Effects of Personal Financial Knowledge on College Students’ Credit Card Behavior Cliff A. Robb and Deanna L. Sharpe began their article “Effects of Personal Financial Knowledge on College Students’ Credit Card Behavior” with clarification regarding the study and also a succinct historical introduction to the ‘invasion’ of credit card companies on college campuses. Their study was based on the analysis of survey data composed from 6,520 students at a grand Midwestern University. This study revealed that financial knowledge was a compelling factor in the credit card decisions regarding college students. They expressed that credit card companies began directing their focus on college students in an attempt to broaden their market share in the late 1980s (Robb and Sharpe, 2009, p. 25). During that time, students were encouraged to obtain credit cards by way of on-campus enrollment, direct mail promotions, on/ off-campus advertisement. “By 2001, over three-quarters of all undergraduates had one or more credit cards” (Robb and Sharpe, 2009, p. 25). These elemental advancements in how and to whom credit cards were advertised resulted in credit cards becoming a way of life for today’s college student. As the rate of college students who own credit cards grew so did the apprehension that credit card …show more content…
Robb and Sharpe (2009) mentioned that in doing so, credit card companies placed students in peril of excessive spending and cultivating financial adversities (p.25). To counteract this issue, a concerned group of individuals encouraged university and college campuses to limit credit card vendor access to students. The intention of the study was to examine the role that knowledge of personal finance concepts and principles may play in college students’ decision to revolve a credit card balance in the level of balance
In the essay, “College Consumerism Run Amok” authored by Kevin Carey describe how colleges are careless with their money. Throughout the essay, Kevin Carey explains why normal people think the average price of college tuition has risen across the United States. People believe college tuition is rising because students demand colleges to have “creature comforts”, such as luxury dorms, a fully operational gym, and a climbing wall. Also, that the creation for “creature comforts” in colleges has caused academic standards to decline. Yet, colleges market to students with these amenities instead of showing students comparable statistics: the quality of teaching, scholarships, and academic environment. Kevin Carey, in the end, sums up his idea with
College is marketed towards students as an essential part of building a successful future. The United States “sells college” to those who are willing to buy into the business (Lee 671). With the massive amounts of student debts acquired every year, and the rising costs of
Kovak, Marc. “Survey suggests credit card companies unfairly target college students.” 31 March 2013. ProQuest. Mira Costa College Library, San Elijo. 15 Oct. 2014.
The invention of the modern day credit card by Alfred Bloomingdale, Frank McNamara, and Ralph Snyder in 1949 brought much debate about the invention by the people of the time, it helped and even put people in debt, and increased the amount of Credit Acts in Congress. The invention of the Credit Card is now America's main source of payment and an essential element of daily life.
Credit cards are something that are almost needed in everyday life now, as most dont have the money available to purchase a car or house and so need credit, thus needing credit cards to help build that credit. Those cards are hard to handle, and receiving applications in the mail daily, and commercials appearing on television don’t seem to make the struggle of staying away any easier. This starts to spark an interest. So people begin to think, "I think I 'm responsible enough to get a credit card, I 'll only use it for emergencies." Then the application process begins and it may take a couple times to finally be approved for one. This only makes it worse, of course, because realizing how long a credit card wasn’t applicable to life, but now
Anderson, Nancy. “13 Ways College Students Waste Money and Opportunities.” Forbes. Forbes.com, 8 August 2013. Web. 24 March 2014.
To determine the factors that influence the use of various credit cards in the United Kingdom.
Statistics suggest about 32% of consumers are going to over estimate the rating on their credit, while only around 4% are going to under estimate the rating on their credit. Ones who will overestimate the quality of their credit are most likely less informative about finances overall, and will be more likely to have learned about their financial knowledge, unfortuanately, the hard way. Also the consumers who are going to overestimate the ratings of their credit will be less likely to properly budget, effectevely save their money, or learn to invest it often. With another example, in 1999 it was found that about 40 percent of mortgage borrowers didn't understand what the interest rates that were associated with their loans were.
To take the concept of personal commitment to financial change further, it is important to understand more fully what the consequences are of not becoming debt free and of not working towards achieving your personal financial goals. For so many of us, carrying a consistent balance on our loans or credit cards has become common practice. But, are we really aware of the financial, personal and health consequences we are causing for ourselves by carrying such debt?
One might say there is a strong argument for the requirement of financial literacy for students in America. Americans continue to have increased balances on their credit cards as well as show a continued increase in bankruptcy filings according to statistics. Even the “baby boomer” generation is no longer exempt from financial hardships, as their generation has recently taken the title of “Fastest Growing Bankruptcy Demographic” from the 25 – 34 year olds (Linfield, 2011). Would it not make sense to say that Americans need to learn how to budget and borrow more wisely? Would not the best place to start be in schools? Well, the answer to that question is not a simple one.
Some schools have little money and few teachers and Matthew Yale said, “[T]he Department of Education’s next step is to work with districts and teachers and help them find the money they need” (Bernard 6). It will take parents to start this movement (Bernard 7) because parents have to be willing to give up more money so that their children know what to do with their money. Financial literacy courses can potentially make students overconfident about their skills and make them do even worse (Burns 8). Harvard Business School performed a study where it was concluded that financial literacy courses “weren’t effective in changing people’s financial decisions” (Burns 10). Thaler stated “A new paper by three business school professors … uses a technique called meta-analysis looking at results from 168 scientific studies of effects to teach people to be financially astute, or at least less clueless. The authors’ conclusions are clear: over all, financial education is laudable, but not particularly helpful” (13). The shows that financial literacy courses are good but they are not helping the youth as of now, so the right combination has not been found to teach the youth how to control their
D. Thesis and Preview: It is important to know how to use credit cards to your
Availability of credit cards have left young people in debt. College-age students and low-income consumers, typically deemed bad risks, are easy targets for credit card companies. Credit card companies should not target college-age students and low-income consumers because of their lack of financial stability. In 1996, twenty-something consumers owed an average of $2,400 on their credit cards, nearly triple what they owed in 1990, according to research by Claritas Inc., a marketing research firm in Virginia. If, payments of $75 were made monthly to pay off a $2,400 debt, it would take 3-1/2 years with a 16 percent-rate card, and you'd pay $ 750 in interest.
In an age of convenience credit cards are a common part of life. Banks have seen a trend in the past ten years of increased credit card usage and have determined the profitability in the area. As we enter into a change in demographics, baby boomers reaching retirement and college students graduating and entering the work field, colleges are seeing the ability to profit from this shift. But should a university enter into this type of agreement, offering credit cards to their students?
The lack of knowledge plays a big part in the debt young people are getting themselves into. Credit cards are often offered to young adults as soon as they get out of high school. Many take advantage of having a credit card without even thinking about the responsibilities that come with it, instead they think about the things they will be able to buy. In “Generation Debt” the author Tamara Draut says that young people are getting into debt younger than ever before. Two of the reasons that are more costly on young students that hit hard on the budget are car repairs, and travel for students who have families and friends in other states (231). From my experience I know first-hand what it was like to be offered credit cards right out of high school, and I didn’t hesitate to get any of them. I st...