# Credit card

A credit card is a card (usually made of plastic with a magnetic strip or microchip containing security information) issued by a bank, credit union, or other credit lender to a cardholder (an individual, group of individuals, or corporate entity) to enable the cardholder to pay a business for goods and services based on the cardholder's promise to pay.

## Quotes

* Credit card defaults have become an increasingly conspicuous feature on the bankruptcy landscape. In 1996, bank credit card delinquencies exceeded 3.5 percent—the highest delinquency rate since 1973, when statistics were first collected. ... Bank credit card chargeoffs also veered upward to 4.5 percent per year, exceeding all but the levels recorded during the years 1991-1992. ... At the same time, personal bankruptcy filings reached a record high 290,111 in the quarter ending September 30, 1996—up thirty-one percent from the corresponding period one year earlier—and surpassed one million for the first year ever in 1996. ... Both credit card defaults and bankruptcies soared amid a generally healthy economy with relatively low unemployment4 and reasonable growth in gross domestic product.
** Lawrence M. Ausubel, "Credit card defaults, credit card profits, and bankruptcy." American Bankruptcy Law Journal 71 (1997): 249.
* Credit card frauds are committed in the following ways: • An act of criminal deception (mislead with intent) by use of unauthorized account and/or personal information • Illegal or unauthorized use of account for personal gain • Misrepresentation of account information to obtain goods and/or services. Contrary to popular belief, merchants are far more at risk from credit card fraud than the cardholders. While consumers may face trouble trying to get a fraudulent charge reversed, merchants lose the cost of the product sold, pay chargeback fees, and fear from the risk of having their merchant account closed.
** Tej Paul Bhatla, Vikram Prabhu, and Amit Dua, "Understanding credit card frauds." Cards Business Review 1, no. 6 (2003): 1–15.
* ... More than a decade ago Churaman (1988) reported on college students' use of consumer credit. It was during this period that the banking industry began permeating the student credit card market in the late 1980's (Manning, 2000). Churaman reported that in 1985-86 over half of all college students had bank credit cards. This figure has been on the rise as some 70% of all undergraduates at four-year colleges have at least one credit card today. The increased number and type of credit cards on university campuses has seen an explosive level of growth in the past decade, with most credit card companies targeting college students. What remains still unanswered is what effect credit card circulation among college students has had on the financial attitudes, behaviors, and outcomes of young Americans.
** So-hyun Joo, John E. Grable, and Dorothy C. Bagwell, "Credit card attitudes and behaviors of college students." College Student Journal 37, no. 3 (2003): 405–420.
* Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints.
** Stephan Meier and Charles Sprenger, "Present-biased preferences and credit card borrowing." American Economic Journal: Applied Economics 2, no. 1 (2010): 193-210.
* Analysis of survey data collected from 6,520 students at a large Midwestern University affirmed that financial knowledge is a significant factor in the credit card decisions of college students but not entirely in expected ways. Results of a double hurdle analysis indicated that students with relatively higher levels of financial knowledge were not significantly different from students with relatively lower levels in terms of the probability of having a credit card balance. Contrary to expectations, those with higher levels of financial knowledge had significantly higher credit card balances. Overall, the present findings highlight the complex nature of the relationship between personal financial knowledge and credit card behavior.
** Cliff A. Robb and Deanna L. Sharpe. "Effect of personal financial knowledge on college students’ credit card behavior." Journal of Financial Counseling and Planning 20, no. 1 (2009).
* With the help of a commercial bank in China, we studied consumer credit card debt behavior ... in correlation with demographics, attitude, personality, and credit card features factors. The study was conducted by using mail-in questionnaires, which were sent to credit card holders who was using or had used either revolving credit or petty installment plans. According to regression functions, we found that demographic variables and credit card features had limited explanatory power compared to attitude variables and personality variables. Specifically, we found that revolving credit use and petty installment use were closely related to attitudes about credit cards, money and debt. Risk attitude efficiently predicted petty installment use; however, it did not correlate with revolving credit use. Personality factors of self-control, self-esteem, self-efficacy, deferring gratification, internal locus of control and impulsiveness were significantly correlated with revolving credit use; on the other hand, sensation seeking, impulsiveness, and deferring gratification were correlated with petty installment use. We also found that some credit card features easily led to an “illusion of income” that facilitated consumer credit card debt behavior.
** Lili Wang, Wei Lu, and Naresh K. Malhotra. "Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China." Journal of Economic Psychology 32, no. 1 (2011): 179–193.