Students heed parents on credit card advice

June 03, 2005

Parents are by far the primary source of information and advice for traditional college students as regards credit card usage. Furthermore, the more information provided by parents, the lower the credit card debt incurred by their college age children, a Penn State study shows.

"According to the students that responded to our survey, the media, peers and high schools and universities furnish far less information to them regarding use (and abuse) of credit cards," says Dr. Mary Beth Pinto, associate professor of marketing in the Sam and Irene Black School of Business at Penn State Erie, The Behrend College.

Parents -- compared to other voices of socialization, particularly peers -- tend to exert a stronger impact in the area of core values, including money management, whereas peers are more influential than parents concerning tastes in clothing, dress style and preferred music, Pinto adds.

Pinto - along with Dr. Diane H. Parente, associate professor of management, and Phylis M. Mansfield, assistant professor of marketing, both at Penn State Erie -- are co-authors of the paper, "Information Learned from Socialization Agents: Its Relationship to Credit Card Use," in the current (June) 2005 issue of Family and Consumer Sciences Research Journal.

The researchers surveyed 589 college students attending 11 U.S. public and private colleges during the 2001-02 academic year. The students owned between 1 and 22 credit cards, with the average number per student at 2.16.

"We asked the students to rate sources of information about credit cards on a scale of 1 (little or no information) to 7 (a great deal of information)," Parente notes. "The scale consisted of 11 sources of information: parents, siblings, other relatives, news shows, talk shows, newspapers and magazines, peers, coworkers, Internet, high school courses and college courses."

The data indicated that high schools and colleges together placed a distant second to parents as a provider of information about credit cards. Peers and the media placed third and fourth respectively.

"Our findings suggest an opportunity for educational institutions to reassess the education and credit counseling provided to students," Pinto says. "Should schools educate students on personal finance issues? If so, at what age should education begin? At a minimum, middle school and high school administrators need to be aware that children are obtaining credit cards at ever-younger ages and, although some teens do not have credit cards, many of their peers do. At the college level, administrators responsible for providing the educational programs and support necessary to help students make successful transitions to and through college need to re-evaluate how well existing programs or formats are working."

Mansfield notes, "The data compiled in our study revealed a significant negative relationship between the amount of credit information learned from parents and credit use as measured by the total balance. In other words, the more information provided by parents, the lower the outstanding balance carried by college students on their credit cards. Media sources, educational sources and peer sources of information showed no significant relationship with credit card use."

As judged by their influence in counseling their college age children in credit card management, the power of parents may be the most powerful and underused tool in helping young people launch their voyage through life, Pinto notes.
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Penn State

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