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
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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: xiao@uri.edu doi: 10.1111/j.1470-6431.2008.00719.x

Abstract
This research examines three factors that are associated with college students credit card indebtedness. Using survey data, we nd that college students buying patterns and social networks affect their credit card indebtedness. Specically, 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 inuence 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 Ofce, 2001). Some research highlights students problematic spending patterns (Hayhoe et al., 2000) and other research nds that college students use cards to pay for basics like school supplies, room and board, and even tuition because of lack of nancial 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 nancial responsibilities.
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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 nancial ties either fully or partially with their children after they nish 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 nancial 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 nancial 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

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College students credit card debt

their use of credit cards. Specically, some patterned buying behaviour can have long and signicant impact on their nancial situations. Their social environment is also important in inuencing their consumption and money management. Even though college students can have their own credit cards now, they may know little about how to use their cards correctly. Thus, guidance and support seem to be crucial. In this study, we explore the effects of three factors, compulsive buying, impulse buying and social network, on credit card indebtedness among college students.

Literature review
Some research links students demographic and socioeconomic backgrounds to their credit card attitudes and behaviours. For instance, male students are found to have more favourable attitudes towards credit cards (Xiao et al., 1995) than female students, but they do not differ in their practices of paying interest and making minimum payments (Hayhoe et al., 2000). One study, however, found that female students are more likely than male students to have difculty making credit card payment (Lyons, 2004). 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, 1998; Lyons, 2004; Grable and Joo, 2006). Students from backgrounds of greater income are more knowledgeable about credit cards but also carry higher credit card debts (Davies and Lea, 1995), and less wealthy students are more likely to choose the minimum monthly payment scheme to deal with their debts (Lewis and van Venrooij, 1995). Overall, students with low socioeconomic status are more likely to be burdened by credit card debt given their low nancial capacity. Another line of research investigates how credit knowledge, experiences and attitudes are associated with students credit card practices and satisfaction. 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, 1995). However, even with greater knowledge about credit and nances, students may not necessarily engage in more prudent scal practices (Munro and Hirt, 1998). Moreover, students attitudes towards credit cards may not reect their real nancial situations. For instance, 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., 2000). Compared with previous studies, the present study has three features. First, we consider the research questions in the context of lifespan transition of college students. Second, we examine compulsive buying, impulse buying and social network, which may affect credit card debt of college students but are not empirically tested in previous research. Third, we use both quantitative and qualitative methods to explore the research questions.

Hypotheses
Compulsive buying
Compulsive buying is dened as chronic, repetitive purchasing that becomes a primary response to negative events or feelings (OGuinn and Faber, 1989, p. 155). Compulsive buyers feel obli-

gated to purchase things, often beyond their economic means. They do not necessarily require material acquisition, but they need to alleviate their anxiety or tension through buying. Although compulsive buying gives an individual short-term positive reward, it results in long-term negative consequences. Compulsive buyers face great difculty in controlling their buying and cannot stop engaging in their spending patterns despite recognizing and realizing its detrimental effects (OGuinn and Faber, 1989; Hirschman, 1992). That is, compulsive buyers may dislike their behaviours, but they are compelled to repeat their behaviours. In credit card usage, they may overspend their limits and carry hefty monthly balances despite knowing the outcome of their overcharges. They may continually use credit cards to appease their compulsivity. Some research has linked compulsive buying with consumer nancial attitudes and behaviours. Compulsive buyers are likely to have more credit cards and use credit cards more irrationally than normal consumers (OGuinn and Faber, 1989; Roberts, 1998). They treat money as a status tool and enhance their self-esteem with purchases (Hanley and Wilhelm, 1992). Paradoxically, compulsive buyers feel a sense of conict over their spending (Hanley and Wilhelm, 1992, p. 17). They spend in order to deal with psychological desires and not necessarily to assuage a desire for the material acquisition. These individuals may temporarily elevate their self-esteem with spending, but consequently worsen their nancial status. However, no research has empirically tested if compulsive buyers are more likely to carry credit card debt. Some research estimates that while only a small proportion of college students are compulsive buyers, many more have tendency to buy out of compulsivity (Roberts and Jones, 2001). College is an arena where students dene new roles and identities. 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, 1989). Money is often necessary to participate in activities, acquire material goods, and attend events so that they can obtain desired peer approval and group afliation. Young adults may spend beyond their nancial capacity because of peer pressure. Their status gain leads to their nancial loss. When they do not have money, they turn to credit cards. Credit cards allow them to shroud their actual nancial condition and appear acceptable in peers eyes. Compulsive buyers may be more likely to feel this obligation and transfer this pressure to their consumption patterns. They routinely buy things to alleviate their negative feelings and charge their credit cards when they cannot afford to pay cash. Compulsive buyers may realize the negative consequences of credit cards but they lack the ability to establish and maintain discipline to constrain their buying. 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. Therefore, we have the following hypothesis. H1: The greater a college students compulsive buying tendency, the more likely s/he carries a credit card balance.

Impulse buying
Impulse buying occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately.
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The impulse to buy is hedonically complex and may stimulate emotional conict. Also, impulse buying is prone to occur with diminished regard for its consequences (Rook, 1987, p. 191). Impulse buying is an immediate experience, often concurrent with a feeling of excitement and urgency. It compels a consumer to buy a product at that moment instead of cautiously contemplating a purchase. It is different from unplanned buying because it involves an experiential urge to buy. Therefore, impulse buying usually occurs without pre-shopping intentions to buy the specic product category or to fulll a specic buying task (Beatty and Ferrell, 1998, p. 170). Impulse buying is a common experience for American consumers. Some press articles report that almost 90% of shoppers occasionally make purchases on impulse (Welles, 1986). While nationally representative research on impulse buying is lacking, several studies nd that a large portion of consumers, ranging from 30% to 50%, engage in impulsive purchases frequently in their shopping trips (e.g., Rook, 1987; Beatty and Ferrell, 1998). An impulse comes on as a sudden urge that drives a person to a certain behaviour, such as buying an item instantly without thought and without delay. The desire to have the item is alleviated by the purchase. When individuals act on impulse, they tend to do so quickly and nonreectively, which increases the likelihood of unintended and undesirable outcomes (Rook and Fisher, 1995, p. 306). 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, 1987). Impulsive buyers are driven by emotions such as excitement and pleasure whereas less impulsive buyers largely rely on utilitarian considerations. The urge to buy impulsively can be resisted if a person goes through full rationalization. Compared with compulsive buying, impulse buying comes from an acute loss of control when shopping and is a less severe problem for consumers. Impulse buying may result from transient self-control failure (Baumeister, 2002) and compulsive buying is chronic loss of control despite realizations by consumers. Both buying patterns involve mixed emotions during and after the purchase. Impulse buying can cause negative consequences for consumers. For example, impulsive individuals are more likely to misuse their credit cards (Pirog and Roberts, 2007). They nd credit cards useful in abetting their spontaneous desire for things. Credit cards may even accelerate the process and speed up the gratication of buying because there is no need to count cash or write a check. Also, the nancial consequences are delayed because of payment schedules. Impulsive buyers use credit cards as a convenient and quick means for spending and an easy way to ignore, at least for the moment, the likely consequences of their spending. We intend to nd whether impulse buying, a behavioural pattern, causes credit card debt among the sample group. When impulse buying becomes habitual because of frequent occurrences over time, buyers are likely to overcharge their credit cards. H2: The greater a college students impulse buying tendency, the more likely s/he carries a credit card balance.

Social support
College students are in a transition from home to school and from dependence to independence (Moffatt, 1989). They aspire to grow
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more mature and independent, although the process is often difcult, stressful and even anxiety-ridden (Arnett, 2004). Most students live away from their families for the rst time in their lives. They need to forge new relationships with their parents and old friends, while simultaneously building networks in a new environment. Their changing self-concept is turbulent in the midst of changes in social support and geographic relocation. When young adults leave home, they often live in a new and complicated network of social relations, group denitions and obligations (Becker et al., 1968). Their social support sources change greatly in college, and young adults reconsider to what extent they can or should rely on previous sources. Support from strong social networks is benecial to young adults. Family communication has been found to greatly affect young peoples socialization process (Moschis, 1985). College students ability to cope with stressful life events is related to their levels of social support (Brissette et al., 2002). With sufcient social support and optimal coping strategies, they are likely to handle life difculties and better manage their life, including their nances. While parental impact begins to fade once their children are on their own, parents can still have major inuences on young adults various life domains. For example, parental involvement in students acquisition of credit cards signicantly reduces credit card balances later on (Palmer et al., 2001). Students whose parents co-sign their credit card applications are likely to have fewer credit cards and carry lower balances. This suggests that parents involvement and supervision exert a positive inuence on their childrens credit card use. Positive social support includes a broad spectrum such as seeking advice, asking for assistance, and sharing feelings and concerns. Generally, young adults feel more secure if they have some reliable people with whom they can communicate and share advice (Bryant, 1989). Some research suggests that parents views about credit inuences childrens successful credit use (Tokunaga, 1993) and childrens credit card attitudes are associated with their parents credit card use (Joo et al., 2003). In college, the sudden decrease in parental supervision and consultation may cause drastic changes in their behaviour, including their nancial behaviour. Students who aspire to have more independence and forfeit previous support are especially at risk. Lacking close parental supervision, they may be inclined to misuse the unprecedented spending power of credit cards and spend recklessly. Inadequate social support may cause college students to engage in problematic behaviour. Credit card management is a new subject to them. Some may enjoy credits buying power and purchasing freedom but do not know or ignore the potential consequences. Those who have adequate guidance, advice and recommendations from their social networks are likely to manage their nances successfully. For example, they can learn about credit card interest and penalties from more experienced users; they can also learn how to handle balances when they accrue. A revolving balance on credit cards, as small as it might be, may grow into an uncontrollable amount over time. Those with little or no social support may get stuck with their nances and trapped by the penalties of credit cards. H3: The more social support a college student has, the less likely s/he carries a credit card balance.

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A survey study
Sample
The survey study was used to test the links between the focal variables and credit card indebtedness as hypothesized. Participants in the survey study were a convenient sample drawn from an introductory class at a large state university in the US. Three hundred and eleven students voluntarily participated in this study to receive extra credits for the course. The study was anonymous and students identities were not recorded in the questionnaire. Because previous literature has found differences in credit card usage in school years, we selected a class taken mostly by juniors. They are more likely than freshmen or sophomores to possess their own credit cards and carry credit card balances. After removing questionnaires rendered unusable because of missing data, a nal sample of 272 remained, of which 45% were female, 69% were white, 16% were Latino, 9% were Asian, and 1% were African American; their median age was 21 (range: 1830). This prole roughly corresponds to the student population from which the sample was drawn.

Table 1 ANOVA results (debt vs. no debt group) Independent variables Compulsive buying Impulse buying Seek social support Budget constraint Parental income Debt group 25.95 23.80 15.61 8.02 7.02 No-debt group 22.93* 21.63* 16.63 6.34* 7.82

*The coefcient is signicant at P < 0.05.

Table 2 Logistic regression analysis of credit card indebtedness Independent variables Beta P-value

Dependent variable: credit card balance (0 vs. 1) Compulsive buying 0.285 Impulse buying -0.013 Social support -0.057 Budget constraint 0.207 Parental income -0.008 Male (vs. female) 0.269

0.001* 0.659 0.042* 0.007* 0.876 0.174

Survey measurement: dependent variable

To differentiate credit cards afliated with their parents, we identied their own credit cards and those afliated with their parents. The analysis focused only on credit cards they held in their own names. We asked details of students credit card usage such as the number of credit cards (min = 1, max = 18, median = 2) and total credit limit (min = $100, max = $100 000, median = $3000). 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, ranging from $50 to $9000 (median = $875). The dependent variable is dichotomous: whether or not the student has a revolving balance on his/her credit cards. Students with a credit card balance are treated as one group as opposed to those with no balance.

*The coefcient is signicant at P < 0.05. Log likelihood in logistic regression A = 232.052. Per cent Concordant = 70.6%.

using a scale (a = 0.73) of Perceived Budget Constraints (Urbany et al., 1996). Our purpose was to compare these economic factors with the consumption and social factors as hypothesized.

Survey results
Both bivariate and multivariate analyses were conducted to test the hypotheses. Results of analysis of variance (ANOVA) are presented in Table 1. Binary logit models were used to test the hypotheses on college students credit card indebtedness (1 = with balance vs. 0 = no balance) and the results are presented in Table 2. The independent variables are compulsive buying, impulse buying and social support. In addition, we include budget constraint, family income and gender as control variables. Hypothesis 1 Compulsive buying is predicted to cause credit card debt. One item in the original compulsive buying scale is termed made only the minimum payments on my credit cards. This question is likely to be confounded with the dependent variable. Therefore, we removed this question from the compulsive buying scale in the binary logit models. The remaining questions generate acceptable reliability (a = 0.69). Both bivariate and multivariate analyses provided supportive evidence. The score of compulsive buying of the debt group is signicantly higher than the no-debt group (25.95 vs. 22.93). In the logistic model, the relationship between compulsive buying and credit card indebtedness is signicant (b = 0.29, P < 0.05). Therefore, Hypothesis 1 is supported, conrming a positive relationship between compulsive buying and credit card indebtedness.
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Survey measurement: independent variables

The Compulsive Buying Scale was used in this study (Faber and OGuinn, 1992, see Appendix A). The scale was developed to distinguish compulsive buyers from non-compulsive buyers. In the present study, we treat compulsive buying as a continuous tendency ranging from low to high, and use the scale (a = 0.69) to measure peoples compulsive buying tendency. Impulse buying was measured by the Buying Impulsiveness Scale (Rook and Fisher, 1995). It is a uni-dimensional construct (a = 0.78) that describes a consumers tendency to buy spontaneously, unreectively, immediately, and kinetically (Rook and Fisher, 1995, p. 306). Social support was evaluated by a six-item scale (Yi and Baumgartner, 2004), which measures the extent to which people use their social networks to obtain advice and emotional support (a = 0.95). Besides the focal variables in the hypotheses, we also asked respondents their economic backgrounds. We included their parents annual income as an objective measure of economic status. We also asked them to evaluate their budget conditions by

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Hypothesis 2 Impulse buying is predicted to cause credit card debt. However, the evidence is mixed. The score of impulse buying in the debt group is signicantly higher than the no-debt group (23.80 vs. 21.63) but in the logit model the relationship between impulsive buying and credit card indebtedness is not signicant (b = -0.01, NS).

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. The guideline was used to generate further and deeper conversations with informants. The interviews started with questions about the informants various life domains including school, social activities, consumption, employment and family. Initial conversation was also used to create intimacy with the informants and prepare them for later in-depth questions. Then, the focus switched to their nancial situations, especially credit card usage. We sought to learn about their experiences with credit cards by including their acquisition of credit cards, usage of credit cards and payment of credit card balances. We also asked about their parents and friends roles in the process of credit consumption. In addition to the interview guideline, follow-up questions were asked to probe the deeper meanings of informants responses.

Hypothesis 3 More social support is predicted to reduce the probability of credit card debt. The prediction is not supported by the ANOVA but supported by the logit model, in which the relationship between social support and credit card indebtedness is signicant (b = -0.06, P < 0.05). Since the result of the logit model is more conclusive than the ANOVA, Hypothesis 3 is supported, conrming that the more social support students have, the less likely they carry credit card balances.

Depth interview ndings

Control Variables We include budget constraint and parental income as measures of students subjective and objective economic resources respectively. We nd that budget constraint is likely to cause credit card balance (b = 0.21, P < 0.05) in the logit model. The result is also supported in ANOVA. The score of perceived budget constraint is signicantly higher than the no-debt group (8.02 vs. 6.04). In contrast, parental income does not affect ones credit card indebtedness (b = -0.01, NS). We also included gender of the respondent as a control variable and nd no gender difference in the respondents indebtedness (b = 0.27, NS). In analysing 22 depth interviews, 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, 1994). Then, individual observations were cross-analysed and compared to develop more general themes. In this way, convergent themes were extracted from the depth interviews and the general outlines of the interviews became apparent (Thompson, 1997). In the next section, we illustrate informants experiences in handling their credit cards. Specically, we focus on impacts of consumption behaviour and social networks on their credit card usage. 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, contexts and life events of college students and explore why they hold credit card debts. Qualitative techniques were employed to gain a comprehensive understanding of college students backgrounds, life trajectories, social relationships and consumption behaviour, and then link them with their credit card usage. The interview data can illustrate specic scenarios of students credit card use. In the qualitative study, we randomly contacted undergraduate students from the university student directory and invited them to participate in an academic study. If they were interested, they were given a few qualifying questions. Because the aim was to understand credit card indebtedness, only those who had revolving balances on their credit cards were selected. Twenty-two students were interviewed and each interview lasted between one hour and a little over two hours. Prior to each interview, the respondent was assured of anonymity, and told that all information provided would be used for research purposes only. Each informant was paid $20 at the end of the interview. All interviews were audio-taped and then transcribed verbatim to text for analysis.
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Impulse buying is common among college students. They are surrounded by abundant material goods on and off campus, and some have difculty resisting the urge to buy. One student talked about his buying habits in on-campus stores. Robert: You (the bookstore) have so many binders that I just bought that. I didnt even use it, and stuff like that. I dont know, sometimes I just walk into a store and I feel like I have to get something. Instead of just turning away and saying okay, just walk out of the store; you got no money, I walk in and grab something and pay for it. This student found himself caught by the products and could not resist buying when he was in the store. His buying impulse drove him to get something before he could leave. Most of the time, he did not plan to buy nor did he need the purchases. He was aroused to take something spontaneously and refused to wait. The urge to acquire things at that moment was so strong that he disregarded the consequences, including whether he had the money to pay for them. Even after he warned himself that you got no money, he nevertheless pulled out his credit cards. After buying, he could not rationally explain his behaviour and usually regretted his purchases. He noted that his impulse buying became a routine, and he felt uneasy if he left a store without buying anything. Coming from a working-class family, he did not

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have any allowances and lived with a modest budget. But credit cards made his impulse buying easier. With the help of credit cards, he quenched his sudden and powerful urge to buy. Over time, he had accrued higher balances on his credit cards partly because of his frequent impulse purchases. Some impulse consumption appears in college students social activities and entertainments. They want to have fun and enjoy the moment. One student described her experiences when going out. Lisa: When it comes to be Friday, you just wanna go and do something fun and you know what? Here is my credit card and I dont care if I put it on here. Im gonna go out and have a good time tonight. . . . When you dont have money in the bank account then here comes the credit card. Interestingly, this student worried about her credit card debt. She planned to apply for medical school, and she understood that she would not make money for a long period of time. She wanted to be debt-free when she started medical school. This conscious evaluation of her current and future nancial situations was contradictory with her spending behaviour in some of her social activities. As she said, she did not care at that moment when a sudden and strong force was pushing her. Her impulse drove her to spend more than she could afford. When she charged her credit cards, she ignored her nancial capacity and the nancial consequences. Although she already had balances on her credit cards, her spending impulse overpowered her conscience of money management. Notably, her buying patterns mixed impulse buying with compulsive buying. She experienced a lot of pressure in her studies and tried very hard to qualify for medical schools. She wanted to escape her academic pressure and reward herself by spending as she wished. Compulsive buying often occurs as a response to negative events or feelings (OGuinn and Faber, 1989). Students may encounter difculty, anxiety, and frustration in their lives and turn to spending to alleviate such negative feelings. Some students spend not because they enjoy their purchases but rather to make themselves feel better. Peer pressure drives college students to engage in compulsive buying. In a competitive social environment, some students feel obligated to spend like their desired social groups. A certain level of spending and an appropriate way of consumption lead to acceptance among their peers. This leads to status enhancement in their social circle. Those lacking nancial means quickly turn to their credit cards for peer-approved spending. One student told how she overcharged her credit cards and why she stopped. Melissa: I used to go to parties a lot and used to go to the bars a lot. And now I dont because Im paying off all this. I dont have money to just go out with them. Oh, its Friday, lets go out and have some drinks and go do this and go do that. I dont have money to do that, so I dont hang with those people as much because thats what they do, because they have money to do that, and I dont so I dont get to hang out with them as much. This student used her credit cards, mostly for partying, and had accrued $3500 in balances within a year. She nally stopped using her credit cards after confessing to her parents. They relinquished her credit cards and monitored her as she repaid her debt. She went to parties because she regarded them as appropriate and necessary events to mingle with her peers. Gradually, she felt she could not miss those events in order to catch up with her friends. She became worried about her nances as she was sinking deeper into debt, but

was compelled to engage with her friends and hide her money problems. 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. The social norm in college emphasizes the right consumption, and students are compelled to spend, sometimes using their credit cards, in order to t in. From clothing to cars, from parties to vacations, many young adults spend in a dangerous cycle of competition. Consumption is a signicant symbol of ones status, probably much more powerful than academic achievement. 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. Compulsive buyers are more likely to enhance their self-esteem with purchases, especially those approved by their desired social groups. Credit cards give all students a chance to taste the pie of luxury but simultaneously put many at nancial risk. When everyone can pull out a credit card to pay, their economic backgrounds are hidden from the public. Credit cards detrimental impact, however, never goes away. College students nd that they can avoid parental scrutiny and hide their nancial situations with their credit cards. Spending with credit cards is unsupervised and their nances are kept unknown to their parents. While self-control is important, these students social networks are also crucial to their proper consumption behaviour and nancial management. Social support and credit card usage Young adults courses of action are not only individually driven, but are also inuenced by their social networks and these social networks change drastically during college years. They leave their daily familial supervision and old friends and live with new people and in a new environment. Some students may want guidance but feel reluctant to share their concerns and problems. One students credit card debt ballooned after she obtained eight credit cards without realizing the potential consequences. Karen: It seems like once you get into debt, its like youre always trying to catch up. When I rst moved out of my own family at 18, I didnt know what to expect. I didnt know how expensive things are. You dont really know a lot about budgeting, unless somebody you know tells you about it. So I got into trouble right from the start where I had a couple of credit cards. She started using credit cards with little understanding about credit, and she felt that credit card debt was a sensitive topic to discuss with acquaintances. When she left her parents and started living on her own, she not only walked away from the nancial aid her parents could provide, but also cut herself off from their guidance and support. As independent as she wanted to be, she felt helpless and overwhelmed as she quickly accrued massive credit card debt. College students may intentionally avoid discussing money issues with their parents. They want more autonomy and privacy in their nancial management and believe they can handle their nances on their own. Lacking knowledge and experience, however, they are likely to encounter problems when they manage credit and debt on their own. Some students nd people in their new environment a more accessible and empathetic resource than
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parents. One student revealed the interplay between her spending and credit management and her friends support. When she moved to a new town for college and got into nancial difculty, she received support from friends that claried her perspectives on spending and established a goal to pay back her credit card debt. Lindsay: They [her friends] are some of the main people that were encouraging me to live more simply. I mean there wasnt really anything that they could do about it because it was my problem and my debt. 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, but to be realistic about what I could afford. It denitely helped a lot and even just practically helping me, you know, like coming up with a budget and learning how to designate how much money I can spend on these things. Living away from family for the rst time in her life, she obtained prompt and valuable advice and suggestions from her friends. They helped her manage her nance, which was more benecial than simply giving money to her. Because peers share similar experiences and face similar difculties, they are more receptive to each others advice. Inappropriate advice, however, can further damage their nancial situations. Some students nd sympathy among their peers and encourage each other to keep charging their credit cards. Some do that because they believe their parents will eventually intervene and bail them out. If parents only provide nancial support but fail to communicate with and educate their children, it may alleviate short-term debt but will cause more harm in the long run.

reluctant to draw on this source. In contrast, peers are a powerful source of social support given their equal position and similar experiences. This research shows that family income is unrelated to students credit card indebtedness but the perceived budget constraint is associated with indebtedness. Students from wealthy families may have access to parental resources, but they may shun this assistance for more spending autonomy and freedom from obligation. While it may be true that students from lower income families are more likely to have nancial burdens, this research offers new reasons for indebtedness.

Conclusion and implications

Credit card debt, as well as student loans and other types of debt, are new to young adults when they leave home and go to college. College is an important transition period in their lifespan from dependence to independence. Financially, 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. Helping college students learn how to manage their debts and credit will have a long-term impact on their lives. To help these young adults better manage consumer credit, we need to understand what factors cause them to incur debts. Quantitative data from a sample of college students in this study demonstrated two factors that are not documented in previous studies, namely that compulsive buying and social network may be associated with credit card indebtedness among college students. In addition, impulse buying, another buying behaviour, may also affect the indebtedness. Depth interviews with a sample of students who keep credit card balance revealed some causes, contexts, and complexities of credit card indebtedness of college students. Our ndings have implications for consumer educators, university administrators, and credit card company executives. 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. Formal and informal courses can be offered in which positive credit management behaviour are taught and practiced. In these courses, students should be informed about the possible consequences of using credit cards, especially when charging large amounts. Students should learn about symptoms of impulse and compulsive buying, analyse their own buying patterns and develop strategies to avoid problematic buying behaviour. Educators also need to coordinate with university administrators to develop nancially friendly social networks for students to help them better manage their credit card use. Peer education and interactions should be encouraged and expanded in which students teach each other nancial knowledge and skills and learn lessons from others of dangers of misusing and abusing credit cards. Such programs can be integrated in, or related to, consumer economics or personal nance courses or they can be organized through after school and community service activities. Research indicates that parents have an important inuence on money management of college students (Xiao et al., 2007). Therefore, programs that promote interactions between students and their parents to discuss nancial issues should also be developed. University administrators can help provide a more nancially friendly environment for their students. Administrators should be

Discussion
By using both qualitative and quantitative data, we demonstrate the potential impact of consumption patterns and social networks on college students credit card indebtedness. Both quantitative and qualitative data imply impacts of buying behaviour on credit card indebtedness. Using the survey data, both bivariate and multivariate analyses support that compulsive buying is associated with credit card debt. Credit cards may provide a convenient tool for consumers who have a strong tendency towards compulsive buying. Compulsive buyers may realize their problematic spending and dislike credit cards, but cannot spend without them and thus keep accruing more debt. 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. In a bivariate analysis, the survey results showed that students with credit card balances are higher in their impulse buying than those without a balance. Impulse buying, however, does not appear to be a signicant predictor of credit card indebtedness in the logit model. 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. Depth interviews reveal some contexts in which students engage in impulse buying, such as visiting campus stores and participating in social activities. In addition, this research demonstrates that sufcient social support decreases the likelihood of indebtedness. If students can obtain prompt and adequate support, the risk of holding credit card debt is reduced and they will be in a better nancial position. Depth interviews show that parents are a source of support and information about money issues, but some young adults are
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J. Wang and J.J. Xiao

College students credit card debt

aware that buying behaviour, such as compulsive and impulse buying, may cause students to accumulate credit card debts, which may affect their academic performance and life satisfaction. To provide a nancially safer campus, administrators should encourage the development and implementation of formal and informal nancial education courses that deliver knowledge of compulsive and impulse buying and effective strategies to avoid these buying behaviours. Administrators also need to encourage social networks that provide nancial education assistance for students. Parents should be encouraged to more actively communicate with their children in college about nancial issues, and universities could facilitate these communications through parent days and other appropriate events. Administrators can also encourage peer interactions to learn wise credit management knowledge and skills from each other. Several universities, such as University of Arizona and Texas Tech University, have active student nancial education teams that deliver nancial education to their fellow students. These efforts should be encouraged by university administrators. Previous research (Lyons, 2004) indicates that a small percentage of students are at risk in credit card usage. They are more likely to accumulate a large amount of credit card debt, cannot make debt payment on time and always max out their credit card limit. For this group of students, universities may not only provide special courses but also provide counselling for them to improve their credit management abilities. Credit card companies have social responsibilities to help college students better manage their credit card use. College students nd money from credit cards less restricted than that from parents. In a sense, credit card companies become pseudo-parents that provide young adults with money but exert little supervision. As long as cardholders make payments, even the monthly minimum, they are free to spend on anything they like. In this nancial relationship, young adults are often given approval for spending regardless of their nancial astuteness. Credit card company executives should be aware that college students are new users of credit card, and some of them have a tendency to become compulsive and impulsive buyers. 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. Special warnings should be provided to college students when they receive their rst credit card. Credit limits should be set at a low level and increased slowly. In addition, credit card companies should sponsor activities that allow students to learn from each other and learn from their parents to wisely use credit cards.

tinguishes students with credit card debt from those without. However, it is possible that students with different amount of balances may be inuenced differently by their buying patterns. So within debtors, what factors are likely to cause high balances need further investigation.

Acknowledgements
Data collection of this research was supported by the Take Charge America Institute for Consumer Financial Education and Research at the University of Arizona, USA, with a research grant to Jeff Wang.

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Limitations
The student respondents in this research were drawn from a convenient sample in a state university in the US. Therefore, the results may be inuenced by the particular characteristics and backgrounds of the sampled group. 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. In order to generalize the results to college students, it requires large-scale, acrossuniversity studies with random sampling. In addition, longitudinal studies that track students at different years in college will better capture the changes of debt over time. The current research dis-

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3. Wrote a check when I knew I didnt have enough money in the bank to cover it. 4. Bought myself something in order to make myself feel better. 5. Felt anxious or nervous on days I didnt go shopping. 6. Made only the minimum payments on my credit cards. (excluded in this study) Impulse Buying (a = 0.78) (1-strongly disagree, 5-strongly agree) 1. I often buy things spontaneously. 2. Just do it describes the way I buy things. 3. I often buy things without thinking. 4. I see it, I buy it describes me. 5. Buy now, think about it later describes me. 6. Sometimes I feel like buying things on the spur of the moment. 7. I buy things according to how I feel at the moment. 8. I carefully plan most of my purchases. (reverse coded) 9. Sometimes I am a bit reckless about what I buy. Seek Social Support (a = 0.95) (1-very often, 5-never, data are reverse recoded in the analyses) 1. Talked to someone about how I was feeling. 2. Tried to get advice from someone about what to do. 3. Tried to get emotional support from family or friends. 4. Asked someone I trust for help. 5. Discussed my feelings with someone. 6. Talked to friends or relatives who know more than I do. Budget Constraints (a = 0.73) (1-strongly disagree, 5-strongly agree) 1. I frequently have problems making ends meet. 2. My budgeting is always tight. 3. I often have to spend more money than I have available.

Appendix B Depth interview guidelines

Demographics: age, marital status, hometown, family background School, Residence, and Employment What is your goal in college? What have you learned most in college? What have you changed most since college? Shopping behavior (where to shop, brands, how much, with whom) Bank services (accounts, money in accounts, checking cards, other services) Credit cards (how many, when and where got them? Ever rejected by credit card companies? When and where do you use them? How to use them, balances, how you feel about them, how to cope with credit card debts, etc.) Do your parents know about your credit cards? What do they think of it? Do your friends know about your credit cards (do you know theirs)? What do you talk about credit cards? Whats your plan with your credit card debt? Has your credit card debt affected your life? As it relates to the whole issue of debt, what is it that you learned most about yourself?

Appendix A Multiple-item measures

Compulsive Buying (a = 0.69) (1-very often, 5-never, data are reverse recoded in the analyses) 1. Felt others would be horried if they knew of my spending habits. 2. Bought things even though I couldnt afford them.

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International Journal of Consumer Studies 33 (2009) 210 The Authors Journal compilation 2008 Blackwell Publishing Ltd