Case Study: Credit Card Attitudes and Behaviors of College Students

Credit cards have been very big business for several decades. The cards have made the life easier for many people because they do not need to carry large amount of cash for most purchases. However, the credit card industry is intensely competitive, highly fragmented, and growing at the rate of 3 to 4 percent. Many college students are living on the verge of a financial crisis. For this purpose many banks are interested to consider this assertion by examining college students’ credit card use behavior and attitudes. A concurrent purpose was to test the factors associated with students’ attitude toward credit cards. College students’ use of credit cards has recently received increased visibility throughout the media concluded that in addition to credit problems many students do not have a written budget, and of those who do have a budget few young people actually use it. They determined that university students “are vulnerable to financial crisis”. Since the interest goes to the issuer of credit card bank so it makes credit card a profitable business for the issuing bank.

The staggering number of credit cards in circulation exemplifies this crisis, as does the number of cards carried by the average student. Currently, there are 1.3 billion credit cards in circulation, which, when averaged, equals about 12 cards per household in America. The growth of credit cards on college campus has tended to minor the credit saturation found in the general public. More than a decade ago it was  reported on college students’ use of consumer credit. It was during this period that the banking industry began permeating the student credit card market in the late 1980’s . In 1985-86 over half of all college students had bank credit cards. This figure has been on the rise as some 70% of all undergraduates at four-year colleges have at least one credit card today.

The increased number and type of credit cards on university campuses has seen an explosive level of growth in the past decade, with most credit card companies targeting college students. What remains still unanswered is what effect credit card circulation among college students has had on the financial attitudes, behaviors, and outcomes of young generation. To examine college students’ credit card use behavior and identify the factors associated with credit attitudes by the students. This research also identifies the factors related to college students’ attitudes toward credit cards. Attitude toward credit was assumed to be explained with demographic characteristics, socioeconomic characteristics, background factors, and psychological factors.

The credit card market is emerging at a rapid velocity in India. The RBI’s latest monthly report reveals that approximately, one-fifth of the total retail electronic payments is being conceded through credit cards, whereas, debit cards’ share is just 4%. The Metro cities like Delhi and Mumbai are highly penetrated by credit cards. The credit card issuers found excellent business prospects in Kolkata, Bangalore, and Hyderabad as well because of their IT/ITeS groups. With increase in the number of commercial activities and the growing swanky malls in smaller cities give bankers another target for their credit card market.

RBI’s latest monetary policy review shows concerns about credit card’s continued high growth and it has increased provisioning to 2% for outstanding credit card receivables to slam the brakes. As per records, credit card payments totaled Rs.25,400 crore during April-December 2006, whereas during the corresponding period in 2005-06, it was approx. Rs.22,000 crore. Central Bank’s monthly report shows Rs.33,886 crore of total credit card payment during the fiscal year 2005-06 as compared to Rs.25,686 crore in 2004-05 and Rs.17,663 crore in 2003-04. During the first eight months of 2006-07, debit card payments was placed at Rs.5,177 crore, in contrast to Rs.5,897 crore during 2005-06, Rs.5,361 crore in 2004-05 and Rs.4,872 crore in 2003-04. In general, the electronic payment system is gaining currency at a retail level. Rs.1,45,057 crore has been paid using electronic means during April-November 2006.

In a study it was discovered  that credit card possession and use is most likely influenced by four factors: (a) demographic characteristics (e.g., age, gender, marital status); (b) socioeconomic factors (e.g., income, education, and other indices of socioeconomic status); (c) background characteristics (e.g., life events, childhood experiences); and (d) psychological characteristics (e.g., locus of control, self-esteem, materialism). A total of five demographic characteristics were examined: Age, gender, ethnic/racial background, marital status, and birth order. Age was measured at the interval level and considered to be a continuous variable. Income, housing situation, employment status, and education were included as socioeconomic factors.


1.        What role Management Information System can play for any credit card issuing bank to increase its share in the market?

2.        Give a list of subsystems that you would recommend be included in a master plan for MIS by the bank.

3.        What specific information systems might you design for the primary use of the bank?

4.        In your opinion does the information about the behavior and attitude of the possessing credit card  by the students in India may help the banks to gain more customers?

5.         Draw a physical data flow diagram to depict the MIS in the above scenario.


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