Graduate Thesis Or Dissertation
 

The relationship of families' money management practices and their control of credit card use

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  • The use of credit cards by young families, their money management practices, and the relationship between money management practices and their control of credit card use was researched in this study. A sample of 60 Oregon families was drawn from the 1975 Johnson's Albany Area City Directory. These families were composed of a married couple living together with at least 1 child between the ages of 6 and 10 years, who used credit cards monthly. The husbands had a mean age of 33 years, and had completed a mean of 14 years of schooling. The wives were younger with a mean age of 30 and had completed a mean of 13 years of schooling. The couples were married a mean of 10 years, and 60 percent had 2 children. The husbands were principally employed in operative and laborer occupations, and the wives were largely homemakers. Sixty-three percent of the families earned a total yearly income between $10, 000 and $22, 000. The mean yearly income was $17, 857. The number of credit cards used by the families in a month ranged from 1 to 21 with a mean of 4 cards. Credit cards were used 1 to 61 times in an average month, with a mean frequency of 9 times per month. The mean number of types of purchases made with credit cards in a month was 6. Sixty-seven percent of the families used an oil company credit card regularly, followed closely by 65 percent who used a retail store card. Clothing was the commodity purchased with credit cards by the largest number of families, gasoline was the second most frequently purchased item. Most families charged under $100 per month with credit cards. Eighty-seven percent of the families reported that both the husband and wife decided upon the purchases to make with credit cards, although 60 percent reported that the wives made the most purchases using credit cards. Most of the wives used a credit card bearing their names, including those whose accounts were in the husbands' names. Spending plans were used by 78 percent of the families; the most common being unwritten plans for a month. Eighty-two percent of the families kept their sales slips from credit card purchases as a means of keeping records of their purchases. A regression analysis was used to test the hypotheses that control of credit card use was linearly related to the money management practices of the families. The money management practices included 1) the number of credit cards used by the families, 2) the number of types of purchases for which the families used a credit card, 3) record keeping practices used by the families, 4) budgeting practices employed by the families, and 5) the frequency with which the families made purchases using a credit card. Hypothesis 1, Hypothesis 1, the number of credit card bills paid in full is linearly related to the money management practices employed by a family, was not supported by the data at the .10 level of significance. Fifty percent of the families paid their credit card bills in full 11 or 12 months of the year. The mean number of months in which all credit card bills were paid in full was 7. Hypothesis 2. Hypothesis 2, the number of monthly credit card billings that are missed is linearly related to the money management practices employed by a family, was not supported at the .10 significance level. Eighty percent of the families reported that they never missed payment on a credit card debt. Hypothesis 3. Hypothesis 3, the degree to which the family buys more with credit cards than if cash were required is linearly related to the money management practices employed by a family was not supported at the .10 level of significance. Sixty-eight percent of the families reported that credit cards caused them to buy no more or just slightly more than if cash were required. Hypothesis 4. Hypothesis 4, the degree to which the family buys more with credit cards than if another loan were required is linearly related to the money management practices employed by a family, was not supported by the data at the .10 level of significance. Fifty percent of the 60 families reported that credit cards caused them to buy no more than if another type of credit were required to make a purchase. Hypothesis 5. Hypothesis 5, the degree to which the family indicates that it feels in control of its credit card use is linearly related to the money management practices employed by a family, was supported at the . 01 level of significance. A strong direct relationship (significant at the .001 level) was shown to exist between the families' feelings of control of credit card use and their budgeting practices. In the presence of all money management practices, the frequency with which families used credit cards was shown to have an inverse effect upon the families' feelings of control, significant at the .05 level. The families in the study demonstrated control of their credit card use, and used them for convenience rather than for installment debt instruments. Credit cards were regarded by a large number of families as a temptation to overspend.
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