Credit card risk behavior on college campuses: evidence from Brazil

Abstract

College students frequently show they have little skill when it comes to using a credit card in a responsible manner. This article deals with this issue in an emerging market and in a pioneering manner. University students (n = 769) in São Paulo, Brazil's main financial center, replied to a questionnaire about their credit card use habits. Using Logit models, associations were discovered between personal characteristics and credit card use habits that involve financially risky behavior. The main results were: (a) a larger number of credit cards increases the probability of risky behavior; (b) students who alleged they knew what interest rates the card administrators were charging were less inclined to engage in risky behavior. The results are of interest to the financial industry, to university managers and to policy makers. This article points to the advisability, indeed necessity, of providing students with information about the use of financial products (notably credit cards) bearing in mind the high interest rates which their users are charged. The findings regarding student behavior in the use of credit cards in emerging economies are both significant and relevant. Furthermore, financial literature, while recognizing the importance of the topic, has not significantly examined the phenomenon in emerging economies.

Predictors of credit card use and perceived financial well‐being in female college students: a Brazil‐United States comparative study

“…More recently, Mendes‐Da‐Silva et al . () examined credit card risk behaviour among 769 college students, finding that those with more credit cards were at increased likelihood of risky credit behaviour and that those students who reported knowing their interest rates were at decreased risk, suggesting that knowledge may be protective. However, little work to date has examined men and women separately.…”

“… This study is a secondary analysis of a data set. For information on the original work, please see Please change to Norvilitis and Mendes‐Da‐Silva ().…”

Attitudes toward Credit and Finances among College Students in Brazil and the United States

“…Although the debt to income ratio is similar among students who hold credit cards, more Brazilian students possess cards and they report greater endorsement of the positive qualities of credit cards and less endorsement of the negative. This may be related to recent growth in the credit card market in Brazil (Mendes-da-Silva, Toshiro Nakamura, & Carrasqueira de Moraes, 2012); that is, because credit cards have only fairly recently become available to college students, it is possible that the negatives have yet to be seen. Similar results were found among Chinese college students.…”

Are you financially literate? Discover in the Financial Literacy Thermometer

“…Entre eles, destacam-se Chen e Volpe (1998) e Neidermeyer e Neidermeyer (2010) nos EUA, Sekita (2011) no Japão, Ansong (2011) em Gana, e Van Rooij et al (2011) estudando os aposentados na Holanda. Para o cenário brasileiro, o assunto foi destaque nos trabalhos conduzidos por Mendes- Da-Silva et al (2012) e Potrich et al (2013).…”