News Release

Credit-conscious college students tend to own most cards

Peer-Reviewed Publication

Penn State

College students with higher levels of credit card consciousness – or awareness of both the usefulness and problems of using credit cards -- are the very ones likely to carry larger numbers of credit cards and run up steeper average balances, according to a Penn State study.

"Our study revealed that college students scoring high in credit consciousness were also more likely to exhibit poor self-esteem and demonstrate higher anxiety levels," says Dr. Mary Beth Pinto, associate professor of marketing in the Sam and Irene Black School of Business at Penn State Erie.

Also, these same students were more inclined to believe that they were not in control of their own lives. Instead, they tended to think that what happened to them was due to some outside force such as fate, chance, society at large or some other external power, Pinto notes. As a result, they are less likely to take personal responsibility for their own actions.

Pinto is lead author of the paper, "Credit Consciousness Among College Students: An Explanatory Study," presented recently at the Marketing Management Association in Chicago. Her co-authors are Dr. Phylis M. Mansfield, assistant professor of marketing, and Dr. Diane H. Parente, assistant professor of management, both at Penn State Erie.

During the 2001-2002 academic year, the researchers surveyed 1,170 college students, of whom 589 owned credit cards. Only those respondents indicating that they had at least one personal credit card were used from the surveys collected, yielding 821 responses (70.8 percent). This percentage is lower than the 83 percent reported by Nellie Mae (2002). Given the purpose of the study, the sample was reduced to include only students less than 23 years of age. Respondents who were 23 or older were considered non-traditional students and were eliminated from the sample. The final sample totaled 589 respondents defined as traditional college students possessing one or more credit cards.

"In our study, the average number of credit cards per student was 2.16, with the number of cards held by each student ranging from 1 to 22. In total, the respondents reported carrying 1,271 credit cards," Parente says. "Twenty-five percent of the sample carried a zero balance month-to-month on their credit cards; the other 75 percent was saddled with a total of almost $400,000 in credit card debt. The average outstanding balance carried month to month by the overall sample of students was $686."

Those students showing high credit consciousness owned an average of 2.5 cards with an outstanding balance of $1,277, while students with low credit consciousness possessed an average of 1.92 cards and maintained an average debt of $298. These figures indicate that both credit card ownership and debt is tied to levels of credit consciousness, Mansfield adds.

"Beginning to understand the variables that impact one's ability to appropriately manage credit is a critical step toward creating a successful long-term consumer," the authors say. "Future research will be needed to help determine how one's credit card consciousness levels are developed."

The findings of this study are part of an ongoing analysis of credit card use among college students begun by Pinto, Mansfield and Parente.

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