their lives and turn to spending to alleviate such negative feelings. and I don’t so I don’t get to hang out with them as much. I didn’t know what to expect. this student worried about her credit card debt. . and had accrued $3500 in balances within a year. it’s Friday. She finally stopped using her credit cards after confessing to her parents. you just wanna go and do something fun and you know what? Here is my credit card and I don’t care if I put it on here. Lacking knowledge and experience.J. from parties to vacations. I’m gonna go out and have a good time tonight. Consumption is a significant symbol of one’s status. Some students spend not because they enjoy their purchases but rather to make themselves feel better. Oh. One student described her experiences when going out. Lisa: When it comes to be Friday. Xiao College students’ credit card debt have any allowances and lived with a modest budget.J. Compulsive buyers are more likely to enhance their self-esteem with purchases. From clothing to cars. She wanted to escape her academic pressure and reward herself by spending as she wished. she felt she could not miss those events in order to catch up with her friends. But credit cards made his impulse buying easier. she felt helpless and overwhelmed as she quickly accrued massive credit card debt. she ignored her financial capacity and the financial consequences. but are also influenced by their social networks and these social networks change drastically during college years. She planned to apply for medical school. They relinquished her credit cards and monitored her as she repaid her debt. never goes away. especially those approved by their desired social groups. I don’t have money to do that. As she said. The social norm in college emphasizes the ‘right’ consumption. When she left her parents and started living on her own. Spending with credit cards is unsupervised and their finances are kept unknown to their parents. in order to fit in. . and students are compelled to spend. sometimes using their credit cards. When you don’t have money in the bank account then here comes the credit card. With the help of credit cards. their economic backgrounds are hidden from the public. he quenched his sudden and powerful urge to buy. A certain level of spending and an appropriate way of consumption lead to acceptance among their peers. many young adults spend in a dangerous cycle of competition. While self-control is important. She started using credit cards with little understanding about credit. When she charged her credit cards. anxiety. Credit cards give all students a chance to taste the pie of luxury but simultaneously put many at financial risk. however. she not only walked away from the financial aid her parents could provide. Melissa: I used to go to parties a lot and used to go to the bars a lot. They leave their daily familial supervision and old friends and live with new people and in a new environment. and she understood that she would not make money for a long period of time. because they have money to do that. these students’ social networks are also crucial to their proper consumption behaviour and financial management. mostly for partying. probably much more powerful than academic achievement. Peer pressure drives college students to engage in compulsive buying. I don’t have money to just go out with them. he had accrued higher balances on his credit cards partly because of his frequent impulse purchases. 1989). One student told how she overcharged her credit cards and why she stopped. Social support and credit card usage Young adults’ courses of action are not only individually driven. Interestingly. You don’t really know a lot about budgeting. And now I don’t because I’m paying off all this. it’s like you’re always trying to catch up. This leads to status enhancement in their social circle. Over time. She experienced a lot of pressure in her studies and tried very hard to qualify for medical schools. . Some students may want guidance but feel reluctant to share their concerns and problems. She became worried about her finances as she was sinking deeper into debt. They want to have fun and enjoy the moment. Karen: It seems like once you get into debt. College students may intentionally avoid discussing money issues with their parents.

may also affect the indebtedness. Wang and J. Compulsive buyers may realize their problematic spending and dislike credit cards. Students should learn about symptoms of impulse and compulsive buying. both bivariate and multivariate analyses support that compulsive buying is associated with credit card debt. Lindsay: They [her friends] are some of the main people that were encouraging me to live more simply. Depth interviews with a sample of students who keep credit card balance revealed some causes. College is an important transition period in their lifespan from dependence to independence. this research demonstrates that sufficient social support decreases the likelihood of indebtedness. It definitely helped a lot and even just practically helping me. peers are a powerful source of social support given their equal position and similar experiences. Administrators should be Discussion By using both qualitative and quantitative data. 2007). but to be realistic about what I could afford. Our findings have implications for consumer educators. Some do that because they believe their parents will eventually intervene and bail them out. In a bivariate analysis. does not appear to be a significant predictor of credit card indebtedness in the logit model. I mean there wasn’t really anything that they could do about it because it was my problem and my debt. In contrast. University administrators can help provide a more financially friendly environment for their students. While it may be true that students from lower income families are more likely to have financial burdens. however. Quantitative data from a sample of college students in this study demonstrated two factors that are not documented in previous studies. Impulse buying. If parents only provide financial support but fail to communicate with and educate their children. Both quantitative and qualitative data imply impacts of buying behaviour on credit card indebtedness. however. namely that compulsive buying and social network may be associated with credit card indebtedness among college students. But they just encouraged me to be a better steward of my money and just to think more about what I was spending money on and not to live above my means.College students’ credit card debt J. analyse their own buying patterns and develop strategies to avoid problematic buying behaviour. In these courses. Peer education and interactions should be encouraged and expanded in which students teach each other financial knowledge and skills and learn lessons from others of dangers of misusing and abusing credit cards. Because peers share similar experiences and face similar difficulties. To help these young adults better manage consumer credit. If students can obtain prompt and adequate support. When she moved to a new town for college and got into financial difficulty. They helped her manage her finance. Depth interviews show that parents are a source of support and information about money issues. In addition. but some young adults are 8 International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd . Using the survey data. or related to. One student revealed the interplay between her spending and credit management and her friends’ support. Financially. especially when charging large amounts. which was more beneficial than simply giving money to her. and complexities of credit card indebtedness of college students. Xiao parents. university administrators. reluctant to draw on this source. Some students find sympathy among their peers and encourage each other to keep charging their credit cards. Inappropriate advice. Depth interviews reveal some contexts in which students engage in impulse buying. they start to learn how to manage credit and debt as they reach 18 years of age and are able to sign loan and credit card contracts. Therefore. contexts. such as visiting campus stores and participating in social activities. Credit cards may provide a convenient tool for consumers who have a strong tendency towards compulsive buying. programs that promote interactions between students and their parents to discuss financial issues should also be developed. it may alleviate short-term debt but will cause more harm in the long run. Financial educators who work with college students have many opportunities to teach students about the disadvantages of accumulating credit card debts and strategies to prevent compulsive and impulse buying. Conclusion and implications Credit card debt. but they may shun this assistance for more spending autonomy and freedom from obligation. the survey results showed that students with credit card balances are higher in their impulse buying than those without a balance. Living away from family for the first time in her life. we need to understand what factors cause them to incur debts. This research shows that family income is unrelated to students’ credit card indebtedness but the perceived budget constraint is associated with indebtedness. Such programs can be integrated in. the risk of holding credit card debt is reduced and they will be in a better financial position. Students from wealthy families may have access to parental resources. Formal and informal courses can be offered in which positive credit management behaviour are taught and practiced. can further damage their financial situations. and credit card company executives. they are more receptive to each other’s advice. she received support from friends that clarified her perspectives on spending and established a goal to pay back her credit card debt. Educators also need to coordinate with university administrators to develop financially friendly social networks for students to help them better manage their credit card use. Helping college students learn how to manage their debts and credit will have a long-term impact on their lives. Evidence from depth interviews suggests that peer pressure may cause college students to engage in compulsive buying with credit cards that results in the debt. students should be informed about the possible consequences of using credit cards. we demonstrate the potential impact of consumption patterns and social networks on college students’ credit card indebtedness. impulse buying. One possible explanation is that impulse buying may have an impact on credit card indebtedness but is not as strong as other factors such as compulsive buying. are new to young adults when they leave home and go to college. In addition. you know.J. as well as student loans and other types of debt.. but cannot spend without them and thus keep accruing more debt. consumer economics or personal finance courses or they can be organized through after school and community service activities. she obtained prompt and valuable advice and suggestions from her friends. Research indicates that parents have an important influence on money management of college students (Xiao et al. like coming up with a budget and learning how to designate how much money I can spend on these things. another buying behaviour. this research offers new reasons for indebtedness.

L. cannot make debt payment on time and always max out their credit card limit. Faber.C. M.D. which may affect their academic performance and life satisfaction. Our aim was to use this sample to explore some important factors that drive young adults’ usage of credit cards and accrual of credit card debt. USA.. Therefore. 155–179. 459–469. 37. & Bagwell.E. Journal of Retailing. Wang and J. In a sense. with a research grant to Jeff Wang.C. Washington. Hirschman. universities may not only provide special courses but also provide counselling for them to improve their credit management abilities. (1992) A clinical screener for compulsive buying. Baumeister. 56–80. (1998) Impulse buying: modeling its precursors. Inc. Executives should target these consumers with a goal of a long-term relationship and not only provide them opportunities to experience using credit cards but also help prevent their potential compulsive and impulsive buying with credit card.J. 40. 2004) indicates that a small percentage of students are at risk in credit card usage. 5–18.-H. 169–191. Credit card company executives should be aware that college students are new users of credit card. J. 332–352. A. Lewis. & Stephen E. S. (1992) The consciousness of addiction: toward a general theory of compulsive consumption. (2004) A profile of financially at-rick college students.G.F. Journal of Consumer Research.S.J.C. These efforts should be encouraged by university administrators. Credit limits should be set at a low level and increased slowly. Oct/Nov.. (2006) Student racial differences in credit card debt and financial behaviors and stress.R. T. 405– 419. Several universities. John Wiley & Sons. 670–676. College Student Journal. 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The current research dis- International Journal of Consumer Studies 33 (2009) 2–10 © The Authors Journal compilation © 2008 Blackwell Publishing Ltd 9 . may cause students to accumulate credit card debts. J. Geer. Journal of Economic Psychology. pp. Administrators can also encourage peer interactions to learn wise credit management knowledge and skills from each other. They are more likely to accumulate a large amount of credit card debt. (2002) The role of optimism in social network development. & van Venrooij M. 16. Bruin. 38. young adults are often given approval for spending regardless of their financial astuteness. Joo. Turner. C. United States General Accounting Office. DC. Student College Journal. Parents should be encouraged to more actively communicate with their children in college about financial issues. 28. So within debtors. 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