How Students Use Credit Cards
Has Greater Impact Than Number Of Cards

May 10, 2000

Erie, Pa. -- For college students, it's not how many credit cards you own that makes you a materialist, but how you use them, a Penn State study shows.

"College students who rate themselves low on materialism own as many credit cards as their materialistic peers, but are less prone to use them to buy status symbol items," says Dr. Mary Beth Pinto, assistant professor of marketing at Penn State Erie, The Behrend College.

"Our study revealed no significant difference between students with high versus low materialism scores in terms of the number of credit cards owned," Pinto notes. "Subjects rating themselves high on materialism possessed, on average, 2.61 credit cards each, while those scoring low on materialism owned 2.69, suggesting that credit card ownership per se does not point to a materialistic or consumerist mindset."

"High materialism students reported using their credit cards more frequently in grocery stores, bars, motels and hotels and for clothing and gifts," says Dr. Diane H. Parente, assistant professor of management at Penn State Erie. "Significantly greater credit card purchases of clothes and gifts by the high materialism group support the belief that materialists place more value on `impression management' or the show of possessions as a means to enhance social status."

Compared to less acquisitive classmates, materialistic students in general cited a stronger willingness to use credit cards to gratify immediate desires, according to Dr. Todd S. Palmer, assistant professor of business law and management at Penn State Erie.

Furthermore, the self-styled materialistic students did not report significantly larger credit card balances than the low materialism group, she adds.

In their study, the researchers surveyed 1,022 students at 3 colleges in the northeastern United States. Of the 735 students who owned at least one personal credit card, the average number of credit cards per student was 2.66, with a range from 1 to 18 and an average monthly balance of $846.

The researchers interpreted the students' attitudes toward use of credit and credit card balances by evaluating their scores on the Richins and Dawson's Materialism Scale (1992). This survey measures the degree to which an individual makes material possessions central to his or her lifestyle and uses possessions to define success and happiness.

The results were published in the paper, "Materialism and Credit Card Use by College Students," in the April issue of the journal, Psychological Reports.

"Between 1991 and 1996, the number of credit cards in circulation increased over 80 percent to 376 million cards. By1998, Americans had made total purchases of $780 billion using two major credit cards alone," Pinto says.

"While in the past, credit card availability was limited to those demonstrating a solid credit history, increased competition in the banking industry has resulted in the relaxing of eligibility standards," Parente adds. "The proliferation of credit cards and their ease of acquisition ensure that students today have more opportunities for making credit purchases to a far greater degree than any other generation of college student. The good news is that the default rate among college students is lower than for the overall population."

Survey respondents were asked many credit cards they owned, the outstanding balance, the number of months they had carried that balance, credit card limit and how they acquired the card. They were also asked how frequently they used credit cards and for what purpose.

"Most students in our study group suggested that they do not spend money on luxuries or `extras,' but necessities," Palmer says. "It could be, however, that what most students today perceive as necessities (computers, backpacks, designer jeans, high-priced sneakers, etc.) would have been viewed as luxuries by their parents or grandparents."

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Contacts:

Paul Blaum (814) 865-9481 (o)

Vicki Fong (814) 865-9481 (o)/ (814) 238-1221 (h)

EDITORS: Dr. Pinto can be contacted at , Dr. Parente is at , and Dr. Palmer is at by email.