Skip to main content
Article thumbnail
Location of Repository

Authors retain copyright of their material under a Creative Commons Non-Commercial Attribution 3.0 License. Financial Literacy and Credit Card Behaviors: A Cross-Sectional Analysis

By Sam Allgood and William Walstad

Abstract

by Age In this study, we use a measure of financial literacy that includes both a test score of actual financial literacy and a self-rating of perceived financial literacy to investigate how financial literacy affects five credit card behaviors: (1) always paying a credit card balance in full; (2) carrying over a credit card balance and being charged interest; (3) making only a minimum payment on a credit card balance; (4) being charged a fee for a late payment; and (5) being charged a fee for exceeding a credit limit. Probit analysis was used to assess each behavior with a large nationally representative sample of U.S. adults (N = 28,146) divided into groups to reflect the five major decades in the adult life cycle (18–29; 30–39; 40–49; 50–59; and 60–69 and older). Perceived financial literacy was found to be a stronger predictor of less costly practices in credit card use than actual financial literacy for the five credit card behaviors and across each of the five age groups. The study also shows that the combination of the subjective assessment with the objective assessment of financial literacy provides a more comprehensive analysis of how financial literacy affects each credit card behavior. This combined approach to assessment produced the largest estimates of the effects of financial literacy on credit card behavior. The findings hold across the five credit card behaviors and the five age groups

Topics: Cover Page Footnote
Year: 2013
OAI identifier: oai:CiteSeerX.psu:10.1.1.352.5222
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.