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Consumer Credit Use of Undergraduate, Graduate and Postgraduate Students: An Application of the Theory of Planned Behaviour

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Abstract

Indebtedness among university students is a recurring problem that needs to be addressed. Previous studies have illustrated the situation regarding credit cards and college students. Graduate and postgraduate students have not been studied, although they are also subject to debt. The aim of this article is to explore the psychological and social factors that contribute to the adoption of responsible credit practices among undergraduate, graduate and postgraduate students. The data are from an electronic survey sent by e-mail to students at two major Canadian universities (n = 1,323). The SEM results indicate that university students with a high level of self-efficacy in consumer credit are more likely to avoid risky credit behaviour. In comparison, the intention of undergraduate students to adopt responsible consumer credit behaviour is more influenced by parents than the (post)graduate students. The implications for financial education and personal finance advisors are discussed based on the results obtained.

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Notes

  1. Software used: R.

  2. T-test revealed a statistically difference between the motivation to comply for undergraduate students compared to (post)graduate students (t(1320) = −2.70, p ≤ 0.05).

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Authors and Affiliations

  1. Department of Agricultural Economics and Consumer Sciences, Laval University, 2425, rue de l’Agriculture, Local 4415, Quebec, G1V 0A6, Canada

    J. Cloutier & A. Roy

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Appendix

Appendix

Attitude toward the use of consumer credit

Pro-credit (α = 0.74)

  • Owning a credit card can contribute to happiness.

  • I really like owning a credit card.

  • I love the extra services offered by credit cards. For example: extended warranties on purchases or travel insurance.

  • I am very proud to own a credit card.

  • I love using my credit card.

Anti-credit (α = 0.77)

  • I hate all types of credit.

  • Borrowing is very often problematic.

  • If my loans totalled a large amount of money, I would feel very stressed.

  • I am very concerned when a loved one uses their credit card too often.

  • The thought of borrowing makes me sick.

  • I would be upset if someone tried to convince me to make a loan when I wanted to pay cash.

  • I’m fearful to apply for a loan.

  • I am fearful when I use my credit card.

Subjective norms toward consumer credit

Parents – injunctive norms (α = 0.65)

  • My parents put pressure on me to use credit appropriately.

  • If I used credit appropriately, I know my parents would be proud of me.

  • My parents think it’s important to use credit wisely.

  • My parents encourage me to not have debts.

Parents – descriptive norms (α = 0.92)

  • I think that my parents control the expenses they put on their credit cards.

  • I think that my parents do not have any problems with credit.

  • I think that my parents are not over-indebted.

  • I think that my parents use credit in a responsible way.

  • I think that my parents always pay off their loans.

Friends – injunctive norms (α = 0.68)

  • My friends put pressure on me to use credit appropriately.

  • If I used credit appropriately, I know my friends would be proud of me.

  • My friends think it is important to use credit wisely.

  • My friends encourage me to not have debts.

Friends – descriptive norms (α = 0.91)

  • I think that my friends control the expenses they put on their credit cards.

  • I think that my friends do not have any problems with credit.

  • I think that my friends are not over-indebted.

  • I think that my friends use credit in a responsible way.

  • I think that my friends always pay off their loans.

Self-efficacy toward the use of credit (α = 0.86)

For the moment, I think I can:

  • control the purchases I charge to my credit card.

  • make the monthly payments on my loans.

  • avoid reaching the limit authorized on my credit card.

  • avoid withdrawing cash on my credit card (cash advance).

  • apply for a loan only when I know I can make all the payments.

  • avoid making only the minimum payment on my credit card.

  • avoid having too much debt.

  • control the total amount of my debts.

  • systematically refuse all solicitations for new credit cards.

Intention to adopt responsible credit behaviour (α = 0.69)

Over the next 12 months, I intend to::

  • avoid reaching the credit limit on my card.

  • always pay off my credit card balance in full.

  • ask for credit only when I am sure I can make all the payments.

  • avoid making only the minimum payment on my credit card.

  • pay attention to the price of what I buy even if I use credit to pay.

Risky credit behaviour (α = 0.74)

In the last 12 months, regarding only my personal loans and credit cards, I have:

  • made late payments.

  • partially repaid the balance due on my credit card.

  • reached the credit limit I had been authorized.

  • made a cash advance on a credit card.

  • spent more because I was using a credit card, whereas if I had paid cash, I would not have spent as much (in restaurants, stores, etc.)

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Cloutier, J., Roy, A. Consumer Credit Use of Undergraduate, Graduate and Postgraduate Students: An Application of the Theory of Planned Behaviour. J Consum Policy 43, 565–592 (2020). https://doi.org/10.1007/s10603-019-09447-8

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