Convenience Use of Credit Cards

Link Title: Convenience Use of Credit Cards

Rutherford, L. G. & DeVaney, S.A. (2009). Utilizing the theory of planned behavior to understand convenience use of credit cards. Journal of Financial Counseling and Planning Education, 20(2), 48-63.

Brief Description: This research investigated factors influencing the convenience use of credit cards (i.e., regularly paying the balance in full instead of paying only a portion of the balance). It was framed by the Theory of Planned Behavior, which states that behavior can be predicted by intention, which includes a person’s behavior, subjective norms, and perceived control. Data about 3,476 households from the 2004 Survey of Consumer Finances were studied. Convenience users were more likely (than those with revolving balances) to believe that using credit was bad, have longer financial planning horizons, and shop for credit. They also were older, college educated, and had higher incomes.

Implications: Consumers who view credit favorably tend to use it excessively without recognizing the consequences of credit mismanagement, such as high interest rates and overspending. Thus, financial educators and advisers need to increase the public’s understanding of problems related to excessive use of credit. Compared to households whose heads had a high school education, only those whose head had a college degree were significantly more likely to be credit card convenience users. However, many young adults don’t graduate from college. Therefore alternative ways to influence financial behavior are needed. The researchers recommended providing financial management education in middle and high schools.