Exploring the factors influencing credit card spending behavior among Malaysians

Abstract

PurposeThis paper explores factors affecting spending behavior of credit card holders in Malaysia. Specifically, variables such as demographic factors, banks’ policies, and credit card holders’ attitudes toward money are examined.Design/methodology/approachA cross‐sectional survey through the use of a structured questionnaire was administered on 150 credit card holders based on the area sampling and convenience snowball sampling techniques.FindingsThe results indicate that age, income, and marital status have significant correlation with credit card holders’ spending behavior. The same goes to two of the three items identified under banks’ policies (benefits given and payment policies) and attitudes toward money (willingness to pay and awareness of the total debt owed). Occupation, qualifications to apply for credit card, and management of income vs expenses are not significantly related to credit card spending behavior among Malaysians.Research limitations/implicationsThe study serves as a guide for researchers to extend the research work covering more variables in different economies in light of the low R2 value. The small sample size raises the issue of generalizability, which future studies should address.Practical implicationsThe results could be used as a guide by emerging market economies or even developed countries where credit card usage is a widespread phenomenon. It also provides insights to the credit card issuing banks in terms of understanding their target consumers, preferences, and the effect of their policies on credit card application and use.Originality/valueThis study sheds light on credit card spending behavior, particularly among Malaysians.

Factors Affecting Fresh Graduate Bankruptcy at Young Age: The Case of Fresh Graduates in Kota Damansara

“…However, (Yong, 2013) stated that any financial problem that will faced by young credit card holders will be temporary and furthermore will be easily repaid due to their young age, based on the assumption of young credit card holders.…”

“…Pauwels (2002) studies that managers and self-employed credit card holders are tend to spend and consume more by using credit card. With more Malaysian with different occupations, including student that has been categorized as an occupation is now started to own credit cards and soon it will become a common trend in near future (Teoh, 2013).…”

“…External factors that cause bankruptcy is Bank Policies, according to (Yong, 2013) due to competition in the credit card industry, bank constantly make product improvement by providing various incentive such as no annual fees, cash rebates, point redemption, installment plan for branded goods or having discount on daily necessities product, these cause fresh graduate has more desire for applying credit card. Thus, this aggressive marketing made by credit card industry causing fresh graduate has more buying power regardless of low level of income which leads to fresh graduates (Seyedian, 2013).…”

“…Possession of credit card is one of the causes that fresh graduates is in debt, especially teenage that lies fresh-graduate level has low level of income, worst part is when fresh graduate has insufficient knowledge towards financial literacy according to (Yong, 2013). External factors that cause bankruptcy is Bank Policies, according to (Yong, 2013) due to competition in the credit card industry, bank constantly make product improvement by providing various incentive such as no annual fees, cash rebates, point redemption, installment plan for branded goods or having discount on daily necessities product, these cause fresh graduate has more desire for applying credit card.…”

“…Bank policies is one of the factors that will contribute to fresh graduates bankruptcy at young age, furthermore, bank policies are the one in charge with the adjustment of credit card benefits, the repayment policies and the minimum qualification required for a credit card (Chong, 2013). Due to the perfect competition in the credit card industries, many banks are striving in establishing their own perfect credit card plan through making constant improvement and innovation towards credit card (Subramanian, 2010).…”