Differences in Spending Habits and Credit Use of College Students
Hayhoe, Celia Ray, Leach, Lauren J., Turner, Pamela R., Bruin, Marilyn J., Lawrence, Frances C., The Journal of Consumer Affairs
In a study of college students, affective credit attitude (feeling about using credit cards) and gender influenced college students' credit purchasing. Affective credit attitude predicted the purchase of clothing, electronics, entertainment, travel, gasoline, and food away from home. Females purchased clothing; males purchased electronics, entertainment, and food away from home. Gender was more influential in predicting financial management practices than was affective credit attitude, with female students employing a greater number of financial practices. A path analysis model showed gender differences in the relationship between financial practices, financial stress, affective credit attitude, and the number of credit cards with a balance.
The use of credit cards to finance consumer purchases has become, unarguably, a way of life. In 1996 consumers charged one trillion dollars in products on their credit cards (Brobeck 1997). This heavy use of credit cards may be due in part to aggressive marketing by the credit card industry that has increased the availability of credit cards. In 1995 over two and one-half billion credit card solicitations were mailed, an average of twenty-five per household (Brobeck 1997).
For the marketers of both consumer goods and credit cards, tapping into the college student market makes good business sense. Research has shown that socialization as a consumer begins in infancy, with children making their first independent purchase at the average age of eight years (McNeal and Yeh 1993). By the time they reach college, full-time students represent over sixty billion dollars in buying power (Punch 1991). This group has many expenses associated with college and moving away from home and usually only a small income, making credit very tempting.
Marketers realize that if they can attract a student in college, there is a high likelihood that the student will remain a customer. Between 1988 and 1990 the number of undergraduates with credit cards increased by more than one-third (Punch 1991). Currently, between 70 percent and 80 percent of college students have at least one credit card and most have an average of three cards (Armstrong and Craven 1993; Hayhoe and Leach 1997; Jover and Allen 1996; Punch 1991; Xiao, Noring, and Anderson 1995).
Understanding gender differences in use and management of credit cards, particularly among college students, has important implications. Understanding types of purchases for which college-aged men and women use their credit cards will give marketers, consumer economists, and researchers more information to better understand this highly targeted market segment. The identification of gender differences may also indicate that educators need to closely examine individual differences in learning about money management and credit use. Understanding the factors that influence students to carry a balance on multiple credit cards may indicate to financial counselors and educators the areas to stress in devising programs in this area.
The first purpose of this study is to examine the impact of gender on credit card use and financial management practices. The second purpose of the study is to examine the impact of the affective use of credit on purchasing and financial management behaviors. How does one's emotional feeling about credit influence what is purchased and how finances are managed? Does it vary by gender?
The third purpose of this study is to introduce a model that depicts the interaction of variety of purchases, financial management practices, financial stressors, affective credit attitude, and number of credit cards with a balance (see Figure 1). It is hypothesized that the model symbolized in the following equations will be significant:
Number of Credit Cards with a Balance = [[beta].sub.1]variety of purchases -- [[beta].sub.2]financial practices + [[beta].sub.3]affective credit attitude + [[beta]. …