Olivia J. Dumm
Professor Marlen Harrison
English 202
13 October 2009 |
Shopping Compulsively with the Swipe of a Card
Introduction
Excessive credit card use is a major contributor to college students’ debt today. A survey
done in 2000 by Nellie Mae, a prominent leader of educational loans, reported that 78%
of undergraduates (aged 18-25) have at least one card. These students that own a card
carried an average balance of $4,776 (Mae, 1). In fact, nearly 9 percent of people under
thirty-five years of age are at least sixty days behind in their payments of debt(Jones,
215). Money is spent too freely amongst college students today. Shopping trips to the
malls result in students feeling guilty about purchases that should not have been made.
If the cash is not there this society we live in today has the credit card to take its place.
Students use the phrase“I’ll pay it off later” much too often and this is where the debt
begins to add up. The reason why this money is spent so freely without contemplation is
known as compulsive shopping. This is an overpowering urge to buy items, especially
clothing in a pattern of “shopping binges” (Krueger 574). Individuals engage in buying
behavior that is so uncontrolled and excessive that it leads to psychological distress and
other negative consequences, including serious debt (Dittmar 833). However, if college
students didn’t have credit cards would they still be in the same situation? It is pretty
much impossible to buy that extra sweater and shirt if we are out of cash and have no
“plastic” on hand. In Holub’s article “Credit Card Usage and Debt among College and
University Students” Holub concludes that there are many advantages in owning a
credit card such as establishing credit, medical or family-related emergencies, making
travel arrangements and reservations, payment conveniences such as shopping by
telephone and the Internet, and cash less transactions. I agree that credit cards do come
in handy and are a necessary item in order to get by in college but I feel that they are
overused when it comes time to go to the mall. Credit cards are a great item for all of the
above purposes but when they are overused in shopping malls and grocery stores the
debt adds up too quickly. A recent study has shown that both the number of students
owning a credit card as well as the amount of debt held by students has risen in the last
couple of years (Mae 1). Since eighteen year-olds in most states are eligible for a card
without parental consent or employment, many have been concerned that students will
use credit unwisely because of their financial inexperience and suffer the long-term
consequences of carrying high debt (U.S. General Accounting Office 1). This paper will
address the conditions that cause compulsive shopping. So how does the use of credit
cards enable compulsive shopping amongst college students on the Indiana University
of Pennsylvania campus. I will further research what causes college students to shop
compulsively and furthermore, what can be done to prevent it from happening. Krueger
states that compulsive shopping occurs in individuals who are very conscious of how
they look and appear to others, who attempt to be pleasing to others, and whose fragile
esteem and sense of self depend on the response of others. This could certainly be true
amongst college students because there is such a need to fit into today’s fashion trends
to keep self-esteem high. This research paper will illustrate how debit/credit cards
enable compulsive shopping on the IUP campus amongst college students.
Literature Review
I am applying my research to college students as my audience because in the late 1980’s
credit card companies began targeting college students in an effort to expand market
share(Cliff 25). By 2001, over three-quarters (83%) of all undergraduate students had
one or more credit cards. (Mae, 1). I want to use college students at my audience
because I, like many other college students, do not yet know the ropes of credit cards.
Credit card companies view college students as inexperienced placing them at a risk of
overspending and developing financial difficulties(Cliff 25). Therefore, college students
are the perfect customers for credit card companies to have because they make a profit
from their inability to pay the total balance on time. Four out of five universities allow
on-campus solicitations for credit cards and charge credit card vendors between $175 to
$400 per day to rent tables during freshmen orientation. Schools also receive a
percentage of all student charges when they authorize the issuance of an affinity card
(Munro and Hirt 52).
“There seems to be some “class rank” effects in credit card behavior. A study by Nellie
Mae (2002), a non-profit student loan provider, found slightly more than half of
freshmen (54%) had a credit card. Freshmen also had the lowest number of credit cards
(2.5) and average debt ($1,533). The number of cardholders rose with class rank,
however. Ninety-two percent of sophomores had a card, for seniors the percentage was
ninety-six.”
Shoppers use credit cards for various reasons. Many use the cards keeping the
advantages in mind but looking past the disadvantages that will be around to haunt way
longer than the purchased item that was bought using the card. Advantages and
disadvantages will be discussed to help users understand what really goes along with
using a credit card.
Advantages. Using a credit card allows college students to build up their credit score.
Building up good credit allows students to take out a private student loan in order to
buy a car, rent an apartment, get a job, and eventually buy a house. Many college
students do not have time to balance a full-time job while going to school full-time,
therefore, students do not have a high steady income. Sometimes unexpected expenses
arise anywhere from getting a car towed to an expensive book. Credit cards come into
great use when there is a financial emergency. Many college students are on the go and
handling a simple plastic card is much more convenient than carrying around a wad of
cash or a bulky check book. At places like gas stations, a simple swipe of the credit or
debit card is much quicker than having to wait in line inside the gas station and go
through the check out process. Most college students are short on time. Bills can be
paid online with only a credit or debit card. This saves time in the sense of writing out
checks and balancing a check book become unnecessary. Sometimes, a credit card can
make one seem more responsible and independent. Many parents do not feel their
college student is ready to be on their own but once the credit card bill comes in the mail
and the student can prove they can pay it off on-time and by themselves it adds a sense
of maturity and responsibility.
Disadvantages. Along with using a credit card to buy a product comes the added
interest cost. If the credit card balance is not totally paid off, interest is then added to
the bill. In result, an item will end up costing more than it originally should have cost.
It is more likely to buy on impulse because there is an ability to pay for the item there on
the spot which results in buying an item that would normally be too expensive if
carrying cash. Using a credit card promotes spending by making the transaction
simpler or by removing the immediate need for money(Roberts 220). A late fee is added
to a credit card payment that is not paid on time. Many times if a bill is paid only one
day late an added $50 charge is added. Annual fees are common with credit cards. This
means a charge is added annually just for using the credit card. Internet shopping
comes along with having a credit card because it is not possible to do so without one. A
user is likely to compulsive shop online because purchase decisions are more difficult
and can increase the complexity of the Internet shopping task because the shoppers
cannot touch the real product online. Positive moods increase internet shopping
intentions(Cheng, Wu, and Yen 323). One click and the item is bought, unlike in stores
where there is time to contemplate your decision like the down-time of waiting in line.
Also, online shopping adds to debt quickly by getting charged for shipping fees that are
avoided by shopping in malls.
After covering the advantages and disadvantages of credit card usage I can now
introduce my methods on how I intend to carry out my research to find if the credit
cards do in fact enable compulsive shopping on the IUP campus amongst college
students.
Methods
Data was collected over a 2-day time period from 20 Indiana University of Pennsylvania
college undergraduate students using a survey. The survey took approximately 10
minutes to answer the questions. Some of the survey questions were used from Joyce E.
Jones study on college students’ knowledge and use of credit (Jones).
The students were first informed that the survey was both voluntary and confidential.
Six students did not submit answers to the survey.
Variables Variables included demographic characteristics, access to and use of credit
cards, and the arousal and materialistic factors of compulsive shopping. The
demographic variables include age, gender(male or female), and employment
status(employed or unemployed).
Areas covered were whether the student uses cash or credit to make the majority
of their purchases, if they had their own credit card and if so how many, if debt was
carried on their credit card, if they considered themselves a compulsive shopper, what
their idea of a compulsive shopper was, and any other comments they would like to add
to this topic.
Limitations Lack of participation created some limitations for this study. Lack of time
also created some limitations. Had time permitted, the researcher would have included
more variables that result in compulsive shopping and observed the use of credit cards
in malls. Further, because of the convenience of the sample, the diversity was limited in
several demographic variables, results are tentative and cannot be generalized further
than this study. Other study limitations included the willingness to provide debt
information and accuracy.
Results
Out of the twelve participants that completed the survey eight were female and four
were male. A little less than half of the students surveyed own a credit card. Of the five
students that reported that they do own a credit card, only two students own more than
one credit card. One student owns 8 credit cards. Another student owns four credit
cards. When going shopping 75% of the sample use cash to pay for the majority of their
purchases. The other 25% use credit cards. Out of the 41.7% of college students that
own a credit card only 25% carry debt. The other 16.7% reported that they do not carry
any debt. Instead, they are able to pay off their debt in the first payment. The student
that owns eight credit cards, carries an $8,000 balance. The student that owns four
credit cards carries a $300 balance.
Discussion
It was a shock to see out of the college students surveyed that less than half owned a
credit card. The more credit cards a college student owns the higher the debt. It is easy
to lose track of what was spent on a credit card. The more credit cards one owns, the
more money they "think" they have. The survey proved that most college students that
own one credit card were able to keep a zero balance. As the number of credit cards
owned increase so did the debt owned. One student owned eight credit cards and
accumulated $8,000 in debt.
Gender made a difference on compulsive shopping in this research study. Of the five
students that answered yes to being a compulsive shopper, all five were females. The
rest of the sample did not consider themselves a compulsive shopper. Also, out of the
three students that have credit card debt, all three are female.
A solution that many college students are turning to is using a debit card instead of a
credit card. A debit card still resembles the light weight, convenient plastic accessibility
of a credit card but money must be in the checking account to use this card. A debit card
electronically transfers funds from the bank account to the store where the purchases
are being made. The advantages of using a debit card (also known as a check card) is
that there is no need to worry about making multiple trips to the bank to get money out.
If the money is needed in cash, it easy so simple to withdraw it from an ATM. These
Automatic Teller Machines are located in just about every mall and shopping center as
well as many gas stations. There are no worries about losing cash. The debit card takes
the place of loose cash. If the card is lost or stolen the perpetrator there are no worries
because the card user must punch in the secret pin number before money can be
accessed. Although debit cards seem like a credit card they are most definitely
different. You can only spend as much money as on the card so this eliminates the
thought of an endless shopping spree.
A student stated that they felt that credit cards made big purchases seem small. This is
true because the cash is not needed up front so although they may feel that they can pay
the payments off every month, in most cases this is not true. The credit cards are still
there even when cash is not. This helps reduce stress in college students because many
college students have a low income if any and the feeling of having money and new
possessions reduces stress and boosts confidence. Three students have stated that they
have gotten in too deep with credit cards and now do not own one. After they got back
on their feet and got the debt paid off they got rid of them to avoid the debt that quickly
adds up with every shopping trip.
One college student surveyed added their experience with credit card debt. "My credit
cards allowed me to buy whatever I wanted whenever I wanted. I never felt that I had a
limit until my bill would come once a month and I would feel swamped in debt. This
however, did not stop me from swiping my credit card. I never had cash on me and I
knew I didn't have money to buy most of the items that I bought but when in the mall all
those feelings went away and they only thing on my mind was 'buy, buy,buy!' Once I
maxed out my 7 credit cards I knew I had to stop. I was working just to pay for
purchases that I did not even have anymore because I had already ate my McDonalds or
threw my sequin purse out after it went out of style two years ago but I was still paying
for it."
Many stores hook customers into applying for a credit card to save a percentage off
when using your card but rarely does the savings add up to be more than the interest,
late fees, or annual fees that are added with every swipe. Many experts warn customers
to avoid falling for this trick.
This experiment did not turn out exactly how I had thought it would. I thought that
more college students would own credit cards. However, I think that the older the
student the more likely they are to have a credit card because one has to build credit in
order to be issued a card. I failed to do a connection with age and the ownership of
credit cards so this is just a future hypothesis. I did find that carrying cash versus credit
cards while shopping help to stop compulsive shopping.
Conclusion
The results of this study clearly indicate that there is a a tie that connects compulsive
shoppers with the use of credit cards. In today's society many college students are living
in the "buy now, pay later" state of mind, not realizing that their minimum wage job
barely earns enough to pay for the interest of their debt, completely looking past the
entire purchases. It was very interesting to see that my hypothesis was not completely
true. I thought more college students would have credit cards. However, the students
that do own credit cards do fall into compulsive shopping more frequently than students
who do not own a credit card. Cash is the way to go when browsing the malls because
there is more of a hold on what you spend. When the cash is gone, the shopping trip is
over. Future researchers could research more ways to avoid compulsive shopping, this
would help college students have a better understanding on how to stop their credit
craze. More careful experiments and research are needed to help us better understand
the role credit cards play in consumer spending. Future research efforts could also
attempt to improve several of the limitation of this study. More surveys could have been
distributed to get a bigger sample amongst the IUP undergraduate students. More time
would have allowed for more questions to be surveyed and more carefully analyzed.
With the results of this experiment it can be concluded that credit cards do contribute to
compulsive shopping amongst college students.
References
Cheng, Fei-Fei, Chin-Shan Wu, and David C. Yen. “The Effect of Online Store
Atmosphere on Consumer’s Emotional Responses- an Experimental Study of Music and
Colour.” Behaviour and Information Technology 28.4 (2009):323-334.
Dittmar, Helga, “A New Look at “Compulsive Buying”:Self-Discrepancies and
Materialistic Values as Predictors of Compulsive Buying Tendency.” Journal of Social
and Clinical Psychology 24.6 (2005):832-859.
Holub, Tamara. “Credit Card Usage and Debt among College and University Students”.
Eric Digest. Washington, DC: ERIC Clearinghouse on Higher Education, 2002. Web. 4
January 2002.
Jones, Joyce E. “College Students’ Knowledge and Use of Credit”. Financial Counseling
and Planning 16.2 (2005): 9-43.
Krueger, David W. “On Compulsive Shopping and Spending: A Psychodynamic Inquiry.”
American Journal of Psychoterapy 42.4 (1988):574-584.
Mae, Nellie. “Credit Card Usage Continues among College Students”. Nellie Mae. 13 July
2000. 5 October 2009. http://www.nelliemae.com/library/cc_use.html
Mae, Nellie. “Undergraduate Students and Credit Cards”. Nellie Mae. 2001.13 October
2009. http://www.nelliemae.com/library/research_9.html
Munro, Jennifer and Joan Hirt. “Credit Cards and College Students: Who Pays, Who
Benefits? Journal of College Student Development. 39:1(1998): 51-57.
Robb, Cliff A. and Deanna L. Sharpe. “Effect of Personal Financial Knowledge on
College Students’ Credit Card Behavior”. Journal of Financial Counseling and
Planning. 20.1(2009):25-43.
Roberts, James A. and Eli Jones. “Money Attitudes, Credit Card Use, and Compulsive
Buying among American College Students”. The Journal of Consumer Affairs.
35.2(2001): 213- 240.
U.S. General Accounting Office. “Consumer Finance: College Students and Credit
Cards”. U.S. General Accounting Office. June 2001. 16 April 2002.
http://www.gao.gov/new.items/d01773.pdfED454785.
Introduction-Before I wrote:
The purpose of this into is to get me into the groove of writing my research paper. It will introduce my
topic to myself and my audience. My intro will hopefully be more of a go with the flow kind of starter. I
want to introduce the topic by painting a scenario for my audience and put them in the situation that they
just went through a compulsive shopping frenzie. I hope that it all just goes from there. This article is
intended for college students. I will gear my paper to them by using the real life situations that they are in
or will be in if they continue to rapidly use their credit/debit cards.
Introduction-After I finished:
After I wrote I think that my audience is established and I hope I made it clear that this was written for
the college students at IUP. I feel that my scenario puts the reader into a scene where they are now in
debt from compuslive shopping. Now that I have done this it is easier for me to throw my information
and research at the reader because I introduced them to what is going to be going on.
Lit Review-Before I wrote:
I’m having a hard time finding a way to gather the theme of my sources and to summarize them in words
instead of thoughts. The goal for my lit review is to convince my audience that my information as well as
my sources is credible. The lit review will give the reader a background for what my paper is researching
and why it is credible.
Lit Review-After I finished:
I am unsure if what I wrote is considered a lit review. I tried to cover my information by separating what I
thought was important and what information would help readers lead up to my data and statistics that I
collect from my methods.
Methods-Before I wrote:
I have a pretty good grasp on what is to be done for my methodology. My goal is to directly explain what
variables I will be using.
Methods- After I finished:
I feel that I finished this paper almost completely. I had a difficult time explaining how I would analyze
my results but after I actually do the surveys I think this will be explained a little easier.
Results- Before I wrote:
I am hoping that my results section comes very easy to me because it is just the straight up facts.
Discussion is all what I think and my hypothesis. I am anxious to analyze my data that I have collected!
Results- After I finished:
I am not happy with this results, discussion, and conclusion section. I need to take more time because this
is way too short for Marlen's liking right now. :( My data can be analyzed in more detail and added to my
discussion section. This will come in the near future because this is only my first draft.