KNOWLEDGE, USE, AND ATTITUDES CONCERNING CONSUMER CREDIT CARDS

AND OTHER CREDIT BY HIGH SCHOOL STUDENTS

IN ALBUQUERQUE, NEW MEXICO

by

DEBORAH J. COLEMAN ROGULICH, B.S. in H.E.

A THESIS

IN

FAMILY MANAGEMENT, HOUSING, AND CONSUMER SCIENCE

Submitted to the Graduaté Faculty of Texas Tech University in Partial Fulfillment of the Requirements for

the Degree of

MASTER OF SCIENCE

IN

HOME ECONOMICS

Approved

Accepted

August 1982

ACKNOWLEDGMENTS

The author wishes to express gratitude to Dr. A. William

Gustafson, graduate committee chairman, for his assistance and guidance;

to Dr. E. Carolyn Ater and Dr. Dennis A. Harp, committee members, for

their suggestions and interest; to John and Dorothy Coleman, parents,

for their continuing support and encouragement; and to Andrew Rogulich,

husband, for his assistance in completing the thesis.

11

CONTENTS

ACKNOWLEDGMENTS ii

LIST OF TABLES v

Chapter

I. INTRODUCTION 1

Statement of Objectives 1

Hypotheses 2 Clarification of Terminology 3 Need for Study 4 Nature and Order of Presentation 5

II. REVIEW OF LITERATURE 6

Introduction 6 Families 6 Teenagers 7 Teenagers and School Attendance 10 Youth and Credit 10 Adults and Credit Cards 17 Summary 22 Youth 22 Adults 22

III. METHODOLOGY 24

Introduction 24 Composition of Population 24 Sampling 25 Questionnaire 26 Data Analysis 27 Limitations 27

111

IV. FINDINGS AND INTERPRETATIONS 29

Description of Sample 29 Descriptive Analysis 34 Student Credit Card Use 34 Respondents' Parents' Credit Card Use 39 Consumer Education 41 Knowledge Questions 43 Summated Knowledge Score 45 Student Attitudes 46

Demographic Comparisons 53 Analysis of Hypotheses 53 Hypothesis 1 53 Hypothesis 2 55 Hypothesis 3 58 Hypothesis 4 58 Hypothesis 5 59

V. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS 60

Summary and Conclusions 60

Recommendations 62

LIST OF REFERENCES 64

APPENDIX: CREDIT CARD SURVEY .67

IV

LIST OF TABLES

1. Demographic Characteristics of Respondents 30

2. Frequency Distribution: Demographics of Parents

of Respondents 33

3. Frequency Distribution: Credit Card Use by Respondents . . 35

4. Frequency Distribution: Credit Card Use by

Parents of Respondents 40

5. Frequency Distribution: Consumer Education 42

6. Frequency Distribution: Credit Knowledge Questions . . . . 43

7. Correlation Analysis: Credit Knowledge Questions 44

8. Frequency Distribution: Summated Knowledge Scores 46

9. Frequency Distribution: Attitude Scores 48

10. Frequency Distribution: Summated Attitude Scores 49

11. Pearson Correlation Analysis: Demographics with

Summated Knowledge, Attitude, and Education Scores . . . . 54 12. Pearson Correlation Analysis: Hypotheses 1 Through 5 . . . 56

CHAPTER I

INTRODUCTION

Statement of Objectives

In the early 1970s research on consumer credit in general and

charge accounts in particular was conducted by Marie Blair and Linda

Ogle. Each suggested that teenagers had a lack of knowledge and under-

standing about the credit they use (2, 19). Consumer credit can include

cash loans, charge accounts, and credit cards of various forms. For

this study regarding credit card use, credit cards include bank cards,

travel and entertainment cards, department store cards, and gasoline

and oil company cards.

Credit cards have grown to be of great importance in consumer

credit. Since many teenagers are using this facet of consumer credit,

it is wise to educate students in its use. If the educator lacks know-

ledge of students' credit experience and information, instruction may

be lacking and may not accomplish the desired goals. A determination

of students' knowledge levels and a plan that will fulfill their unique

educational needs may be necessary for each school system.

Specifically, the objective of this research study was to

determine areas in which students' knowledge of consumer credit is

strong or weak and, thus, where educational efforts should be concen-

trated. Overall, the objective was to support or reject the concept

held by many educators that it is important to educate students concern-

ing consumer credit in general and credit cards in specific.

Hypotheses

The hypotheses were as follows:

1. There was no statistically significant relationship between

the total number of credit cards the student uses and the total number

of credit cards the students' parents use.

2. There was no statistically significant relationship

between whose credit card the student uses and the percentage of the

students' credit card bills that are paid by the student.

3. There was no statistically significant relationship between

the summated knowledge scores of students and the students' use of

credit cards.

4. There was no statistically significant relationship between

the summated knowledge scores of students with and without prior credit

card education. Prior education was defined as having taken a consumer

education class and/or having studied or discussed credit cards for

purchasing goods and/or services.

5. There was no statistically significant relationship between

the attitudes toward saving money by students who do and do not use

credit cards.

Clarification of Terminology

Use of credit cards is defined as the number of credit cards

students possess or use, the number of times students use a credit

card each month, the length of time they have had a credit card in their

own names, how long they have been using credit cards, and what they

purchased with the credit carcis they possess.

Credit cards may be substituted for cash or checks in trans-

actions. They have a twofold function of serving as debt instruments.

One function is that most have a similar payment plan in which the

credit card holder is billed in one statement each month, and, if the

payment is made, there is usually no interest charge. The second is

typically a revolving account in which at least a minimum payment must

be made and interest is charged for use. Credit cards may have an

effect upon the economy, in that they are a substitute for cash trans-

actions and may help our economy move toward a "checkless society."

Since credit cards may enable the holder to hold smaller amounts of

cash, they may be helping to reduce money demand and, consequently,

speed up velocity. In addition, since credit cards are an alternative

to more traditional types of installment debt paper, they may be chang-

ing the profile of consumer debt in the United States (14:2).

Level of consumer credit knowledge was defined as responses

given to true-false and multiple-choice questions concerning general

credit information, installment contracts, and credit cards.

Consumer attitudes are defined as the attitudes students have

regarding credit, credit cards, and saving money. Specific credit

card attitudes are:

1. Should teenagers be allowed to use credit cards more or

less often?

2. Should they learn about credit cards in school?

3. Do they think credit cards are bad or good, or somewhere in

between?

4. How important are reasons for saving money?

Prior education is defined as having taken a consumer education

class and/or having studied or discussed credit cards for purchasing

goods and/or services.

Need for Study

In a pilot study conducted during April 1979 at Texas Tech

University, students used or possessed an average of five credit

cards, and 59 percent of the sample had used credit cards for more than

one year. When asked the current interest rate charged on credit cards,

26 percent answered correctly, 21 percent answered incorrectly, and 53

percent said they did not know the interest rate. These findings and

others suggest that students may be uninformed about the credit they

are using. They may not realize there are alternatives to credit cards,

the disadvantages and advantages of credit card use, nor understand

what is involved in the alternatives to credit use. Since all

teenagers do not continue their education beyond the secondary level, it

seems most appropriate to provide credit education opportunities at

the high school level.

Nature and Order of Presentation

Included in the following chapters are the review of litera-

ture, explanation of the data collection process, methods of data

analysis, analysis of the hypotheses and other data, conclusions, and

recoramendations for further research. The appendix includes a blank

questionnaire.

CHAPTER II

REVIEW OF LITERATURE

Introduction

The chapter reviews the role of credit in lives of families

and teenagers and teenagers' acquisition and use of money. The term

"teenager" is one lacking a strict definition in research. Often, it

is used to describe a sample which consists of people whose ages are

thirteen through nineteen. High school students, however, are in the

fourteen to eighteen years of age range and are in the ninth through

twelfth grades. In this study the term "teenagers" will be used to

describe any population that includes youth from thirteen through nine-

teen years of age.

Families

Credit plays an important role in our economy. In 1974

Americans spent 17 percent of their take-home pay on installment

credit, and this percentage did not include mortgage payments. Ameri-

cans in 1974 paid for one-half of their retail purchases by some type

of credit cards (22), and it is assumed that this amount has increased

since that time.

Mandell's 1970-1971 study indicated that 50 percent of the

families surveyed had no credit cards, 10 percent had one credit

card, 26 percent had two to five credit cards, and 14 percent had six

or more credit cards (14). In November 1978 it was reported that

credit of almost $23 million was outstanding on commercial bank credit

cards, a 33.6 percent jump over the previous year (6). In U.S. News

and World Report the Federal Reserve Board also reported that from

December 1967 to June 1973, less than six years, the share of all out-

standing consumer credit accounted for by holders of bank credit cards,

travel and entertainment cards, and oil company cards had more than

doubled, rising from 2 percent to 5 percent. The amount owed by bank

card holders increased 546 percent, from $828 million to $5,502 million,

during that six-year period. Travel and entertainment card debt

increased 197 percent, from $61 million to $181 million (10). Accord-

ing to the Federal Reserve Bulletin (September 1973), the bank credit

card debt increased 553 percent from January 1968 to December 1972,

and during the same five-year period, travel and entertainment card

debt increased 169 percent (7). From such data, it can be assumed that

American families and/or households are using credit and that its use

is increasing.

Teenagers

Teenagers are a market segment with large spending power.

Since most students do not have to pay living expenses while at home,

8

most of the income they acquire is available to be spent or saved.

Ogle (19) found that clothing, shoes, groceries, and gasoline were

the primary items purchased by teenagers using credit.

As a result of a study by the U.S. Education Commission, it

was concluded that "seventeen-year-olds are not well-prepared for

their consumer roles as informed citizens, spenders, earners, or

investors." They continued to affirm that the seventeen-year-olds knew

they should be asking more questions and that they did not seem to have

the required knowledge to carry out consumer transactions effectively

(7).

According to one source, the number of fourteen- to eighteen-

year-olds increased from 15 percent of the population in 1960 to 20

percent of the population in 1972, with more than 42 million teens in

1972. During the same twelve-year period, the number of fourteen- to

seventeen-year-olds in school increased from 90 percent to 93 percent

(12).

According to Gilbert Youth Research, Inc., in 1979 the 28

million fourteen- to nineteen-year-olds had $30 billion to spend, much

of which was earned by the teens themselves. One-half of the teenagers

had their own store charge accounts or had the use of one (16). The

Rand Youth Poil in 1978 found that teenagers had $39.1 billion to

spend and that one-half of the $39.1 billion came from their own

earnings (11).

In the Detailed Characteristics of the Census for New Mexico

in 1970, the median income was given for persons who are a relative

of the head of the household, other than the wife. The assumption is

made that in most cases this person is a son or daughter. The median

income for the group of fourteen- to nineteen-year-olds was $728

in 1969 (23:159). In 1977, the median income nationwide for this

group was $1,039 (24:460). The figures do not truly represent the

income of high school students since many eighteen- and nineteen-year-

olds would be out of high school, employed in a full-time job, and

living on their own. However, it does provide some knowledge of the

money teenagers have available.

According to the Rand Youth Poll in 1978, the allowance for

teenagers was as follows: Girls thirteen to fifteen years of age,

$30.00 per month; boys thirteen to fifteen years of age, $29.20 per

month; girls sixteen to nineteen yars of age, $64.40 per month; and

boys sixteen to nineteen years of age, $63.80 per month. The study

also reported that in each of the age groups the teenagers were more

than matching their allowances listed above with earnings of their

own (11).

The importance of youth in America to the retail sales indus-

try, and potentially to the credit card industry, is indicated in a

recent study by Gilbert Youth Research, Inc. It was found that

thirteen- to nineteen-year-olds spent between $5.5 and $6 billion on

10

clothes in 1979. These same teenagers spent almost $5 billion on

records, tapes, films, concerts, and other forms of entertainment (16).

Teenagers and School Attendance

A national longitudinal study of the high school graduating

class of1972 was conducted by the Department of Health, Education, and

Welfare. They reported the percentage of high school students who

participated in postsecondary education from the fall of 1972 through

the fall of 1976, five years later. In the fall of 1972, 54 percent of

the students were in school; in 1973, 45 percent; in 1974, 40 percent;

and in 1975, 37 percent. In 1976 after many students may have gradu-

ated from a postsecondary institution, 25 percent who graduated in 1972

were still in a postsecondary school. These statistics show that just

over one-half of the students who graduated from high school in the

spring of 1972 attended a postsecondary school that fall. By the fall

of 1975, just over one-third were still in school. This suggests that

many students do not continue their formal education in the first five

years after they graduate (25). An opportune time to educate young

people about wise credit use is during their high school years.

Youth and Credit

Cateora (5) stated that "the purpose of this study, therefore,

has been to examine the possible effects of and the extent of influence

from the adolescent's family social status and/or peer group

11

affiliation upon his attitudes toward selected consumer characteris-

tics." For this study, a fifty-minute questionnaire was administered

during the fall of 1961 in a city with a population of 200,000. There

were 189 useable surveys completed by the high school juniors and

seniors. The questionnaire was administered to two groups several weeks

apart, with the two groups combined for analysis.

Through the analysis of the hypothesis it was found that

students' consumer values and goals were related to peer group

affiliation and peer group opinions.

It was found that the students were not price-conscious or will-

ing to shop around, and that they wanted to acquire an abundant package

of consumer goods early in adulthood. The researchers felt that in

other areas of consuming the students had a mature and relatively com-

plete awareness of the art of consuming (5).

Cateora's (5) study is important in that it indicates that the

students' consumer values were most influenced by their peer groups

and not by their family or by their family's social status. The

school was another source of influence since the students were all

exposed to the same information and, thus, it presumably had an effect

on peer group values and opinions.

In 1978, a nationwide study was conducted by the National

Assessment for Educational Progress (NAEP), an independent survey

group of the U.S Education Committee. The purpose was to assess

12

consumer knowledge, skills, and attitudes of a sample of 4,300

seventeen-year-olds. A questionnaire with 201 consumer knowledge ques-

tions was used as the survey instrument.

The NAEP found that the average number of questions answered

correctly was 57 percent. Twenty-five percent of the students knew

that personal finance companies charge higher rates for credit than

banks, credit unions, or savings and loans. Consumer specialists asked

to evaluate the results of the testing believed that the seventeen-year-

olds were not well-prepared for their consumer roles as informed citi-

zens, spenders, earners, or investors. The consensus was that the

testing indicated that seventeen-year-olds knew they should be asking

more questions as consumers, but that they did not seem to have suffi-

cient level of knowledge to carry out effectively consumer transactions

(13).

The study by NAEP provides evidence that students are lacking

in consumer knowledge and consumer skills. More data on areas where

students lack consumer credit card knowledge are needed.

Sources that influenced the development of consumption-related

skills, knowledge, and attitudes during adolescence were the focus of

a study by Moschis. A sample of 806 adolescents from thirteen schools

in seven towns and cities in urban, suburban, semi-rural, and rural

Wisconsin was studied. Self-administered questionnaires were used to

collect the data.

13

In this study, mass media was found to be the most important

agent in adolescent consumer socialization. Influence of peers was

secondary. Family influence ranked third in its influence on sociali-

zation. Adolescents appeared to learn very little about both consump-

tion, in general, and effective consumer behaviors, in particular,

from consumer-related classes in school (15).

The study by Moschis suggests that the mass media could be used

to improve adolescents' consumer skills knowledge, and attitudes.

At present, mass media advertisers are promoting the use of credit

cards.

A study by Ogle sought to determine: (a) students' previous

instruction in the area of consumer credit, (b) prevalence of their

use of consumer credit in the form of personal or parents' charge

accounts, (c) various items they purchased with credit, and (d) know-

ledge of certain consumer credit concepts. The concepts, vocabulary,

types, cost, and regulations of the use of consumer credit and the

characteristics and attitudes of consumer credit users were topics in

the knowledge section.

The sample consisted of 606 students in the ninth through

twelfth grades in three counties of rural Mississippi. The juniors

and seniors were attending a short-course in consumer education spon-

sored by the Mississippi Cooperative Extension Service. The freshmen

and sophomores were selected at random from five randomly selected high

14

schools. It was observed by the researcher that many of the white

children of upper socioeconomic status were enrolled in private schools

rather than public schools.

It was found that 59 percent of the students had received

instruction in the use of consumer credit, with home economic classes

being their primary sources of instruction. Sixty-five percent of the

students had used credit in some form. Both males and females used

their parents' charge accounts more than their own. Males used their

own personal charge accounts more than the females did. The items pur-

chased with credit were as follows: clothes and shoes, groceries,

auto parts and gasoline, and, lastly, cars and bicycles. The mean

score for the knowledge section of the test was 53 percent. The

researcher reported that students had a greater understanding of charac-

teristics and attitudes of consumer credit users than knowledge of

vocabulary, types, costs, and regulations of consumer credit (19).

The study by Ogle was related to the students' attitudes

toward and understanding of consumer credit and charge accounts.

While this study looked at many of the same topics as Ogle did, the

topics were related to credit cards. These topics were consumer educa-

tion, parent credit use,items purchased with credit or credit cards,

and credit knowledge. The findings of this study and the study by

Ogle show the importance of credit and credit card research.

15

The purpose of Blair's (2) study was to look at knowledge,

attitudes, and the use of consumer credit by the eighteen- and

nineteen-year-old freshmen residing on the University of Nebraska-

Lincoln campuses. First she determined what credit was available in

the area for fourteen- to twenty-year-olds. Credit managers of twenty-

eight stores of all types were interviewed, and, of these stores,

eighteen extended credit to the designated age group.

From the research data collected, it was found that students'

use of credit cards was higher if the parents used credit cards. No

significant relationships were found in the areas of use, knowledge,

and attitudes. In the previous six months, 56 percent of the students

had used some credit cards. Of the students who used credit cards,

80 percent had used their parents' cards and 64 percent had used them

for gas purchases, with clothing purchases second in use.

Blair found that over one-half of the college freshmen had used

credit cards. The parents' use of credit cards affected the students'

use of credit cards. The parents' use of credit cards did not affect

the students' knowledge or attitudes, and the use of credit had only

a slight effect on knowledge and attitudes. The knowledge and atti-

tude scores were slightly higher for students who had used credit

before (2).

Research conducted by Buswell (4) sought to answer four

questions:

16

1. What personal characteristics of college students have a

relationship to consumer credit use?

2. What are the credit habits of college students?

3. What is the extent of credit knowledge possessed by the

students?

4. What are the attitudes of college students toward credit

cards?

Questionnaires were mailed to a stratified random sample of

four hundred students enrolled at the University of lowa.

It was found that there was no statistically significant rela-

tionship between consumer credit use among the students and the four

credit-related variables: personal characteristics, habits, knowledge,

and attitudes. Some of the conclusions of the study were as follows:

1. Consumer credit habits were related to age, place of resi-

dence, marital status, income, and level of education attained

2. The score obtained from the knowledge categories indicated

a minimal amount of training in consumer credit use

3. Students were mobile and tended to use credit

4. The students' patronage of commercial banks and credit

card companies was likely to increase (4)

Buswell found that students did use credit cards and that they

lacked training in consumer credit use. The study suggests that more

17

research should be done in the area of credit cards, due to the increas-

ing use of credit cards.

Adults and Credit Cards

The purpose of Gorham's (8) study was to determine the attitudes

of husbands and wives regarding the use of bank credit cards as compared

and related to the couple's marital happiness rating.

The sample consisted of forty randomly selected young married

couples residing in married student housing at Utah State University.

The subjects had at least one child, were U.S. born, and were between

the ages of twenty and thirty-five. Gorham's survey consisted of a back-

ground questionnaire, marital happiness rating scale, and eight case

studies used to evaluate subjects' attitudes toward bank credit cards.

Since both bank credit card users and nonusers were included in the

study, some variations in experiences and knowledge about bank credit

cards were reported.

There was no significant difference found between attitudes

of husbands and wives regarding the use of bank credit cards. There

was no significant relationship between attitudes of husbands and wives

regarding the use of bank credit cards of those couples expressing a

very happy marital happiness rating and of couples expressing other

than a very happy marital rating (8).

The purpose of the study by St. Clair (21) was to analyze the

attitudes and opinions of credit card holders and participating

18

retailers of the Uni-Card credit card system in New York City. The Uni-

Card, family-type credit card plan was selected because it was the

largest family-type system in the area and because it represented the

consumer and retailer population more than other t rpes of credit cards.

Two opinion surveys of users were conducted. One was a representative

sample of 1,000 cardholders, ôf which 400 responded. The other was a

representative sample of 1,000 retailers, of which 295 responded.

The study indicated that both cardholders and retailers liked

credit card advantages more than they disliked the disadvantages of

credit cards. The cardholders favored credit cards even more than the

retailers. Cardholders placed the greatest value on the convenience of

instant credit, and their greatest dislike was the fear of loss if their

credit card would be lost or stolen. Retailers disliked the cost of

the credit card system, but they liked the increased sales volume that

resulted from the new credit customers who tended to make larger pur-

chases than cash customers (21).

The study by St. Clair concluded that credit cards were liked

by both retailers and credit card customers. The researcher believed

that the study indicates that modern society is moving toward the use

of an electronic funds-transfer system and away from the use of cash

and checks. Credit cards and the study of credit cards thus increase

in importance as society assumes this direction.

19

Two major research questions were asked in the study by

Blackwell, Hawes, and Talarzyk (1). The first was whether credit cards

were valued primarily for their convenience function or for their

borrowing function. That is, do people value them as an alternative

to cash and checks or as long-term (over ninety days) loans? Secondly,

did female and male credit needs, attitudes, and practices differ?

A twenty-page questionnaire was sent by Market Facts, Inc. , to

1,000 households in May 1973. The useable response rate was 61 percent.

The questionnaire included credit data; leisure data; standard demo-

graphic questions; and eighty-seven activity, interest, and opinion

questions. Households with a total family income less than $4,000 per

year were excluded from the sample. The demographics of the sample were

very similar to that of the United States Census on geographic region,

urbanization, income, and education and were slightly higher in age than

the United States Census.

The respondents perceived the "convenience" function to be more

important than the "borrowing" function, with this ratio being about

two-thirds to one-third. The study reported that American consumers

generally believe that "long-term" borrowing should be restricted to

major purchases of needed durable goods or needed medical services.

Over 75 percent of the sample considered buying a car a good reason to

borrow, and over 66 percent considered buying land or property a good

reason for borrowing.

20

Two attitudes toward credit cards were studied. First, over

66 percent believed that credit cards made it too easy to buy things

when they were not needed, and 24 percent disagreed. Secondly, over

66 percent said they would not use credit cards if it was not for the

convenience aspect of credit cards. Over 60 percent said they paid

their bills in full when they received the credit card bill.

The major conclusion was that while some minor differences do

exist, overall, males and females have similar credit needs, habits,

and behaviors. The researchers reported that this finding cast doubt

on the discrimination toward granting credit toward women (1).

Blackwell, Hawes, and Talazyk's study indicates that research

and education in this area should be equally concerned with males and

females. The study establishes major motivations for credit use.

The study by Plummer (20) involved a nationwide survey of

activities, interests, and opinions of female homemakers and male heads

of households. The research was designed to indicate the difference

between heavy, light, or non-users of bank credit cards in terms of

life styles or attitudes.

The study was conducted in the fall of 1968 by Market Facts,

Inc. Two separate samples were used—one of 1,000 females and one of

1,200 males. The demographic composition of each sample was similar

to the United States Census figures.

21

In general, the male users surveyed led an active, urban, and

upper socioeconomic style of life congruent with their higher incomes,

positions, and education. They perceived credit cards as providing a

convenience over cash in every transaction.

The females who used credit cards also led an active, upper

socioeconomic style of life, belonged to social organizations, and were

concerned with their appearance. The typical respondent seemed to fit

the picture of the suburban housewife.

There were several differences between users and nonusers that

are worth examining since they have some bearing on credit card usage.

The two most pronounced differences were that the female credit card

users (a) showed a number of fantasies of potential roles or activi-

ties and (b) tended to be less interested in housework than nonusers.

A variety of activities indicated a woman who not only possessed energy

but also had some specific cultural interests. She viewed her house-

wife role as one of managing and purchasing, as opposed to the tra-

ditional duties of the housewife.

From the standpoint of a potential market segment, people who

have higher incomes, who are better educated, who are middle-aged, and

who are employed in the professional segments will tend to rank higher

on the commercial bank credit card user scale (20).

Since the study by Plummer involves adults, the findings can

be related to the parents of the students in this study. The parents'

22

use of credit cards influences the students' use of credit cards. The

parents in this study were found to have higher incomes, higher educa-

tion, and a mean of 4.7 credit cards.

Summary

Youth

In summary, six studies dealing with adolescents of various

ages were reviewed. It was found that youth did use credit but often

lacked knowledge about wise credit use. It was found that youth were

not price conscious or willing to shop around for the best buy.

The development of consumption skills was influenced by the

following factors, in this order: (a) mass media, (b) peers,

(c) family, and (d) school.

The incomes and spending of teenagers have risen to a level

that makes them an important group in our national spending. The

number of teenagers is increasing, and they are attaining higher levels

of education. Not only do teenagers spend large amounts of money, but

they influence the spending patterns of their parents.

Adults

Four studies concerned with adult credit card use were

reviewed. No difference between male and female credit card attitudes,

behaviors, and habits was found, which suggests that credit cards

should be issued to males and females on the same basis, without

23

discrimination toward females. Bank credit card users tend to have

higher incomes, to be better educated, to be middle-aged, and to be

professionally employed.

CHAPTER III

METHODOLOGY

Introduction

This chapter describes the sample selection, development of the

questionnaire, and method for analyzing the data. The questionnaire was

designed to determine students' use of, knowledge about, and attitudes

toward credit cards and related factors. The research procedure is

described below.

Composition of Population

In the April 1980 United States Census, the City of Albuquerque

and several nearby communities had a population of 409,589 people.

The City of Albuquerque was composed of the following racial groups:

Anglo, 80 percent; Blacks, 2.4 percent; American Indians, 2.1 percent;

Asian, 0.9 percent; and others, 14.6 percent (18).

The 1980 census had one question concerning race and one ques-

tion concerning Spanish ethnic origin. According to the Bureau of

Business and Economic Research at the University of New Mexico, these

questions were sometimes misinterpreted by the respondents (3). Race

included possible choices of Anglo, Black, American Indian, Asian, and

24

25

other, and it was intended for people of Spanish ethnic origin to be

classified as Anglo. It has been estimated that 40 percent of the

people classified in the "other" category were of Spanish origin (3).

Adding 5.8 percent (40 percent of 14.6 percent) to the 80 per-

cent already included as Anglo results in a sum of 85.8 percent Anglo.

The ethnic question determined if the respondent was of Spanish

ethnic origin. It is desirable to determine the percentage of Anglos

without a Spanish background and the percentage of Anglos with a

Spanish background. Thirty-seven percent responded that they were of

Spanish ethnic origin. When the 37 percent Spanish origin figure is sub-

tracted from the 85.8 percent Anglo figure, it results in 48.8 percent

of the Anglos without a Spanish background and 37 percent of the Anglos

with a Spanish background.

Sampling

In the Albuquerque school district there were thirteen high

schools with a total enrollment of approximately 27,000 students dur-

ing the Spring 1980 session (9). During the 1980 six-week summer

school session, there were 2,436 students enrolled in school, or approxi-

mately 9 percent of the spring enrollment.

Two schools were offering the high school summer school pro-

grams in 1980. Each principal at the two schools selected several

classes in which to administer the questionnaire. There was a total of

26

eight classes in the sample. Selection was based on teachers who were

willing to cooperate and who did not have class schedule conflicts.

The questionnaire was administered to 95 students at Albuquerque High

School on July 10, 1980, and to 107 students at Del Norte High School

on July 15, 1980. Forty-eight percent of the respondents were in five

classes at Albuquerque High School, and 52 percent of the respondents

were in three classes at Del Norte High School.

The students were allowed as much time as was needed for com-

pleting the questionnaire. The questionnaire was administered in math,

history, English, and physical education classes. Of the 202 surveys

collected, 190 were useable.

By using a sample of summer school students, it was possible

to obtain a wide representation of students. Overall, the students were

from nineteen different schools. Of these nineteen schools, six were

not located in Albuquerque or the Albuquerque Public School District.

The number of respondents attending these six schools during the regu-

lar school year was twelve, or 7 percent of the sample.

Questionnaire

The questionnaire consisted of three sections: demographic

information, assessment of knowledge and attitudes of students toward

credit and credit cards, and credit behavior. Questions to measure

credit behavior included the number of credit cards possessed by the

27

students and their parents, information about who pays the students'

credit card bills, how long they had been using credit cards, what they

purchased with credit cards, and if they had taken consumer education

courses. Another section of the questionnaire was designed to deter-

mine the students' knowledge of several aspects of consumer credit

and credit cards and the attitudes toward credit, credit cards, and

saving money. A summated knowledge score based on answers to knowledge

questions was computed for each student. A summated score of attitudes

toward saving money also was computed.

Data Analysis

For each variable, the mean, mode, and frequencies were calcu-

lated. The Pearson Product Moment Correlation Coefficient (Pearson's

r) was used to test the hypotheses. The Pearson's r coefficient indi-

cates both strength and direction of relationship between two variables.

Also, a comparison of demographic data with the knowledge, attitude, and

consumer education scores was made.

Limitations

Several limitations to the study are noted. Since the

respondents were summer school students, they may not have been a

representative sample of students attending high school during the

regular school year. Classes were not selected in a random method.

In addition, some questions may have been misinterpreted by the

28

respondents and resulted in measurement errors. The limitations of the

study are of the nature that restrict the findings and conclusions of

the study to the group studied.

CHAPTER IV

FINDINGS AND INTERPRETATIONS

Description of Sample

The demographic characteristics of the respondents are shown

in table 1. The sample was composed of 49 percent males and 51 percent

females. The students' ages varied from 13 to 19 years. Over one-third

of the respondents were age seventeen (35 percent) , and almost one-fourth

were age sixteen (22 percent). Over 57 percent of the students were

in the twelfth grade. A major portion of the sample was coraposed of

Anglos (48 percent) and Hispanics (33 percent). In the City of

Albuquerque the population consisted of 49 percent Anglos and 37 percent

Hispanics (18).

The question, What is the amount of the allowance you receive

from your parents each month? was answered by 44 percent of the

students. The average allowance received by the students was $48.66

per month. In addition, the average earnings of the students with

jobs was $301.43 per month. Since it was summer and the students were

in school only during the morning, their potential earnings at this

time of year were much greater than during the regular school year.

29

30

TABLE 1

DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS

Question and Response

Sex of respondent Male Female No response

Total

Age of respondent 19 years 18 years 17 years 16 years 15 years 14 years 13 years No response

Total

Year in school of respondent Graduated 12 11 10 9 No response

Total

Ethnic origin of respondent Anglo Black Hispanic Oriental Indian Other No response

Total

Frequency

93 96 2

190

5 21 67 42 26 13 4 12 190

4 109 30 24 113 10 190

91

4 63

6 10 6

10 190

Percentage

49 50 1

100

3 11 35 22 14 7 2 6

100

2 57 16 13 7 5

100

48

2 34

3 5 3

5 100

TABLE l~Continued

31

Question and Response Frequency Percentage

Amount of

allowance

$200

100

60

50

30

20

10

1

No

-

-

-

-

-

-

-

-

re:

monthly

from parents

$500

199

99

59

49

29

19

9

sponse

Total

4

6

4

10

18

24

11

7

106

190

2

3

2

5

9

13

6

4

56

100

Average raonthly earnings

of respondent

700 - $999

500 - 699

400 - 499

300 - 399

200 - 299

100 - 199

1 - 99

Not employed or no response

Total

6

14

10

13

15

20

15

97

190

3

7

5

7

8

11

8

51

100

32

According to Rand Youth Poll, in 1978 the average allowance for

thirteen- to fifteen-year-olds was $29.60 per month, while sixteen- to

nineteen-year-olds averaged $64.10 per month. It was also indicated

that the respondents were more than matching their allowances with

earnings of their own (11:19).

Inforraation provided by the respondents regarding their

parents' income and education is shown in table 2. Thirty-five percent

of the fathers had completed a college degree; 29 percent had twelve

years of school or less and/or had other training; 23 percent had some

college; and 4 percent completed a Master's degree or Ph.D. Of the

raothers, 38 percent had twelve years of school or less and/or other

training; 27 percent had some college; 24 percent completed a college

degree; and 2 percent completed a Master's degree or Ph.D. Thus, the

sample appeared to have a higher educational level than the normal

population.

Forty-four percent of the respondents did not answer the ques-

tion, possibly because they did not know their parents' incorae. Of

those who did respond, the highest number reported an income of over

$40,000 per year, while 14 percent had an income between $20,000 and

$29,999; and 15 percent had an income of $19,999 or less. Mandell

(14) reported that 92 percent of the adult respondents in the 1970-1971

survey had an income of $19,999 or less; 4 percent had an income of

$20,000 to $24,999; and 4 percent had an income of $25,000 or raore.

33

TABLE 2

FREQUENCY DISTRIBUTION: DEMOGRAPHICS OF PARENTS OF RESPONDENTS

Question and Response Frequency Percentage

Hghest year of school compieted by f a the r

Ph.D. Mas t e r ' s College degree Some college 12 years Less than 12 years Other No response or did not know

Total

6 1 66 44 27 25 3 18 190

3 1 35 23 14 13 2 9

100

Highest year of school completed by mother Ph.D. Master's College degree Some college 12 years Less than 12 years Other No response or did not know

Total

1 2 46 51 35 33 6 16 190

1 1 24 27 18 17 3 9

100

Parents' combined incorae $40,000 and raore 30,000 -25,000 -20,000 -10,000 -

0 -

$39,999 29,999 24,999 19,999 9,999

No response or did not know Total

36 16 14 14 18 9 83 190

19 8 7 7 10 5 44 100

34

The incomes and educational backgrounds of the respondents'

parents suggest that the parents are generally professionally

employed. In contrast, the sample in Mandell's (14) study was com-

posed of 50 percent clerical-salesworkers, craftsmen, foremen, opera-

tives, and laborers; and 12 percent professional workers. The occupa-

tions and an inflationary economy help to explain the wide difference

in the incoraes of the two samples.

Descriptive Analysis

This analysis includes responses to questions concerning student'

use of credit cards, parent use of credit cards, student consumer educa-

tion background, knowledge about credit and credit cards, and attitudes

toward saving raoney.

Student Credit Card Use

As indicated in table 3, slightly less than two-thirds of the

students reported they did not use credit cards. About one-third

(28 percent) used credit cards one to five tiraes each raonth, and 9

percent used credit cards six times or more tiraes each month. Of

the students responding to a second question on credit card use, thirty-

two indicated various amounts of time that they had been using the

credit cards. The time ranged from six months or less (7 percent) to

raore than three years (2 percent). Only 14 percent of the students

responding to a question regarding credit card ownership had a credit

35

TABLE 3

FREQUENCY DISTRIBUTION: CREDIT CARD USE BY RESPONDENTS

Question and Response Frequency Percentage

Frequency of credit card use per month 11 times or raore 6 3 6 to 10 times 11 6 1 to 5 times 52 28 Never use them 113 59 No response 8 4_

Total 190 100

Length of time using credit cards 3 years or more 4 2 2 years to 3 years 7 4 1 year to 2 years 22 12 6 months to 1 year 14 7 Less than 6 months 14 7 No credit card use or no response 129 68

Total 190 100

Length of time respondents had credit card in own name 3 years or more 0 0 2 years to 3 years 3 2 1 year to 2 years 11 6 6 months to 1 year 8 4 Less than 6 months 5 2 No credit card in name 163 86

Total 190 100

Number of credit cards used by respondents 5 or more credit cards 13 7 4 credit cards 9 5 3 credit cards 12 6 2 credit cards 25 13 1 credit card 18 9 No credit cards 113 60

Total 190 100 Mean 3.6

36

TABLE 3—Continued

Types of iteras purchased with credit cards Clothes Gasoline and automobile parts Shoes Emergency Restaurants Records and tapes Airline tickets Mail order purchases Other Don't use them - 54.7%

Proportion of time respondent used someone's credit card other than their own or their

parents 11 - 100% 1 - 10% 0% (not at all) Total

8.8 7.8 7.7 6.3 5.2 4.5 3.6 2.9 1.3

0 2

188 190

Proportion of credit card bills paid by respondent

76 - 100%

Question and Response Frequency Percentage

Types of credit cards used by respondents Master Charge 39 Visa 29 American Express 6 Department stores 45 Gas companies 38

0 1 99 100

7 27

5 1 - 7 5 0 0 2 6 - 5 0 4 15 1 - 2 5 15 _5^ Total 26 100

37

TABLE 3—Continued

Question and Response Frequency Percentage

Proportion of bills paid by

100% 76 51 26 1

- 99 - 75 - 50 - 25 Total

credit parents

card

55 9 5 1

_5 75

74 12 7 1 7

100

Proportion of time respondents used own credit cards 76 51 26 1

- 100% - 75 - 50 - 25 Total

6 3 5

10. 24

25 12 21 42 100

Proportion of tirae respondents used paren t s ' c red i t card

100% 76 51 26 1

- 99 - 75 - 50 - 25 Total

20 10

0 4

Z5 59

34 17

0 7

42 100

38

card in their names, with the length of time of cards in their own

names ranging from six months or less (2 percent) to more than two

years (2 percent) (see table 3). As can be observed in the table, of

those students reporting number of credit cards in use, the majority

had use of two credit cards.

When credit cards were used, use was fairly evenly divided

between departraent store credit cards (used by forty-five of the

respondents), Master Charge (used by thirty-nine of the respondents),

and gasoline credit cards (used by thirty-eight of the respondents).

Visa and American Express cards were used less frequently. It should

be noted that it was possible to indicate the use of more than one

credit card.

Respondents were asked to rank nine categories of items from

most to least purchased using credit cards. Of the 45 percent who

reported making purchases, the top three items most frequently pur-

chased were clothes, gasoline and automobile parts, and shoes (see

table 3). Although ranked in different priority, these were the same

three items reported by Ogle as raost frequently purchased (19). These

three items correspond also to the types of credit cards most often

used—that is, department store credit cards (clothes and shoes),

bank credit cards (general use), and gasoline credit cards.

Only two of the respondents indicated using a credit card

other than their own or their parents'. Fifty-nine of the respondents

39

used their parents' cards, and twenty-four respondents used their own

credit cards for purchases. Seventy-five of the respondents' credit

card bills were paid by their parents, and twenty-six of the

respondents paid their own credit card bills.

Respondents' Parents' Credit Card Use

Respondents were asked to list the number of credit card accounts

their parents had (see table 4). Thirty percent of the respondents did

not know how many credit card accounts their parents had or responded

that their parents had no credit card accounts. Of the 70 percent

who did report credit card use by parents, the use reported by the

respondents was fairly evenly distributed between one to six credit

card accounts. The mean number of credit cards used was 4.7. While

Mandell (14) reported that one-half of his respondents used credit

cards and the other one-half did not use credit cards, it is suggested

that in the ten years since his study, credit card use has increased.

The respondents reported that when credit cards were used by

parents, 104 used one or raore departraent store credit cards, 79 used

Master Charge, 75 used Visa, 63 used gasoline credit cards, and 9 per-

cent used American Express cards. Use of raore than one credit card

account could be reported. In contrast, Mandell (14) reported that

of his respondents, 35 percent used store credit cards, 16 percent

used bank credit cards, 34 percent used gasoline credit cards, and

40

TABLE 4

FREQUENCY DISTRIBUTION: CREDIT CARD USE BY PARENTS OF RESPONDENTS

Question and Response Frequency Percentage

Number of credit card accounts of parents 6 or more credit card accounts 5 credit card accounts 4 credit card accounts 3 credit card accounts 2 credit card accounts 1 credit card account Do not know or no credit card accounts

Total

33 14 17 22 22 24 58

17 7 9 12 12 13 30

190 100

Mean 4.7

Types of credit cards used by parents Master Charge Visa American Express Department stores Gas companies

79 75 17 104 63

41

9 percent used travel and entertainment cards. The use of bank credit

cards and department store credit cards was much higher in the 1980

study than the 1970-1971 study conducted by Mandell. This also indi-

cates the large growth in credit card use during the past ten years.

Consumer Education

Respondents were asked if they had enrolled or were presently

enrolled in a consumer education course (see table 5). Twenty-six

percent of the respondents had taken or were currently taking a consumer

education course. However, when asked if they had either studied or

discussed the use of credit cards for buying things, 53 percent

responded that they had. The respondents were asked then where they

had studied or discussed the use of credit cards. Parental instruction

and business classes were the most frequent sources of study or dis-

cussion, with home economics, social studies, and econoraics classes

given as the next raost frequent sources.

The summated education score was computed from the following

variables: (a) present or prior enrollment in consumer education

courses and (b) the study or discussion of credit cards. The summated

education score was computed by adding the number who responded yes to

both questions, those who responded yes to one question and no to one

question, and those who responded no to both questions. Frora this

computation, it was observed that 59 percent of the saraple had some

42

TABLE 5

FREQUENCY DISTRIBUTION: CONSUMER EDUCATION

Question and Response

Prior or present enrollment in consumer education course Yes No

Total

Frequency

49 141 190

Percentage

26 74 100

Study or discussion of use of credit cards Yes No

Total

100 90 190

53 47 100

Sources of study and/or discussion of credit cards Parents' instruction Business class Home econoraics class Social studies class Econoraics class Other 4H, FHA, FFA Clubs

Those who answered yes

42 38 22 20 15 11 5

100

Summated education score Yes to both questions No to one question, yes to one question No to both questions

Total

37 75 78 190

20 39 41 100

43

background of credit card education, and 41 percent had no credit card

education.

Knowledge Questions

The knowledge section of the questionnaire included twenty-seven

questions. The number of credit knowledge questions answered correctly

was computed for each respondent. This score was converted to a per-

centage and scaled as shown in table 6. Almost one-third (32 percent)

of the respondents scored from 71 to 100 percent correct knowledge

questions.

TABLE 6

FREQUENCY DISTRIBUTION: CREDIT KNOWLEDGE QUESTIONS

Percentage of Correctly Answered Knowledge Frequency Percentage

Questions

91 - 100% correct answers 6 3 81 - 90 31 16 71 - 80 25 13 61 - 70 53 28 51 - 60 24 13 0 - 5 0 _51 JJ_

Total 190 100

44

Variables that were found to be related to the percentage of

correct answers at a statistically significant level were:

1. The number of times the respondents use credit cards each

month

2. The education of the father

3. If the respondent studied or had discussed the use of credit

cards and/or had a consumer education course (see table 7).

As the percentage of correct credit knowledge questions increased,

the number of times credit cards were used per raonth increased, the

father's education increased, and the summated education score increased.

TABLE 7

CORRELATION ANALYSIS: CREDIT KNOWLEDGE QUESTIONS

Percentage of Correctly Answered Knowledge Questions in Relationship Coefficient

With Other Variables

Number of times credit cards were used per raonth 0.12*

Father's level of education 0.14-

Mother's level of education -0.01

Parents' corabined income 0.08

Summated education score 0.23***

*Significance at 0.05 level **Significance at 0.01 level ***Significance at 0-001 level

45

One of the objectives of this study was to determine where the

students' knowledge was strong and where it was weak. To determine

this, the percentage of correct answers was averaged for the credit

and credit card questions in the multiple choice section, and for

credit, credit card, and installment contract questions in the true-

false section. The averaging resulted in three credit card questions

averaging 51 percent and eight credit questions averaging 52 percent.

In the true-false section, five credit questions averaged 54 percent,

five credit card questions averaged 66 percent, and six installment

contract questions averaged 73 percent. These percentages are in the

same range or higher than the percentages for knowledge score in the

studies by the N.A.E.P. (13), 57 percent, and Ogle (19), 53 percent.

Summated Knowledge Score

For further analysis, the responses to the twenty-seven ques-

tions in the knowledge section of the questionnaire were summated in

the following manner. The true-false questions were scored 2 for

correct answers, 1 for incorrect answers, and 0 for blank or did not

know answers. Multiple choice questions were scaled frora the most

correct answer (value of 4) to the least correct answer (value of 1)

and 0 for questions left blank. Each respondent's summated knowledge

score was calculated by summing the score for each question. The

total possible score was 68. Each student's score was then converted

46

to a percentage. Results are indicated in table 8. Overall, the

students have a high level of knowledge, with two-thirds of the

students having 71 to 100 percent knowledge scores. Since the summated

education score gave full, partial, or no credit for each question,

the respondents were given credit for some credit knowledge, even

though they did not have the correct answer. Twice as raany respondents

scored from 71 to 100 percent on the summated education score (64

percent) as did respondents on the number of correct credit knowledge

questions (32 percent). This resulted from the partial credit given

for answers in the summated knowledge section.

TABLE 8

FREQUENCY DISTRIBUTION: SUMMATED KNOWLEDGE SCORE

Summated Score Frequency Percentage

91 - 100 percent correct 81 - 90 71 - 80 61 - 70 51 - 60 0 - 5 0

Total

11 52 59 35 10 23 190

6 27 31 19 5 12 100

Student Attitudes

Student attitudes toward the use of consumer credit and credit

cards, learning about credit cards, and attitudes toward saving money

47

were the topics in the attitude section of the questionnaire. A ques-

tion from each topic is discussed here and shown in tables 9 and 10.

Responses to the question concerning the use of credit cards

by high school students indicated a variety of attitudes. Forty per-

cent believed they should use credit cards the same amount as present

(see table 9). The students were asked if they believed it was impor-

tant to learn about the use of credit cards in school situations, and

alraost two-thirds (61 percent) of the students answered yes, while

other responses were somewhat equally distributed between more use

(13 percent), less use (21 percent), and no use (18 percent).

One question requested a response to whether credit cards in

general were good or bad. Thirty-eight percent reported good or

good with qualifications, while 34 percent reported the opposite belief

of bad, bad with qualifications, or uncertain. In Mandeil's (14) study,

38 percent reported good or good with qualifications, and 49 percent

reported bad, bad with qualifications, or uncertain beliefs. A compari-

son of the results of this research and Mandell's study is shown in

table 9.

Eight items were offered as responses to the stateraent:

How important are these reasons to save money? The responses were

summed to determine a composite attitude toward saving money score

(summated attitude score) . Responses are shown in table 10. The four

possible answers for each question were: (a) Not Important at All,

48

TABLE 9

FREQUENCY DISTRIBUTION: ATTITUDE SCORES

Question and Response Frequency Percentage Mandell Study Percentage

High school students should be allowed to use credit cards: More often Same as at present Less often Not at all No response

Total

24 77 40 34 15 190

13 40 21 18 8

100

Importance of learning about the use of credit cards in school situations: Yes 116 Sort of 20 No 22 Do not know 23 No response 9

Total 190

61 11 12 11 5

100

Use of credit cards is a good thing, or a bad thing, or what? Good Good with qua l i f i ca t ions Pro-Con Bad with qualifications

Bad Uncertain No response

Total

20 54 43 11 22 31 9

10 28 23 6 12 16 5

190 100

26 12 12 4 41 4 1

100

49

TABLE 10

FREQUENCY DISTRIBUTION: SUMMATED ATTITUDE SCORES

Summated score of attitude toward

savmg money: 25 17 9 1

- 32 - 24 - 16 - 8

0 Total

Frequency Percentage

82 85 7 2 14 190

43 45 4 1 7

100

Teenage Consumers A Profile

(%)

Importance of reasons to save money—question and response:

To buy something you cannot afford right now Very important Moderately important Not very important Not iraportant at all No response

Total

29 30 19 13 9

100

32 38 22 8 0

100

To take care of emergencies Very iraportant Moderately important Not very important Not important at all No response

Total

80 8 3 1 8

100

75 20 4 1 0

100

50

TABLE 10—Continued

Frequency Percentage

To pay for an education Very important Moderately important Not very important Not important at all No response

Total

53 28 5 6 8

100

Teenage Consumers: A Profile

63 25 9 3 0

100

To get raarried Very iraportant Moderately important Not very important Not important at all No response

Total

32 33 20 9 6

100

16 39 28 17 0

100

How important are these reasons to save money? Question and response:

Just to have money in the bank Very important Moderately important Not very important Not important at all No response

Total

25 31 24 13 7

100

29 46 18 7 0

100

Because your family expects you to save money Very important Moderately important Not very important Not important at all No response

Total

13 26 33 20 8

100

8 32 35 25 0

100

TABLE 10—Continued

Frequency Percentage

51

Teenage Consumers A Profile

To earn interest on the raoney Very iraportant Moderately important Not very important Not important at all No response

Total

30 38 18 6 8

100

24 45 26 5 0

100

To avoid using credit to buy something Very important Moderately important No't ve ry imp or t ant Not important at all No response

Total

35 34 14 10 7

100

37 37 17 9 0

100

52

(b) Not Very Iraportant, (c) Moderately Important, and (d) Very Iraportant

The highest possible score was 32. Forty-five percent scored from 17

to 24, and 43 percent scored from 25 to 32, indicating a positive atti-

tude toward savings was held by the raajority of the respondents.

A coraparison of the responses to the eight iteras by the

students in this study to the responses by students in the Teenage

Consumers study is also shown in table 10 (17). The questions were

corapared by the responses with the highest percentage results. Two

questions rated very important in both studies: (a) To take care of

eraergencies and (b) To pay for an education. The question, Avoiding

the use of credit to buy soraething, was rated Very Iraportant in this

study, and the Teenage Consumers: A Profile study had equal response

to Very Important and Moderately Important. Four questions were

rated Moderately Iraportant in both studies: (a) To buy soraething you

cannot afford now, (b) To get raarried, (c) Just to have money in the

bank, and (d) To earn interest on the raoney. The question that was

rated Not Very Iraportant in both studies was: Because your faraily

expects you to save raoney. None of the questions was rated Not Irapor-

tant At All in either study. The individual percentage of responses

is given in table 10.

53

Deraographic Coraparisons

The respondents' summated knowledge scores, attitudes toward

saving money scores, and education scores were compared with several

demographic and credit card-related variables (see table 11). The

Pearson's r_ test was used for this analysis.

The summated knowledge score was related at a statistically

significant level to having discussed or studied the use of credit

cards. The students' summated knowledge score was not related to the

education of the father, the education of the mother, parents' combined

income, or the respondents' having taken a consumer education course.

Neither the summated attitude toward savings score nor the

suramated consumer education score was related at a statistically signifi-

cant level with any of the variables: student credit card use, parent

education, or parents' income. And the summated attitude score was

not related to the summated education score.

Analysis of Hypotheses

Hypothesis 1

Hypothesis 1 stated that there was no statistically signifi-

cant relationship between the total number of credit cards the respondent

uses and the total number of credit card accounts respondent's parents

use. There was a highly significant positive relationship between the

possession of credit cards by the students and their parents. Therefore,

54

TABLE 11

PEARSON CORRELATION ANALYSIS: DEMOGRAPHICS WITH SUMMATED KNOWLEDGE, ATTITUDE, AND EDUCATION SCORES

*Significance at 0.05 level. **Significance at 0.01 level. ***Significance at 0.001 level.

Variables Coefficient

Summated knowledge score Father's education level 0.11 Mother's education level 0.01 Parents' combined income 0.09 Consumer education course 0.05 Studied or discussed credit card use 0.23***

Summated attitude score Number of times credit cards used monthly -0.05 Father's education level -0.10 Mother's education level -0.08 Parents' combined income 0.01 Consumer education course -0.09 Studied or discussed credit card use 0.01

Summated education score Number of times credit cards used monthly 0.03 Father's education level -0.01 Mother's education level -0.01 Parents' combined incorae 0.05

55

the alternative hypothesis was accepted (see table 12). This supported

the findings by Blair (2), who also found a significant relationship

between students' and parents' credit card use.

Hypothesis 2

Hypothesis 2 stated that there was no statistically significant

relationship between whose credit card the student uses and the per-

centage of the student's credit card bills that is paid by the student.

Four variables were used to test Hypothesis 2. The four vari-

ables used were:

1. The student's use of his or her own credit cards

2. The student's using his or her parents' credit cards

3. The student's paying his or her own credit card bills

4. The parents' paying the student's credit card bills

Since two of the variables were found to be related at a statistically

significant level, the alternative hypothesis was partially accepted as

follows: The students' using their own credit cards was significantly

related to paying their own credit card bills was positively related at

the 0.01 level of significance. At the same significance level (0.01),

a positive relationship was found between the students' using the

parents' credit cards and the parents' paying the students' credit

card bills. The alternative hypothesis was partially rejected for the

other two sets of variable corabinations. These results support the

56

TABLE 12

PEARSON CORRELATION ANALYSIS: HYPOTHESES 1 THROUGH 5

Variable Coefficient

Hypothesis 1

Total number of credit cards used by the students with

Total number of credit cards used by the student's parents 0.76***

Hypothesis 2

The percentage the student uses his own credit card with

The percentage the student pays his own credit card bills 0.71**

The percentage the student uses his own credit card with

The percentage the student's parents pay the credit card bills 0.09

The percentage the student uses his parents' credit cards with

The percentage the student pays his own credit card bills - -029

The percentage the student uses his parents' credit cards with

The percentage the student's parents pay the credit card bills 0.31*

Hypothesis 3

Summated knowledge score with Number of times credit cards are used each month by the students 0.12*

57

TABLE 12~Continued

Variable Coefficient

Hypothesis 4

Summatéd knowledge score with Summated education classes score 0.18**

Hypothesis 5 Summated attitude score with Number of tiraes credit cards are used each raonth by the students -0.05

*Significance at 0.05 level. **Significance at 0.01 level. ***Significance at 0.001 level.

58

idea that whose credit card is used is related to who pays the credit

card bills (see table 12). The students' use of someone's credit card

other than their own or their parents' was eliminated since only two

students used someone else's credit card.

Hypothesis 3

Hypothesis 3 stated that there was no statistically significant

relationship between the summated knowledge scores of students and the

students' use of credit cards. A positive statistically significant rela-

tionship was found; therefore, the alternative hypothesis was accepted.

This suggests that knowledge and credit card use are positively

related (see table 12). However, Blair did not find a statistically

significant relationship between these variables (2).

Hypothesis 4

Hypothesis 4 stated that there was no statistically significant

relationship between the summated knowledge score of students with prior

credit card education and the knowledge scores of those without prior

credit card education. A positive statistically significant relation-

ship was found between the summated knowledge score and the summated

education score (see table 12). The alternative hypothesis was accepted.

This finding indicates that knowledge and education are related and

supports the concept that credit card education is iraportant since

education increases with knowledge.

59

The summated education score was composed of two variables:

(a) had taken a consumer education course and (b) had studied or dis-

cussed the use of credit cards for buying things. When the variables

were compared separately with the suramated knowledge score, only the

second of the above variables was related at a statistically signifi-

cant level to the summated knowledge score (see table 11). This find-

ing suggests that the discussion or study of credit cards had a greater

influence on the students' summated knowledge scores than did enrollment

in a consumer education course.

Hypothesis 5

Hypothesis 5 stated that there was no statistically significant

relationship between attitudes toward saving and the use of credit

cards by students. For the students who did use credit cards, the

number of times they used credit cards each month was also included.

Since no statistically significant relationship was found between the

variables, the alternative hypothesis was rejected (see table 12).

Blair (2) found that if the students used consumer credit, their

attitudes toward consumer credit were higher, but the difference was

not statistically significant.

CHAPTER V

SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS

Summary and Conclusions

The questionnaire was administered to 202 high school summer

school students during the summer of 1980 in Albuquerque, New Mexico.

Of the surveys collected, 190 were determined to be useable.

For each variable, frequencies were calculated. The Pearson's

r_ test was used to test the hypotheses. A comparison of demographic

data with the suramated knowledge score, summated attitude score, and

summated consumer education score was made.

The findings of this study show that the number of credit cards

used by the students was related at a statistically significant level

to the number of credit cards used by the parents. As partial use of

credit cards increased, student use of credit cards also increased.

This supports the results reported by Blair (2).

A statistically significant relationship was found between

students using their own credit cards and paying the credit card bills.

A statistically significant relationship was found between the students'

using their parents' credit cards and the parents' paying the students'

credit card bills. Since parents often pay the students' credit

60

61

card bills, the students may not fully realize the responsibilities of

credit card use.

A statistically significant relationship was found between the

students' use of credit cards and the students' summated knowledge

scores. This relationship suggests that education may be helpful,

since students do have higher knowledge levels with higher credit card

use. Further research might show other factors that are related to

the students' credit card knowledge levels.

As the respondents' summated knowledge scores increased, the

respondents' summated education scores increased. This result indicates

that knowledge and education are related and further research might

show the exact relationship. Blair (2) did not find a statistically

significant relationship between credit knowledge and credit use.

In this study and the study by Blair (2), no statistically

significant relationship was found between the students' attitudes

scores and credit card or credit use. Research regarding the types

of experiences students had with credit cards could provide further

insight to development of attitudes. Expansion of credit card use

and attitude questions may lend further insight in this relationship.

A follow-up survey of the same students several years later also might

indicate attitude changes.

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Re commendat ions

A recommendation for improving the questionnaire includes

better organization of questions, as well as expanding the content

of the questionnaire. The questions for credit card users only need

to be labeled as such. Different types of data, such as demographic,

should be placed together, as well as the credit card information ques-

tions, knowledge questions, and attitude questions.

Questions concerning demographic data need to be expanded.

The parents' occupations, student income and allowance during the

school year and suramertime, and the dollar amount charged per month

on credit cards are questions that could lend insight to student know-

ledge, use, and attitudes concerning credit cards. Responses from the

students' parents on credit card use would provide accurate informa-

tion not easily obtained from the students. The knowledge and atti-

tude sections could be expanded to cover the areas studied by the

students in class. Math computations covering interest charges, dis-

counts, balancing checkbooks, and installraent contracts may show

strengths and weaknesses in math skills (13). An investigation of the

influence of peers on credit knowledge, use, and attitudes; and the

influence of discussion about credit cards and the sources of dis-

cussion would provide additional information. Research into the effect

of the parents as role raodels and their influence in the students'

credit behavior may suggest that parental education be combined with

63

student education in credit-related areas.

A random sample during the regular school year that included

each school in the city would be more effective than testing during

the summer school session. Given the diversity of school enrollment

patterns, testing should be done between each school to discover

differences in the sample groups.

Research in the past has been limited to adults and credit

card use and youth and general credit use. Since youth are using

credit cards now and are expected to continue to use credit cards as

they raature, the importance of research into knowledge, use, and atti-

tudes concerning credit cards is increased.

This study did not investigate factors related to student

credit card attitudes. Research into the related factors would be

helpful.

LIST OF REFERENCES

1. Blackwell, Rodger D.; Hawes, Douglas K.; Talarzyk, W- Wayne. "Americans' Use of Credit Cards: A Nationwide Study of Femaie and Male Attitudes." Bulletin of Business Research February 1975, pp. 5-8.

2. Blair, Laurel Marie. "Use of Knowledge About and Attitude Toward Consumer Credit by Freshmen Students Residing on the University of Nebraska-Lincoln Campuses." M.S. thesis, University of Nebraska, 1975.

3. Bureau of Business and Economic Research, University of New Mexico- Interview, 29 May 1981.

4. Buswell, Henrietta Arlene. "An Analysis of Consumer Credit Behavior of a College Market." Ph.D. dissertation, University of lowa, 1975. In Dissertation Abstracts International. Ann Arbor, Michigan: University Microfilms International, 1976.

5. Cateora, Philip R. An Analysis of the Teen-age Market. Austin: University of Texas, 1963.

6. "Credit Card War Moves Into High Gear." U.S. News and World Report, 5 March 1979, pp. 70-73.

7. Federal Reserve Board. "Credit Card and Check-Credit Plans at Commercial Banks." Federal Reserve Bulletin 59 (Septeraber 1973): 647-648.

8. Gorham, Elizabeth Ellen. "Young Married Couples' Attitudes Toward Credit Cards." M.S. thesis, Utah State University, 1971.

9. Hutchins, Robert. Albuquerque Public Schools, Albuquerque, New Mexico. Interview, 7 May 1981.

10. "It's Getting Hard to Live Without a Credit Card." U.S. News and World Report, 8 October 1973, pp. 57, 58, 60.

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65

11. "Kids and Money: What They Need to Know, When They Need to Know It." Changing Times, June 1981, pp. 17-20.

12. "Latest Profile of the Nation's Young People." U.S. News and World Report, 16 April 1973, p. 70.

13. McFeatters, Ann. "Tests Show Teenage Consumers Marketplace 'Babes in the Words.'" Albuquerque Tribune, 9 July 1979.

14. Mandell, Lewis. Credit Card Use in the United States. Ann Arbor, Michigan: Braun and Brumfield, 1972.

15. Moschis, George Parthenios. "Acquisition of the Consumer Role by Adolescents." Ph.D. dissertation, University of Wisconsin-Madison, 1976. In Dissertation Abstracts International. Ann Arbor, Michigan: University Microfilms International 38 (1977).

16. NBC, "The New Teens." The Today Show, 14 May 1980. Tom Brokaw and Sam White.

17. National Assessment of Educational Progress. Education Commission of the States. Teenage Consumers: A Profile. Denver, Colorado

18. New Mexico. 1980 Census of Population and Housing, Final Popula-tion and Housing Units Counts. March 1981, p. 4.

19. Ogle, Linda Lee. "An Investigation of the Study, Use, and Under-standing of Consumer Credit by a Selected Group of High School Students." M.S thesis, University of Mississippi, 1972.

20. Plummer, Joseph T. "Life-Style Patterns and Commercial Bank Credit Card Usage." Journal of Marketing 35 (April 1971): 35-41.

21. St. Clair, Robert M. "An Analysis of Attitudes and Opinions of Consumers and Retailers Using a Family-Type Credit Card Systera in the New York City Area." Ph.D. dissertation, New York University, 1968. In Dissertation Abstracts International. Ann Arbor, Michigan: University Microfilms International 30 (1969).

22. Stinson, Richard J. "Is there a Credit-Card Debacle?" Financial World, 17 July 1974, pp. 28-31.

66

23. U.S. Department of Commerce. Bureau of the Census. Census Popu-lation: 1970. Detailed Characteristics. Final Report PC(1) - D33 N.M.

24. U.S. Department of Commerce. Bureau of the Census. Statistical Abstract of the U.S.: 1979. Washington, D.C., 1979.

25. U.S. Department of Health, Education, and Weifare. National Center for Education Statistics. Digest of Education Statis-tics 1979. By W. Vance Grant and C. George Lind. Washington, D.C.: Government Printing Office, 1979.

APPENDIX: CREDIT CARD SURVEY

One purpose of thi3 survey is to strengthen the consumer credit oresentation in the APS schools. The study will be used to fulfill a requirement for a ::asters Thesis problem as Texas Tech University. Please answer each question to the best of your knowledge.

1, Person completing the survey: Male Pemale Age Grade in school

Ethnic Origin; Anglo Blaclc ^Hispanic Oriental Other

2, What school do you attend during the regular year? ^_______^_^_________^^_

3, How many of the following typea of credit cards do you use?

Type Number of Who pays the credit card bills aost often? BMâãi You Parents (Checlc one)

Master Chsæge —____»»_ _____ ___^_ Visa

American Express ________ -_—_— __,^___ Department Stores _ _ _ _ _ _ ______ _______ Gas Companies _______ ______ ____^__ Other

4. Please give an estimate of how many credit card accounts your pajents have of each of the following types, (If •they have severai accoiints with the sane company, count each account as a separate account, EXAMPLE 1: If your family has a Texaco accoTint for your fathers' business, and if your parents have their own Texaco accoxint; -this would be counted as two accounts. E.XJ^':?LZ 2: However, several cards for the same account would count as only one account. Thus, "Texaco, Parents* Account" with separate cards in the name of each spouse counts' as one account.)

t'Iaster Charge Visa American Express Department Stores Gas Companies None Don't have any idea Other

5. Generally, what percent of your credit card bills do you pay, and what percent do your parents pay? ^ ou pay ?iParents pay

6. How many times do you use credit caxds each month? (Check one)

Never use 'them 1 to 5 times 6 to 10 times 11 to 15 times 16 to 20 times 21 times or raore

7. Generally, what percent do you use your credit cards and your parents credit cards? % Yours % Parenta % Someone else (Specify )

8. If you have a credlt card in your name, how long have you had it? (If more than

one, check when you got the first one.) Less than 6 raon-ths 6 months to 1 year 1 to 2 years 2 to 3 years 3 years or tnore

9. How long have 3^u been using credit cards? less than 6 months

6 months to 1 year 1 to 2 years 2 to 3 years 3 years or riore

10. What is the amoiint of the allowaiice you receive from your parents each month?

$ . I f you have a job, how much do you eam in an average month? S

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11. What do you use credit cards to purchase? Rank these in order with 1 being the most often purchased, and 9 being the least often puxchased.

Shoes Restaurants Gas and Auto Parts Don't use

Clothes Airline Tickets Records and Tapes '^^^

__Emergency Mail Order Purchases Other (Specify)

12. What is the highest year of school your parents have completed?

PATHER: MOTHER:

___Iiea8 than 12 Some College Less than 12 Some College

12 years College Degree 12 years College Degree

^Other(Specify) Other(Specify)

13. What is the income rajige of your parents? (Corabined income.) (Check one)

Less than $2,000 $10,000 to $14,999 $25.000 to $29,999

$2,000 to $4,999 $15,000 to $19,999 $30,000 to $39,999 don't

$5,000 to $9,999 $20,000 to $24,999 $40,000 or more ^ ° ^

14. Have you taken, or are you now taking a consumer education course?

yes no

15. Have you ever studied or discussed the use of credit cards for buying things? yes no

TTyes, where? You may check more than one,

Business Class Social Studies Class Other(Specify)

Economics Class Home Economics Class

4H. FHA, PFA Club Parents Instruction

POR QUESIIONS 16 TO 26 CIRCLE THE LETTER OF THE C0RR2CT ANS^WER.

16. What is the current interest rate charged on credit card accounts?

A, 10% per year B. 296 per month C. 18% per year D. 1% per month

17. Three important characteristics checked by credit lenders when extending credit

^ ® ' A. character, charge, credit C. character, capacity, collateral

B. charge, credit, capacity

18. Credit purchases cost more thaji cash purchases.

A, often true B, occasionally true C, rarely true

19. Among these four the lowest interest rates for loans are usually at:

A, credit cards B, pawn shops C, banks D, finance companies

20. If you loose your credit card, the maximum amount you can be responsible for is:

A, $0.00 B, $100,00 C, $50,00 D, no limit on the amount

21. Interest is: A. payment for the use of credit

B, rates charged for added payments C, principal X rate X down payment

22. Before signing any credit contract, you should: A. pay all payments

B. be sure "there are no blank spaces C. obtain a co-signer

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23. When you cannot meet yDur credit card payments because of an emergency vou should: . .j ^. j.^ ,, = -

A, avoid the creditors until you can raise the money. B, send -the goods back to the store

C, talk to the creditors and explain the situation

24. If you cannot keep up with your installment payments, the credit lenders or finance coopany can: ^^ ^^ ^^^ ^^ ^^^

B, repossess "the item and possibly hold you resposible for the remainder of the payments in your contract

C, repossess the item and free you from all responsiblility of your contract

25. Ihe Truth In Lending Law protects the consumer by requiring:

A, true interest rates to be stated in a credit contract

B, the seller to repair goods when damaged

C, a fixed rate of interest on all bank loans

26. If you feel you have been cheated in a credit deal you can get more help by complalning to:

A. your mother B, your neighbor C, your lawyer

27. THE FOLOWING ARZ STATETÍENTS AflOUT CREDIT AND CREDIT CARDS. Answer T for true statements, F for false statements, and D for émy statements which you do not Imow if they are true or false,

A, Statements about buying things on credit.

_ _ A TV can be had sooner if bought on credit,

Better warranty available if a TV is purchased on credit,

___ Spendablfi income will be affected if credit is used,

___ Flxad expenses will increase.

___ May lose the opportrunity to buy other items on credit if already making many credit pajmients each month,

B, Things to do before signing an installment contract,

___ Fill in or cross out all blank spaces in the contract,

___ Check to see if the contract outlines the schedule of payments,

___ Ignore the fine print in the contract, because all installment contracts are the same,

_ _ Check to see if the contract states the Annual Percentage Rate and the finance charges.

Insist on obtaining an exact copy of the contract,

Make sure you understand all of the provisions of the contract before signing it,

C, Statements about credit cards.

The use of credit cards may involve interest charges.

The use of a credit card lessens the necessity of carrying a lot of cash when shopping or traveling, Once you sign your credit card, no one else caui use it,

^ ^ If your credit card is lost, you can be held responsible for any charges made on the credit card by someone else.

A credit card allows you to buy things when you are short of cash.

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FOR QUESTIONS 28 TO 34 CIHCLE TKE LETTER OF THE YOU JEZL IS CORRECT.

28, Who do you feel should pay a high school student's credit card bills?

A. the student B. the parents C. don't know D, it depends

29, In yoxir opinion, high school students should be allowed to use their parent's credit cards to the following degree:

A. all the time (for all purchaaes) B. some purchases C. not at all

30, There is a lot of talk about credit cards these days, amd we are interested in what you think about them, Would you say that using credit cards is a good thing, or a bad thing, or what?

A, good B. good with qualifications C, pro-con

D, bad with qualifications E, bad F. uncertian

31, In your opinion, teenagers should use credit for:

A. durable goods (car, stereo, motobikes, etc.)

B. nondurable goods (clothes, cosmetic items, etc.) C. no itema, except in case of extreme. necessity

32, In your opinion, do your parents: A, not charge enough with credit cards

B, charge the 'right amount of credit cards C, charge too much on credit cards

33, In you opinion, it is important to leam about the use of credit cards in school situations? ^ ^^ g^ „^ ^^ ^^^.^ ^^^ ^^ ^^^^ ^^

34, In your opinion, high school students should be allowed to use credit cards: A, more often B, less often C, the same D, not at all

35, What type of credit card do you feel teenagers should have? (You may check more than one,)

bank credit cards department store cards none

gas carda travel and entertainment cards

36, How important éire •these reaaons to save money? (Check one for each statement.) very moderately not very not important important iraportant importémt at all

To buy something you can't

afford now.

To t2Úce care of emergencies.

To pay for an education, _____ ____ ^ _

To get married, _ _ __ _ _ _ _

Just to have money in the bank. _ _ ____ _ ^

Because yo\ir family expects you to save money,

To eam interest on the money, ___ ___ ___ To avoid using credit to buy

something, ___ ___ ___ ___ Thank you for your cooperation.