BANK CREDIT CARD USAGE BEHAVIOR OF INDIVIDUALS … · Bank credit card usage behavior of...

International Journal of Social Sciences Vol. III (4), 2014

75

Bank credit card usage behavior of individuals; are credit cards

considered as status symbols or are they really threats to

consumers´ budgets? A field study from Eskisehir, Turkey

Celil Koparal

Nuri Çalık

Celil Koparal (Prof. Dr.)

Anadolu University Faculty of Economics and Administrative Sciences

Department of Business Administration

Yunus Emre Campus 26470 Eskişehir/TURKEY

Phone: ++90 2223350580-2101 Fax: ++90 2223350595

E-mail: [email protected]

Nuri Çalık (Prof. Dr.)

Anadolu University Faculty of Economics and Administrative Sciences

Department of Business Administration

Yunus Emre Campus 26470 Eskişehir/TURKEY

Phone: ++90 2223350580-3335 Fax: ++90 2223350595

E-mail: [email protected]

Abstract

This survey intends to find out the “bank credit card usage behavior” of the consumers where

store and other loyalty cards are excluded from this survey. A survey is applied to 916

respondents selected via stratified sampling of which 880 are found eligible to be analyzed;

Eskişehir is a city of Turkey with 700.000 inhabitants. The respondents are required to answer

45 questions of which first eight are of descriptive type on nominal scale and the last five are

related to demographic characteristics of these respondents. The rest 32 are statements which

are designed to reflect the credit card usage behavior of these people. The study consists of

five parts. The first part is an introduction where the history of credit cards in Turkey together

with the scope and the purpose of the study are concisely stated. The second part relates to the

theoretical background of the subject matter and the prior researches carried out so far. The

third part deals with research methodology, basic premises and hypotheses attached to these

premises. Research model and analyses take place in this section. Theoretical framework is

built and a variable name is assigned to each of the question asked or proposition forwarded

to the respondents of this survey. 32 statements or propositions given to the respondents are

placed on a five-point Likert scale where 1 represents strongly disagree; 2 disagree; 3 neither

agree nor disagree; 4 agree and 5 strongly agree. The last five questions about demographic

traits as age, gender, occupation, educational level and monthly income are placed either on a

nominal or ratio scale with respect to the nature of the trait. Six research hypotheses are

formulated in this section. The fourth part mainly deals with the results of the hypothesis tests

and a factor analysis is applied to the data on hand. Here exploratory factor analysis reduces

32 variables to eight basic components. KMO test of sampling adequacy and scale reliability

test proved high scores as 0.891 and 0.696 respectively. In addition non-parametric biraviate

analysis in terms of Chi-Square test is applied to test the hypotheses formulated in this respect.

The fifth part is the conclusion where findings of this survey are listed.

Key words: Self-esteem, default on loans, compulsive buying behavior, price sensitivity,

excessive card usage

mailto:[email protected]

mailto:[email protected]


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1. Introduction

“A credit card is a payment card issued to users as a system of payment. It allows the

cardholder to pay for goods and services based on the holder's promise to pay for them.

The issuer of the card creates a revolving account and grants a line of credit to the

consumer (or the user) from which the user can borrow money for payment to a merchant

or as a cash advance to the user. A credit card is different from a charge card: a charge

card requires the balance to be paid in full each month. In contrast, credit cards allow the

consumers a continuing balance of debt, subject to interest being charged. A credit card

also differs from a cash card, which can be used like currency by the owner of the card. A

credit card differs from a charge card also in that a credit card typically involves a third-

party entity that pays the seller and is reimbursed by the buyer, whereas a charge card

simply defers payment by the buyer until a later date.” A debit card (also known as a

bank card or check card) is a plastic payment card that provides the cardholder

electronic access to his or her bank account(s) at a financial institution. Some cards have a

stored value with which a payment is made, while most relay a message to the

cardholder's bank to withdraw funds from a payer's designated bank account. The card,

where accepted, can be used instead of cash when making purchases. In some cases, the

primary account number is assigned exclusively for use on the Internet and there is no

physical card.[1][2]

In many countries, the use of debit cards has become so widespread that

their volume has overtaken or entirely replaced cheques and, in some instances, cash

transactions. The development of debit cards, unlike credit cards and charge cards, has

generally been country specific resulting in a number of different systems around the

world, which were often incompatible. Since the mid-2000s, a number of initiatives have

allowed debit cards issued in one country to be used in other countries and allowed their

use for internet and phone purchases. Unlike credit and charge cards, payments using a

debit card are immediately transferred from the cardholder's designated bank account,

instead of them paying the money back at a later date. Debit cards usually also allow for

instant withdrawal of cash, acting as the ATM card for withdrawing cash. Merchants may

also offer cash back facilities to customers, where a customer can withdraw cash along

with their purchase. Although the introduction of credit card usage in Turkey has some

similarities with the European countries, there is a reverse order in terms of priory with

consumer credit process (individual banking) where consumer credit process started first

in European countries and then credit cards usage became widespread. On the other hand

in Turkey this process first started with credit cards and then individual banking came into

use.

The first credit cards introduced in Turkey is “Diners Club” credit card which was offered

to the customers of the “Service-Tourist Inc. (SETUR)” Which is a subsidiary of Koç

Goup, in 1968 after getting authorization from 28 Diners Club to issue cards for domestic

use.. After the introduction of Diners Club Cards by SETUR, Turkish Express Aviation

and Tourism Ltd. Co. Entered into the market with “American Express (AMEX) cards.

These two cards sustained their leadership until 1975 without any other competitors.

After 1975, Eurocard, MasterCard and Access credits are introduced which along to

Interbank group. The offices cards are then transferred to “Anatolian Credit Cards

Tourism Inc.” owned by a national bank and an insurance company. After the second half

of the eighties more national banks took place in this matter and widespread rapidly.

In USA, percent of united households that use selected payment instruments between

years 2001 and 2007 is as follows (U.S. Census Bureau, Statistical Abstract of the United States:

2012) :

http://en.wikipedia.org/wiki/Payment_card

http://en.wikipedia.org/wiki/Payment

http://en.wikipedia.org/wiki/Revolving_account

http://en.wikipedia.org/wiki/Line_of_credit

http://en.wikipedia.org/wiki/Consumer

http://en.wikipedia.org/wiki/Merchant

http://en.wikipedia.org/wiki/Cash_advance

http://en.wikipedia.org/wiki/Charge_card

http://en.wikipedia.org/wiki/Credit_card_interest

http://en.wikipedia.org/wiki/Cash_card

http://en.wikipedia.org/wiki/ISO/IEC_7812

http://en.wikipedia.org/wiki/Payment_card

http://en.wikipedia.org/wiki/Bank_account

http://en.wikipedia.org/wiki/Stored-value_card

http://en.wikipedia.org/wiki/Cash

http://en.wikipedia.org/wiki/Primary_account_number

http://en.wikipedia.org/wiki/Debit_card#cite_note-1

http://en.wikipedia.org/wiki/Debit_card#cite_note-1

http://en.wikipedia.org/wiki/Cheque

http://en.wikipedia.org/wiki/Credit_card

http://en.wikipedia.org/wiki/Charge_card

http://en.wikipedia.org/wiki/ATM_card

http://en.wikipedia.org/wiki/Debit_card_cashback


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Table 1. Payment Instruments in USA

[In percent. Based on Survey of Consumer Finances conducted by the Board of Governors of the Federal Reserve System

Characteristic of head of

household

Any of these

instruments

ATM 1

Debit card

Direct

deposit

Automatic bill

paying

Software 2

(Visa and

MasterCard

debit cards)

2001

2007

2001

2007

2001

2007

2001

2007

2001

2007

2001

2007

All households.

88.9

91.8

69.8

79.7

47.0

67.0

67.3

74.9

40.3

45.5

18.0

19.1

Under 30 years old. . . . . .

83.8

88.6

78.1

84.8

60.6

78.3

48.8

61.3

32.1

35.7

17.0

21.4

30 to 60 years old. . . . . . .

89.9

92.4

76.8

85.9

53.4

74.9

64.8

72.6

44.1

48.8

22.0

21.6

61 years old and over. . . .

89.4

92.1

48.9

63.5

24.6

43.9

83.2

86.4

35.9

42.9

9.0

12.3

Household income: 3

Low

income. . . . . . . . . . . .

74.3

79.7

46.8

58.8

29.2

48.1

51.9

60.5

18.2

23.8

6.1

7.7

Moderate income. . . . . . .

88.6

91.1

67.4

78.5

46.3

68.0

63.1

68.5

35.1

37.8

10.7

10.7

Middle income. . . . . . . . .

92.5

96.4

75.2

87.5

50.0

75.0

65.7

76.8

45.1

50.2

16.3

18.8

Upper income. . . . . . . . .

97.1

98.4

83.7

91.0

57.8

75.8

80.2

86.6

55.2

61.6

29.9

30.5

No college

degree. . . . . . .

85.1

88.4

63.7

74.0

42.3

63.7

61.8

68.9

33.7

38.0

10.9

11.9

College degree. . . . . . . . .

96.4

98.2

81.6

90.3

56.2

72.9

78.0

85.9

53.2

59.3

31.8

32.2

Similarly the following table shows numbers of credit cards, number of holders, credit

card purchasing volume and credit card debt outstanding:

Table 2. Credit Card Usage in USA

Type of credit card

Cardholders (mil.)

Number of cards

(mil.)

Credit card purchase

volume(bill. dol.)

Credit card debt

outstanding (bill.

dol.)

2000

2009

2012,

proj.

2000

2009

2012,

proj.

2000

2009

2012,

proj.

2000

2009

2012,

proj.

Total 1.

159

156

160

1,425

1,245

1,167

1,242

1,944

2,378

680

886

870

Visa. . . . . . . . . . . . . .

93

100

107

255

270

261

487

764

932

268

366

359

MasterCard. . . . . . . .

86

80

84

200

203

174

281

477

524

212

268

255

Store. . . . . . . . . . . . .

114

100

96

597

470

455

120

132

135

92

102

94

Oil

company. . . . . . . .

76

58

56

98

61

60

45

45

52

5

8

9

Discover. . . . . . . . . . .

36

40

43

50

54

59

69

100

127

48

53

54

American Express. . .

23

34

37

33

49

52

221

420

603

50

87

97


78

The Rest 2 . . . . . . . . .

133

105

81

192

137

106

18

5

5

5

3

2

In Turkey, credit card usage in numbers and purchase volume is as follows (Data

supplied from Tudkish Interbank Card Center) :

Table 3. Credit Card Types and Their Number by Years in Turkey

2001 2002 2003 2004 2005 2006 2007

Visa 7.829.906 7.906.995 9.572.460 13.202.147 15.989.986 17.800.385 20.878.744

MasterCard 6.102.024 7.565.766 10.255.667 13.450.664 13.963.095 14.623.148 16.416.829

Other 64.876 40.019 35.040 28.677 25.162 9.800 39.606

Total 13.996.806 15.705.370 19.863.167 26.681.128 29.978.243 32.433.333 37.335.179

Table 4. Credit Card Transaction Types, Transaction Number and Purchase Volume

(mil. USD) by Years in Turkey

2001 2002 2003 2004 2005 2006 2007

Automatic Teller Machine (ATM) 12.127 12.069 12.857 13.544 14.823 16.511 18.800

Point of Sale(POS) 364.636 495.718 662.429 912.118 1.140.957 1.282.658 1.453.877

Transaction Number 5.449.228 8.550.522 12.428.032 19.928.312 33.773.664 50.048.349 73.850.404

Purchase Volume (Million USD) 464 596 788 1.080 1.241 1.272 1.366

The above four tables reveal that there is a great gap between these two countries (USA

and Turkey in terms of credit card number (usage) and the volume of purchases (1245

million to 37 million and $1944 billion to $1366 million. Even when the population of

these two countries is used as weight factors (317 million vs. 76 million) this gap doesn’t

even close at per capita level.

After giving preliminary information about credit cards, it is time to return the purpose of

this study which is to ‘find out the consumer credit carol usage behavior in terms of their

demographic and psycho-graphic traits’.

2. Theoretical Background and Prior Research

2.1 Compulsive Buying Behavior and Credit Card Usage

Compulsive buying behavior is a form of buying which is still confused with impulse

buying although these two are quite different concepts. The major difference between

them as follows: “Impulsive buying is motivated by an external trigger such as a product

near the cash register. Compulsive buying is motivated by an internal trigger such as

stress or anxiety, and shopping and spending is an escape from the internal trigger.

Compulsive buying can develop into addictive buying when it become s a need to

continuously spend in order to alleviate stress and anxiety” (Johnson and Attman, p.394).

Another definition of compulsive buying is given by Michael R. Solomon: “Compulsive

consumption is the process of repetitive, often excessive shopping used to relieve tension,

anxiety, depression, or boredom”.

A number of psychographic attributes can be assigned to those consumer who frequently

succumb to compulsive buying as, low self-esteem, depression, anxiety, materialism,

excitement seeking, impulsiveness, and low emotional stability/high neuroticism (Johnson

and Attman, p. 395) Compulsive buying behavior, generally thought to be a chronic tendency

to spend beyond one’s needs and means. Credit card usage is suggested as a moderating


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variable between money attitudes (power, distrust and anxiety as independent variables)

and compulsive buying behavior (dependent variable (Robents and Jones, 216).

Fig 1. Relationship Between Money Attitudes and Compulsive Buying

Distrust

Power

Credit Card

Usage

Anxiety

Compulsive

Buying

Credit card misuse on the other hand plays the same role (moderating variable) between

consumer psychological traits as self-esteem, power prestige and risk taking and

compulsive buying (Palan et. Al., p. 82):

Fig 2. Relationship Between Psychological Traits and Compulsive Buying

Power Prestige

Self-Esteem

Credit Card

Misuse

Risk-Taking

Compulsive

Buying

2.2 Store and Debit Cards as complimentaries of Credit Cards

Store issued credit cards function as an alternative payment and financing medium.

Researches based on 1998 Survey of Consumer Finances revealed that credit availability

through bankcards is negatively correlated with consumers’ use of store cards as a


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financing medium (Lee and Kwon, p. 239). According to the survey of Consumer Finances in

1998, 68 % of American families have credit cards and half of the families have store

cards. The main difference between the credit and store cards is that store cards could

only be used at locations affiliated with the issuer of the cards. For practical reasons store

cards are also classified under the broad definition of credit cards together with bankcards.

Debit cards defined by Foscht et al is as follows (Foscht et al, p. 154): “Debit cards, on the other

hand, are a form of payment that requires that the buyer has the funds (or a line of credit

attached to the account) in his/her account before a purchase transaction is consummated.

The chief advantage of using a debit card is that it is a cashless way of paying cash for a

product or service. The immediate deduction of the payment amount from the account

also ensures that the customer does not spend more than what he/she has in his/her

account. However, a service fee may be levied by the financial institution processing the

debit transaction”.

An empirical study carried on 114 credit card holders in Dubai revealed that “the loyalty

behavior of credit card holders was influenced by perceived service quality and perceived

value, which in turn were influenced by involvement. Credit card firms therefore need to

devote adequate attention to their customers as well as delivering them prompt service,

because these quality determinants have both a high direct effect on loyalty in addition to

an equivalent indirect effect mediated by value. At the same time, given the strong direct

perceived value-loyalty linkage, credit card issuers should ensure that their value

proposition, in terms of cash value equivalence, convenience of use, and benefits

associated with the frequent use of the cards are appealing to their customers. This should

not restrain credit card suppliers from using premium pricing strategies for their services,

but it implies that the benefits that customers get in return should be seen as offsetting the

costs for them”. (Parahoo, p.12)

2.3 Credit Cards and Perceived Risk

Because of uncertainty, consumers want to manage their risk in exchanges. As said Bienstock

(2002), customers use information to increase certainty and lower the risk. Similarly, Mitra,

Reiss and Capella (1999) stated that perceived risk is used as a variable to explain the risk

perception. Murray (1991) expressed the greater the degree of perceived risk in a pre-

purchase context, the greater the consumer propensity to seek information about the product.

In the marketing literature, Jacopy and Kaplan’s risk definition and classification used widely.

Especially, they have some researches about perceived risk. (Jacoby and Kaplan, 1972;

Kaplan et al., 1974). According to them, perceived risk has been operational zed by five

specific risk types (Jacoby and Kaplan, 1972; Kaplan et al., 1974). Five different risk

dimensions identified are these (Jacoby and Kaplan, 1972):

Financial (monetary);

Performance (functional);

physical;

social; and

psychological risk

However the sixth important risk parameter is also identified as the time risk (Mitra, Reiss

and Capella , 1999). Time risk involves the possible loss of convenience or time associated

with the satisfactory delivery of a service according to Mitra, Reiss and Capella, (1999).

“The major types of risk (Schiffman , L . G . and Kanuk, P.76) that consumers may perceive when

making product purchase decisions include functional risk (risk that the product will not

perform as expected), physical risk (risk to self and to others that the product may pose), fi


81

nancial risk (risk that the product will not be worth its cost), social risk (risk that a poor

product choice may result in social embarrassment), psychological risk (risk that a poor

product choice will bruise the consumer ’ s ego) and time risk (risk that the time spent in

product search may be wasted if the product does not perform as expected). Perceived risk is

considered a consumer characteristic as well as a product characteristic as it may be due to

various factors either associated with personal or product features. (Turley , L . W . and LeBlanc ,

R . P . PP.11-18) Another research is carried on the moderating influence of multi-item-list of

value on credit card attributes, age, and gender in credit use among Indian customers (Goyal,

p. 332”.

3. Research Model and Hypotheses

This field research was conducted in May 2013 applied to 916 respondents selected via

stratified sampling of which 880 are found eligible to be analyzed, Eskişehir is a city of

Turkey with 700.000 inhabitants. The respondents are required to answer 45 questions of

which first eight are of descriptive type on nominal scale and the last five are related to

demographic characteristics of these respondents. The rest 32 are statements which are

designed to reflect the credit card usage behavior of these people. All 45 answers

(statements) are transformed into variables as in the following table:

Table 1. Variables and Their Explanations

Variable Explanation Mean SD

NOOFCARD Number of credit cards that you actively use 1.80 0.92 USEPERIO How long have you been using credit cards? 2.53 0.76 TOTALNUM What is the total limit for your credit card(s)? 2.54 1.39 MOSTPRAC What is your most common practice in using credit

cards?

1.41 0.80

PRODGROU Which of the following product groups or service types

that you spend most with your credit cards?

3.04 2.56

SECURITY Apart from user name and password (mobile password)

what type of security tools do you use while shopping

online:

3.75 1.40

COMPLAIN When you have a complaint about your credit card,

whom do you usually appeal?

2.95 1.30

CANCELLE If one or more of your credit cards are canceled in the

last two years, what is the main reason of this?

3.46 1,51

MAXLIMIT I like to use the maximum limit of my credit cards. 2.38 0.82 FULLPAYM I always pay off my credit card debt fully and timely. 1.83 1.39 AGITATED When payment date of my credit card(s) approaches, I

often get agitated.

2.40 1,30

NOCAREPR I don't care much about the price of a product when I use

my credit card(s).

3.87 1.18

SPENDMOR Using credit cards drive me to spend more. 2.67 1.28 AVOIDDEF I always avoid default on my loans of my credit card(s). 2.13 1.20 UNDERLIM I never go beyond my credit card(s) limit(s). 3.01 1.33 PRESTIGE I consider credit cards as a sign of prestige. 2.99 1.11 PREFCRCA I prefer credit cards, because they offer payment in

installments without charging interest.

3.90 1.20


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FEELSECU I feel fully secure when I shop online with a credit card. 2.26 1.20 CONTREXP It is more difficult to control expenditures with credit-

card payment.

4,01 1.01

BUDGETLI My budget limits me from over-spending even if I use

my credit cards.

2.53 1.25

SIGNMODE I consider credit card usage as a sign of modernity. 3.35 1.19 CARELESS I don't care much about the price of a product when I use

my credit card.

3.69 1.20

RECKLESS I consider myself a bit reckless in taking risks. 2.70 1.31 REASNBLI The banks charge reasonable interest rates on credit cards

(in case of default, partial payment, installment purchases

etc.).

2.18 1.202.

OVERSPEN Credit cards lead people to overspending. 2,57 1.80 ADVANTAG Paying with credit card is always more advantageous

than paying with cash

2.45 1.15

SELFCONF It gives me self-confidence to pay with credit card when

I'm abroad.

3.71 1.11

EXCESSCA I believe that I have excessive credit cards. 3.28 1.13 NOMEMBRF I cancel the credit cards which require membership fees. 2.65 1.17 YEARNOLD I often yearn for the old days without credit cards. 1.96 1.14 FREEEXCS Credit card usage gives me the freedom of excess

spending.

.360 1.26

INTRSTIN I am more interested in the amount of money people

have, rather than their success in their occupations.

2.39 1.12

IMPRESSO I often purchase things to impress the other people. 2.80 1.22 DREADEXC My habit of excess credit card usage often frightens my

family members.

1.79 1.06

LESSATTN I pay less attention to security when excitement and

adventure are under consideration.

1.72 1.01

MINIMDEB I developed the habit of paying the minimum debt on my

credit card(s) bills.

2,44 1,27

FEELBETT Spending money makes me feel better. 2.17 1.19 COMPULSI Sometimes I lose my control and do purchases that I

cannot afford with my credit card.

2.28 1.30

ESTIMABL I feel myself as an estimable person or at least not

inferior than the other people.

2.72 1,23

IMPULSIV I often act impulsive when I do my purchases with credit

cards.

2.30 1.23

AGE Age ( ) 1) 18-25 2) 26-40 3) 41-62

4) 62+

2.91 1.04

GENDER Gender ( ) 1) Female 2) Male 1.69 0,45 OCCUPATI Occupation ( ) 1) Wage or Salary Earner 2)

Tradesman/businessman 3) Self-employed, professional

or manager 4) Retired 5) Housewife 6) Student

2.05 0.92

EDCLEVEL Education Level (Last Graduated) 1) Elementary

2) High School 3) College or University

1.55 0,50

INCOME Monthly Household Income ($.) ( ) 1) 0-500

2) 501-1000 3) 1001-2000 4) 2001-4000

5) 4000+

2.87 1.63


83

Frequency Charts for the First Eight Questions on Nominal Scale

The following charts depict the frequency distributions for the first eight questions on

nominal scale:

Figure 3. Number of Credit Cards that Respondents Actively Use

6,82

%

13,64%

32,16%

47,39%

More than

khree

Three

Two

One

Number of credit cards that you actively use

__

Figure 4. The Period that the Respondents are Using Their Credit Cards

9,77%

40,45%43,18%

6,5

9%

More than

12 years

5-12 years

1-4 years

Less than

one year

How long have you been using credit cards?

__

Figure 5. Total Limit of the Respondents Cards


84

3,

64

%7,0

5%

12,95%

21,25%

26,70%

28,41%

More than

$10000

$5001-

10000

$2501-5000

$1251-2500

$501-1250

less than

$500

What is the total limit for your credit card(s)?

__

Figure 6. The Most Common Practice of the Respondents in Using Credit Cards

19,55%

1…

78,52%

Online (by

internet)

By mail-

order

Directly

by POS

device

What is your most common practice in using credit

cards?

__

Figure 7. The Product Groups or Service Types that the Respondents Spend Most with

Their Credit Cards


85

2

,

3

9

%

……5,0

0%

6,02

%

7,73%

28,64%

4,

5…

41,36%

Hotel, restaurant,

travel, holiday,

entertainment,

etc.

Gas (for

vehicles),

utilities (for

house), tax (all

direct taxes),

etc.

Cameras, handy

cams, printers,

optics, musical

instruments, etc.

TV, cell-phone,

audio-video

systems, iphone,

ipad, computers

(desktop, laptop,

notebook), mp3,

etc.

Clothing, shoes,

sunglasses,

accessories,

sundries, etc.)

Books, stationery,

vcd-dvd,

magazines, etc.)

Store purchases

(food, detergents,

small household

appliances, etc.)

Which of the following product groups or service types that

you spend most with your credit cards?

__

Figure 8. Apart From User Name and Password (Mobile Password) the Type of Security

Tools the Respondents Use While Shopping Online

36,82%

39,43%

9,55%

14,20%

I don’t

shop

online

with

credit

card.

I don’t use

a security

tool

3D Secure

Virtual

card

Apart from user name and password (mobile password)

what type of security tools do you use while shopping

online:

__

Figure 9. The Appeal Point of the Respondents When They Have a Complaint About

Their Credit Cards


86

54,77%

12,61%

5,45%

27,16%

Point of

sale (of

the

purchase)

To the

issuer of

the card

(Visa,

Master

Card, AMEX

etc.)

To local

authoritie

s

To the

bank

directly

When you have a complaint about your credit card,

whom do you usually appeal?

__

Figure 10. The Main Reason for the Cancellation of Respondents’ Credit Cards

…

36,02%

24,43%

…

23,07%

13,98%

The bank

canceled it

(them) because

I did not pay

my debts

regularly.

I did not make

use of that

(those) card(s)

for a long

time.

The bank

charged

excessive

membership fee.

I had too many

cards so I

wanted to get

rid of some of

them.

I terminated

all my business

with that bank.

If one or more of your credit cards are canceled in

the last two years, what is the main reason of this?

__

Hypotheses

Several research hypotheses are formulated and tested as follows;

a. Relationship Between Consumer Demographics and Credit Card Usage

Behavior:

H1 : There are statistically significant differences between the consumer demographics

and credit card usage behavior

b. Relationship Between Price Sensitivity and Shopping With Credit Cards.


87

H2. People who spend excessively with credit cards do not care much about the price of

the product.

H3. Spending more with credit cards is positively correlated with price insensitivity.

H4. There is a significant positive relationship between price insensitivity and compulsive

buying behavior.

c. Relationship Between Compulsive Buying Behavior and Overspending

H5. Compulsive Buying Behavior Leads People to Overspending with Credit Cards.

d. Relationship Between Compulsive Buying Behavior and Consumers’ Psycho-

graphical Traits.

H6. Compulsive buying behavior is positively correlated with psycho-graphical traits as,

power, prestige, anxiety, self-esteem self-confidence and risk-taking.

4. Analyses and Results

Hypotheses Tests Results

H1 is sustained at most of the demographic traits

Bi- is hypotheses formulated in the previous

section are shown on the following tables:

Table 5. Relationship Between Consumer Demographics and Credit Card Usage

Behavior (*):

Consumer Demographics

Statements Age Gender Occupation Education Income

I like to use the maximum limit

of my credit cards. 84.4 %

41-62 female rejected rejected rejected

I always pay off my credit card

debt fully and timely. 76.6 %

rejected female wage and

salary earner rejected $4000+

When payment date of my

credit card(s) approaches, I

often get agitated. 63.3 %

18-25 female retired rejected $2001-

4000

I don't care much about the

price of a product when I use

my credit card(s). 69.5 %


4000

Using credit cards drive me to

spend more.

51.2 %

18-25 female rejected college or

university

(*)

rejected

I always avoid default on my

loans of my credit card(s).

71.7 %

18-25 female retired Elementary

and high

school

$0-400

I never go beyond my credit

card(s) limit(s).

42.5 % 44.0%

18-25

+62

female

male

retired

wage and

salary

earner

rejected $2001-

4000

$1001-

2000

I consider credit cards as a sign 26-40 female retired rejected $2001-


88

of prestige. 74.3 % 4000

I prefer credit cards, because

they offer payment in

installments without charging

interest. 73.5 %

+62 female retired rejected $2001-

4000

I feel fully secure when I shop

online with a credit card.

65.0 %

41-62 female Self

employed

professional

or manager

(*)

rejected $2001-

4000

It is more difficult to control

expenditures with credit-card

payment. 80.1 %

+62 Male Rejected rejected Rejected

My budget limits me from over-

spending even if I use my credit

cards. 49.8 %

18-25 female retired elementary

& high

school

$2001-

4000

I consider credit card usage as

a sign of modernity. 54.0 %

62+ Male tradesman/

businessman

elementary

& high

school

rejected

I don't care much about the

price of a product when I use

my credit card. 66.1 %

62+ female Retired rejected $2001-

4000

I consider myself a bit reckless

in taking risks. 49.6 %

18-25 female

male

Self

employed

professional

or manager

retired

rejected Rejected

The banks charge reasonable

interest rates on credit cards (in

case of default, partial payment,

installment purchases etc.).

71.1 %


4000

Credit cards lead people to

overspending. 54.5 %


4000

Paying with credit card is

always more advantageous than

paying with cash 55.5 %

18-25 female

(*)

rejected rejected Rejected

It gives me self-confidence to

pay with credit card when I'm

abroad. 78.3 %

62+ Male tradesman/

businessman

rejected $1001-

2000

I believe that I have excessive

credit cards. 47.2 %

62+ Male Rejected college &

university

$1001-

2000

I cancel the credit cards which

require membership fees.

43.1 %

18-25 female retired

(*)

rejected $2001-

4000

I often yearn for the old days

without credit cards.

78.5 %

62+ female wage and

salary earner elementary

& high

school (*)

$4000+

Credit card usage gives me the 62+ female Rejected Rejected $2001-


89

freedom of excess spending.

61.0 %

4000

$501-

1000

I am more interested in the

amount of money people have,

rather than their success in their

occupations. 60.5 %

26-40 rejected tradesman/

businessman

Rejected $4000+

(*)

I often purchase things to

impress the other people.

47.3 %

18-25 female

male

retired

tradesman/

businessman

Rejected $2001-

4000

$501-

1000

My habit of excess credit card

usage often frightens my family

members. 80.5 %

18-25 female retired Rejected $2001-

4000

I pay less attention to security

when excitement and adventure

are under consideration.

83.9 %


4000

I developed the habit of paying

the minimum debt on my credit

card(s) bills. 63.1 %

18-25 female Self

employed

professional

or manager

rejected rejected

Spending money makes me feel

better. 70.9 %

18-25 female retired elementary

& high

school (*)

$2001-

4000

Sometimes I lose my control

and do purchases that I cannot

afford with my credit card.

67.6 %


4000

I feel myself as an estimable

person or at least not inferior

than the other people. 48.1 %

18-25 female retired college &

university

$2001-

4000

$4000+

I often act impulsive when I do

my purchases with credit cards.

67.1 %

18-25 female Self

employed

professional

or manager

rejected $2001-

4000

Tests are conducted at Agree + Strongly Agree

Disagree + Strongly Disagree

(*) Those demographics which differ significantly from others at

level

H2 is tested and is not sustained at both significance levels,

H3 proved a significant inverse relationship between the proposal that “using credit cards

drive the people to spend more and the price insensitivity of such people”. In other words this

hypothesis revealed just the opposite of what has been intended. Chi-Square analysis proved

that 53.1 % of the price conscious consumers agreed with the idea that using credit cards

drive them to spend more; whereas only 23.3 % of the price insensitive respondents accepted

it.

H4 also ends up with an inverse (negative) relationship between price insensitivity and

compulsive buying behavior where 62.4 % of the price conscious consumers admit (strongly

agree) that they lose control from time to time and do purchases that they cannot afford with


90

their credit card. On the other hand 85.7 % of the price insensitive consumers reject this

proposal. The same is also true with impulsive buying behavior (63.5 % vs. 82.8 %),

H5 is sustained at all levels of compulsive behavior as shown on the following table:

Table 6. Relationship Between Compulsive Buying Behavior and Overspending

Overspending Spending Within Credit Card Limits

Statements for

Compulsive Behavior

Agree

Average

%

Agree

Disagree

Average

%

Disagree Agree

Average

%

Agree

Disagree

Average

%

Disagree

Spending money makes

me feel better

25.7 % 80.0 % 54.5 % 12.9 % 25.7 % 9.7 % 54.5 % 76.3 %

I often act impulsive

when I do my purchases

with credit cards

25.4 % 60.8 % 59.5 % 25.5 % 25.4 % 9.4 % 59.5 % 75.2 %

Sometimes I lose my

control and do purchases

that I cannot afford with

my credit card.

25.7 % 45.2 % 54.5 % 43.7 % 25.7 % 15.0 % 54.5 % 64.6 %

Agree + Strongly Agree

Disagree + Strongly Disagree

The average figures on that table depicts the average agreement and disagreement rates of

total consumers who exhibit compulsive and non-compulsive buying behavior. The

percentages on the other columns are the discrete agreement and disagreement values

respectively for these consumers. All these values reveal the fact that for those consumers

who exhibit compulsive buying behavior overspending agreement rates are far above the

total consumers’ average and contrary to this their disagreement levels are below the

average. On the other and such consumers’ agreement rates for ‘spending within credit

card limits’ are much below the population’s average and disagreement dates are always

higher than the total consumers’ average.

H6 is accepted for most of the psycho-graphical traits except “prestige”. Consequently,

traits like risk taking (except one level), self-confidence, power, self-estem and excitement

all lead to and positively correlated (at <0.01 significance level) with compulsive buying

behavior.

Table 7. Relationship Between Compulsive Buying Behavior and Consumers’

Psycho-graphical Traits.

Risk Taking Prestige

Statements for

Compulsive Behavior

Agree

Average

%

Agree

Disagree

Average

%

Disagree Agree

Average

%

Agree

Disagree

Average

%

Disagree


me feel better

31.4 % 52.0 % 49.6 % 32.0 % 74.3 % 40.0 %

(*)

13.4 % 38.0 %

(*)



with credit cards

31.4 % 45.1 % 49.6 % 43.1 % 74.3 % 45.1 %

(*)

13.4 % 432 %

(*)

Sometimes I lose my



my credit card.

31.4 % 24.7 %

(*)

49.6 % 64.4 %

(*)

74.3 % 48.0%

(*)

13.4 % 6.2 %

Self-confidence Power

Statements for

Compulsive Behavior

Agree

Average

%

Agree

Disagree

Average

%

Disagree Agree

Average

%

Agree

Disagree

Average

%

Disagree


91


me feel better

68.3 % 84.0 % 16.8 % 14.0 % 35.5 % 72.0 % 47.3 % 22.0 %



with credit cards

68.3 % 86.3 % 16.8 % 11.8 % 35.5 % 80.4 % 47.3 % 15.72 %

Sometimes I lose my



my credit card.

68.3 % 76.7 % 16.8 % 19.27 % 35.5 % 52.0 % 47.3 % 35.6 %

Self-esteem Excitement

Statements for

Compulsive Behavior

Agree

Average

%

Agree

Disagree

Average

%

Disagree Agree

Average

%

Agree

Disagree

Average

%

Disagree


me feel better

36.1 % 72.0 % 48.1 % 30.0 % 25.7 % 70.0 % 63.3 % 26.0 %



with credit cards

36.1 % 62.8 % 48.1 % 21.5 % 25.7 % 72.5% 63.3 % 27.5 %

Sometimes I lose my



my credit card.

36.1 % 41.1 %

(*)

48.1 % 35.5 % 25.7 % 41.1 % 63.3 % 55.2 %

Factor Analysis

An exploratory factor analysis applied on 32 variables on scale reduced them to 8

components as, price consciousness, prestige-power, online security, self-confidence,

overspending, default on payments, materialistic behavior and yearning for old days. The

following rotated component matrix table shows these factors clearly:

Table 8. Rotated Component Matrix

Rotated Component Matrix(a)

Component

1 2 3 4 5 6 7 8

1. PRICE CONSCIOUSNESS

The banks charge reasonable interest rates

on credit cards (in case of default, partial

payment, installment purchases etc.).

,825

I always avoid default on my loans of my

credit card(s). ,815

I often purchase things to impress the

other people. ,687

When payment date of my credit card(s)

approaches, I often get agitated. ,683


92

I prefer credit cards, because they offer

payment in installments without charging

interest. ,669

I never go beyond my credit card(s)

limit(s). ,666

Credit cards lead people to overspending. ,659

Spending money makes me feel better. ,649

I often act impulsive when I do my

purchases with credit cards. ,641

I don't care much about the price of a

product when I use my credit card. ,628

I feel myself as an estimable person or at

least not inferior than the other people. ,542

I developed the habit of paying the

minimum debt on my credit card(s) bills. ,417

2. PRESTIGE

I don't care much about the price of a

product when I use my credit card(s). ,737

I consider credit cards as a sign of

prestige. ,663

Sometimes I lose my control and do

purchases that I cannot afford with my

credit card. ,633

I always pay off my credit card debt fully

and timely. ,415

3. CARD SECIRITY

I consider myself a bit reckless in taking

risks. ,698

I feel fully secure when I shop online with

a credit card. ,646

I pay less attention to security when

excitement and adventure are under

consideration. ,624

My habit of excess credit card usage often

frightens my family members. ,619


93

4. SELF-CONFIDENCE

It gives me self-confidence to pay with

credit card when I'm abroad. ,668

I consider credit card usage as a sign of

modernity. ,630

I like to use the maximum limit of my

credit cards. ,461

5. OVERSPENDING

My budget limits me from over-spending

even if I use my credit cards. ,654

Using credit cards drive me to spend

more. ,573

I cancel the credit cards which require

membership fees. ,558

6. DIFFICULTY TO CONTROL

EXPENDITURES

It is more difficult to control

expenditures with credit-card payment. ,784

I believe that I have excessive credit

cards. ,633

7. MATERIALISTIC BEHAVIOR

Paying with credit card is always more

advantageous than paying with cash ,711

Credit card usage gives me the freedom of

excess spending. ,634

I am more interested in the amount of

money people have, rather than their

success in their occupations. ,482

9. NOSTALGIC BEHAVIOR

I often yearn for the old days without

credit cards. ,828

Extraction Method: Principal Component Analysis.

Rotation Method: Quartimax with Kaiser Normalization.

a Rotation converged in 11 iterations.


94

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. ,891

Bartlett's Test of

Sphericity

Approx. Chi-Square 9986,867

df 496

Sig. ,000

Reliability Statistics

Cronbach's

Alpha N of Items

,746 32

5. Findings

This study reveals that almost half of the consumers own only one credit card, and 20 % of

them use kore than three cards. Card users are almost divided equally in terms of the period

they are using their cards (less than four and more than five years). The majority of the card

users (54 %) have a total card spending limit of $1200 or less. On the other hand the highest


95

limit of $5000 or more is granted to only 5 % of the population. There is also a new

govevnment regulation imposed on this top limit that it would not exceed the total montly

income of the persons.The usage of credit cards is divided ino two groups. The majority of the

people (80 %) use POS terminals in their spendings and the rest (20 %) submit their cars

online.The fraud on POS terminals is also seen but not so widespread where consumers are

warned to enter their information directly by themselves but not through intermediadies.

Credits cards are mostly (41 %) used for grocery spendings (Foodstuffs, detergents, small

house appliances etc.). Clothing, sunglasses, accessories, shoes etc. take the second place.

Apart from user-name and password the majority of the consumers (62 %) do not need to use

another security tool while shopping online. On the other hand 23 % of the respondents use

virtual cards and 15 % “3-D secure” system. Any claims or complaints about the credit cards

is mostly directed to the point of sale authorities (55 %); rather than the bank or the issuer of

the card (27 %) The most important reason for the cancelled cards in the past two years is that

the consumers could not be able to pay their debts regularly (36 %). The other resons are,

long idle time of not using the credit card ’24 %) and the desire of the consumers to get rid of

their excessive cards (23 %). The great majority of the card-holders do not use the maximum

limit of their cards (85 %) and oly 3 % who do so... This is escepially true for those

consummers with lower incomes. People who achieve to pay their credit card debts fully and

timelyare not so many (17 %). 77 % of such people fail in this respect. Accumulation of debt

causes many defaults of payment and many cases are brought to lawcourts in this

respect.26 % of the consumers get excited as the due date of tneir cards approaches. On the

other hand 63 % of them do not care much about this matter. Psychographical factors play

less and people prefer to steay calm. The consumers who pay less attention to the prices of the

products and services as long as they use credit cards is around 70 %. A minority of 18 %

rejects this idea. This does not prove that credit card users are less sensitive to price in all

their spendings but there is an evidence that they act more free when using using credit cards

than when they spend out of pocket. 74 % of the population sees credit cards as a symbol of

prestige. Only 13 % of them declines it. This was more evident in last decades when credit

card usage was not widespread so much as today. Granting installments to credit cards at the

purchases is favored by the people (73 %) . Only 19 % of the consumers oppose to this

situation. Installments are applied to all spendings regardless of their magnitude except

foodstuffs and other store items.Consumers do not have a complete trust to online shopping

by credit cards (65 %). People who have trust is only 19 % of the population. There are many

frauds and cheatingz in this respect, however less people prefer to use virtual cards and

similar care to avoid it. 80 % of the respondents believe that it is hard to control the

expenditures by using credit cards. Only 10 % of them rejects this idea. Postponing the

payment dates appear as an advantage to them. Only one fourth of the population thinks that

their budgets will not allow excessive spendings even they use credit cards. 50 % of the

people think the other way round. Rate of those who perceive the credit cards as a sign of

modernity is 55 %. 29 % of the consumers rejects it. People who regard the interest on default,

partial payment, commission on service etc. As reasonable do not exceed 19 %. A majority of

74 % do not accept this idea. People do not accept the proposition that spending with credit

cards is more advantageous than spending with cash (56 %). Only 23 % of them accepts this

proposition. Those who think that spending abroad by credit cards grants them self-

confidence consist 68 % of the population. Those opposing to this idea remains at 17 %, and

47 % of the consumers think that tey own excessive number of credit cards. 25 % of them do

not adopt this idea. Only a minority of the consumers cancelled their cards because of high

membership fees (24 %). This action is not favored by 43 % of the consumers. Membership

fees are restricted recently to certain conditions by law. 79 % of the consumers support credit

card usage. Those who yearn for the ‘good old days without credit cards are not many


96

(14 %). . These are especially elder and retired people. Complsive buying behavior is

significantly and positively related with overspending and with, risk-taking, power-seeking,

self-confidence, self-esteem and excitement. On the other hand no statistical evidence is

found between compulsive buying behavior and prestige-seeking. A significant positive

relationship is found betwen compulsive buying behavior and price sensitivity, where price

conscious consumers agreed with the idea that using credit cards drive them to spend more

and they admit (strongly agree) that they lose control from time to time and do purchases that

they cannot afford with their credit card. (an inverse conclusion of what was expected while

formulating the hypothesis).

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