Credit Cards
Chapter 1: Introduction
The research study will be examining the effect of credit card use on the consumer spending which is a significant topic in the field of business, economics and public policy. If it is deduced that the use of credit cards tends encouraging more spending as opposed to other means of payment, this may help in the provision of some rationale of regulating the use of spending. Additionally, In case the credit card usage leads to the excessive spending and even individual financial hardships, the regulation of the given cards could be much justified on the equal basis as the certain drug type’s regulation. The study of this topic will be instrumental in answering the questions of whether the usage of the credit cards encourages the consumers in spending more as compared to the usage of the other means of payment. The investigation of this topic is essential since it will be instrumental in shaping the usage of the various purchases by the consumers. Furthermore, it will be vital in the designing of various public policies regarding the modes of payment thus helping in streamlining the business sector. Additionally, the findings of the research study will be significant in the future in topics related to the given business topic.
Problem statement
The use of credit cards for payment encourages more spending due to the convenience that technology has brought about, bank incentives and improvement of credit score.
Purpose of the study
Many shopping malls and retail places have encouraged the usage of credit cards as an alternative and convenient mode of payment for various purchases that are made by the consumers. The usage of the credit cards as modes has led to the changing of the buying behaviors of the different consumers due to various reasons that are associated with it. The findings of this research study will help in revealing the impact of credit cards on the buying behaviors of the consumers as compared to the other modes of payment.
Study Hypothesis
Consumers who use credit cards tend spending more than those who use cash.
Chapter 2: Literature Review
There exist various few attempts which have been made in relating the spending levels and the use of credit cards as the mode of payment. Different research has highlighted that there is a likelihood of credit cards encouraging the consumers spending more due to the various reasons. There exist various reasons behind this increased by the consumers who use credit cards as the mode of payment. The use of credit cards encourages spending due to some psychological reasons.
Credit cards allow consumers to splurge easily.
There is various research which has been conducted and has shown that the individuals are always willing to make payments of double prices for any given commodity whenever they are making use of some credit card as opposed to the usage of cash. The usage of credit cards has some less psychological pain when swiping as compared to the physical payment by cash Roberts & Jones, 2001). The credit helps in anesthetizing the pain of payment and sometimes causes the tightwads to close up with the spendthrifts spending levels that are always higher. Credit helps to anesthetize the pain of paying, and it caused tightwads to nearly catch up to the spending levels of spendthrifts.
Credit limits make purchases appear smaller
The credit cards tend to make the purchases made by the consumers to appear smaller thus encouraging them to spend more on some unnecessary expenditure which may not be planned. The appearance of the payments being smaller has a psychological impact on the consumers since it stimulates the spending desire. The increased desire for spending mostly leads overspending which might not be planned as compared when using other modes of payment. The appearance of the purchases to be smaller is sometimes facilitated by the consumer credit limits which are mostly higher as compared to the income Rutherford & Devaney, 2009). The limits sometimes make the credit users make their comparison against the prevailing prices which mostly seems cheaper. The high limits of credit might be an illustration of potential future earning, and the expected might make the consumers see the prices to be smaller thus stimulating their spending. Other research has suggested that the limits of credit when salient aid I making the purchases to appear much more modest.
The convenience of using credit cards
The usage of credit cards also encourages more spending as a result of the much convenience of payment associated with its usage (Rutherford& Devaney, 2009). The consumers have much easy time making payments using credit cards as it is much easier, less time-consuming ass compared to other modes payment which sometimes tempts the consumers to overspend knowing very well the payment will be quickly made and the debt will be repaid at a later debt as agreed by the credit usurer Norum, 2008).
The improvement of the credit rating
The use of credit cards sometimes increases the chances of consumers spending more because the individual may be targeting to improve his or her credit rating. The more expenditure on purchases increases the amount of debt to be repaid by the individual cardholder hence who eventually pays the debt. The payment of the debt helps in increasing the credit rating of the given person thus qualifying him or her to take more loans and at the same time increase the maximum value of the amount available in the credit card.
Chapter 3: Methodology
Survey Description
A study survey was designed to help in capturing the impact of the use of credit cards on the buying behaviors and whether it encourages more spending as compared to other modes of payment. The survey questions were designed to assist in highlighting the impact of the use of credit cards on buying habits and specifically if it encourages more spending as compared to the other modes of payment like the cash payment. The survey proposed some hypothetical to the study participants to help in the stimulation of their interest in the given program. The study also had segments which were based on the level of education, gender, age and income of the participants thus helping in collecting varied data that shows a true reflection of the society set.
Data collection
The data was collected through the use of a questionnaire that was composed of ten questions that were simple to answer thus helping in getting some quick response or feedback. The consent of the participants was sought before an email of the questionnaire was sent to him or her. All the participants were given a deadline of submitting the paper after two days upon receiving. A simple layout of the survey was additionally chosen to facilitate the easier handling of the survey by the chosen respondents. The questions were also open-ended thus helping the participants to easily respond to them and submit the completed survey in time.
The study used convenience sampling in selecting the participants of the study based on the various aspects that were under investigation. The survey used a sample of 50 participants from a population of 1000 customers. The participants were chosen from the population of customers who pay by the use of credit cards in various shopping malls in San Diego.
Chapter 4: Findings
Norum, P. S. (2008). The role of time preference and credit card usage in compulsive buying behaviour. International Journal of Consumer Studies32(3), 269-275.
Roberts, J. A., & Jones, E. (2001). Money attitudes, credit card use, and compulsive buying among American college students. Journal of consumer affairs35(2), 213-240.
Runnemark, E., Hedman, J., & Xiao, X. (2015). Do consumers pay more using debit cards than cash?. Electronic Commerce Research and Applications14(5), 285-291.
Rutherford, L., & Devaney, S. (2009). Utilizing the theory of planned behavior to understand convenience use of credit cards.

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