Toward a theory of credit card management: A qualitative exploration of credit card use and abuse

This research motivates a study of credit card use and abuse through a discussion of trends in credit card use which highlight the issues' importance (e.g., dramatically increasing credit card balances, reduction in income and credit requirements needed to obtain a credit card, etc.). Motivation is also provided by describing and reviewing the current body of research which exists on credit card use/abuse and emphasizing the shortcomings of this body of work in terms of its relatively small contribution to achieving a true understanding of credit card use/abuse. The grounded theory method is then described and reasons for its choice are explicated.;Multiple methods were used to triangulate on credit card management, the focal construct under study. First, in-depth interviews were conducted with 28 credit card users, varying in their typical level of outstanding balance. Differences in low, moderate, and high debtors' norms, attitudes, and behaviors with regard to credit card use were then examined through a continuous development of theoretical coding and memoing, utilizing the constant comparative method. Second, in-depth interviews were carried out with 10 credit card counselors from a major non-profit organization. Counselors were asked to give their attributions for their clients' credit card debt, describe their clients' debt situations, and, in general, share their experiences as credit card counselors. This secondary data from professionals has the effect of adding additional data, insight, and support to the theory developed in this study. Third, participant-observation was done at four money management seminars given by the credit counselors, providing additional data and a third perspective to the focal construct under study.;This theory development effort resulted in numerous theoretical propositions regarding credit card management. Attribution theory correctly predicts that high credit card debtors tend to make external attributions for their debt (e.g., emergency situations necessitated card use, overly aggressive card marketing contributed to their debt, etc.), while credit counselors overwhelmingly make internal attributions for their clients' debt (e.g., lack of budgeting, lack of self-discipline, etc.). Behavioral antecedents of credit card debt, such as a lack of budgeting for periodic expenses and regular use of credit cards for daily necessities such as groceries and gasoline, were discovered. Also incorporated into the theory were attitudes and non-attributional beliefs related to credit card debt, including but not limited to attitude toward the cost of borrowing, perceived cost of credit card use, expectation of future income, underestimation of payback difficulty, and feelings of deservedness. Environmental antecedents such as reference group modeling and teaching and financial/credit management education (or lack thereof) are also encompassed by the theory. Finally, costs of credit cards and consequences of credit card debt are incorporated. Following the discussion of results, contributions of this research and avenues for future research are discussed. (Abstract shortened by UMI.).