Credit Card Usage Among College Students in China

Rui Yaoa and Xiangyi Mengb

Credit cards have become a common method of payment for college students in China. It is important that they
form good credit card usage behaviors and build a good credit history early in their financial life. Using data
collected from 10 universities in China, results of this study found that being financially dependent on their
parents is negatively associated with Chinese college students’ ability to pay their credit card bills. The study
also found that students with a high level of financial knowledge were less likely to take cash advances on their
credit card. Implications for financial educators and parents as well as policymakers were provided.

Keywords: cash advance, China, college students, credit card

C
redit cards are a common method of payment for charges for their credit cards (Ludlum et al., 2012). Unlike
most college students. Although they provide ac- other age groups, college students are being exposed to
cess to funds when other methods of payment the consumer credit market for the first time in their lives
are limited, using such funds can accumulate high costs. and must deal with the issues associated with real-world
Credit card companies believe that college students have debts (Xiao, Ahn, Serido, & Shim, 2014). Questions have
the potential to earn higher incomes in the near future been raised about college students’ ability to use credit
and therefore issue cards to young consumers even if they cards responsibly as well as their attitudes about money
do not currently have a credit history or a steady income and consumption. In order to help college students de-
(Robb, 2011). This relationship that creates the initial ex- velop good spending habits, it is important for educators
posure to the consumer credit market may help increase and policymakers to investigate the ways in which these
their loyalty as well. According to a survey conducted students use credit cards.
by a US student loan provider, Sallie Mae (2013), credit
card usage among US college students has remained at Researchers have studied American college students’
approximately 30% since 2010. In 2016, more than half credit cards usage for decades, but few studies have been
(56%) of college students between the ages of 18 and 24 conducted among other cultures. Being the second largest
years held a credit card (Sallie Mae, 2016). These credit economy in the world, China has huge market potential
card users are typically financially dependent but also for credit cards, and the number of credit card owners
have a strong tendency to buy new products and make in China has grown significantly over the past several
their own decisions. years. According to China Real News (2014, 2015), Chi-
nese banks had issued 414 million credit cards as of the
Using credit cards can provide enormous benefits, such first quarter of 2014, an increase of 5.8% since the end of
as convenience, expense budgeting, and the accumulation 2013; and a total of 511 million credit cards in the first
of a credit history; however, it also comes with respon- half of 2015, an 8.9% increase since the end of 2014.
sibilities, such as paying bills on time, staying under the Worthington, Thompson, and Stewart (2011) indicated
credit limits, and understanding the terms and conditions that China is very savings- and cash-centric, rather than
of the card. Based on a multicampus survey, college stu- borrowing- and credit card–centric. However, they indi-
dents lacked knowledge of interest rates and late payment cated that young and affluent Chinese credit card users

a
Associate Professor, Department of Personal Financial Planning, University of Missouri, 239A Stanley Hall, Columbia, MO 65211. E-mail: y​ aor@​
missouri.​edu
b
Associate Professor, China Institute of Public Finance & Policy, Central University of Finance & Economics, 39 South Xueyuan Road, Haidian District,
Beijing, China 100081. E-mail: x​ iangyi.​meng@​cufe.​edu.​cn

304 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018, 304-316
© 2018 Association for Financial Counseling and Planning Education®
http://​dx.​doi.​org/​10.​1891/​1052-​3073.​29.​2.​304
exhibit the traits of those who acquire new products and Literature Review and Hypotheses
indicate that credit cards offer them greater convenience. Credit Cards in China
In 1985, the Bank of China (BOC) produced the first do-
In 2004, a Chinese bank issued the first credit cards to col- mestic Chinese credit card, the Great Wall Card (Worthing-
lege students (Li, Wang, & Xu, 2014). According to these ton, 2003). In 1987, the BOC joined the international credit
authors, the Jin Cheng International Credit Management card associations, MasterCard, and Visa and issued its first
Co., Ltd., along with the Guangdong Development Bank, international Great Wall MasterCard in 1988. According to
issued the first domestic credit cards to college students in Worthington (2003), by the end of 1997, over 30 million
Beijing. This showcased the enormous opportunity avail- Chinese held a Great Wall Card. The other three banks out
able to other commercial banks to enter the student credit of the “big four” Chinese banks followed the BOC’s lead
card market. Sure enough, an increasing number of banks and began to issue credit cards to Chinese consumers. Be-
began to issue various credit cards with the use of campus tween 1990 and 2001, the number of cards held by Chi-
promotions. The dramatic increase in credit card usage nese people increased from 3 to 330 million (Worthington,
among Chinese college students has generated concern 2003). In 2007, China experienced another boom in credit
about whether they are using credit cards in appropriate card acquisition. According to data provided by Statista
ways or are engaging in risky behaviors. An example of (2016), the number of credit cards acquired in China in
harmful behavior would be not paying the credit card bal- 2007 had increased by 80% compared to that of 2006. After
ance in full or taking cash advances (Xiao et al., 2014). 2009, annual growth in the total number of credit cards held
In order to protect credit card users and to prevent young declined to 36%, and from 2010 to 2014, the annual growth
generations from getting into debt, in 2011, the China rate hovered at approximately 16%–20%. China, a tradi-
Banking Regulatory Commission issued provisions to tional cash-centric society, has experienced a rapid growth
improve and standardize credit card market. Banks are of credit card ownership.
prohibited from issuing credit cards to people who are
aged under 18 years old (excluding supplementary card Characteristics of Chinese Credit Card Users
applicants). In addition, people over the age of 18 years Most existing research on credit card usage in China has
who do not have a stable income will need a co-signer been conducted from the perspective of general consumers.
to ensure that there is a secondary source of repayment Worthington, Stewart, and Lu (2007) examined 196 respon-
(Measures for the Supervision and Administration of the dents with an average annual income of 200,000 RMB (ap-
Credit Card Business of Commercial Banks, 2011). proximately US $26,385 in 2007). Approximately 67.9% of
respondents used a credit card regularly, and either paid off
Most people in China do not like to carry debt. Traditionally, their debts each month (84.5%) or only made the minimum
they control their consumption and maintain conservative or partial payments of their balances (15.5%). This suggest-
cash spending habits (Li et al., 2014). However, Chinese ed that the sample of Chinese consumers were using credit
college students are well aware of the Chinese saving tradi- cards appropriately. Respondents who paid their balances in
tion and therefore are likely influenced by Western consum- full appeared to be well aware of the risks and advantages
erism. They are a unique group of people who may accept of using credit cards compared to those who did not pay
new spending and borrowing concepts in addition to the their balances in full. The authors predicted that credit card
usage of credit cards. Currently, not much is known about products would continue to influence the choice of payment
college students’ usage of credit cards because data on their options in the Chinese market.
financial behavior in China are limited. To fill in this gap,
this study used data collected by 10 universities in Beijing Wang, Lu, and Malhotra (2011) used a 2008 sample of 1,410
and Tianjin in 2014 to explore the factors related to college credit card holders in China and noted credit card users with
students’ credit card usage—specifically, their payment and revolving debt (individuals who pay between the minimum
cash advance behaviors. The findings tracked Chinese col- payment and the full payment) are typically younger than 37
lege students’ credit card usage and provided insights on years old. Males were less likely than females to pay the full
how to help them avoid making mistakes when using credit monthly balances, while individuals with higher incomes
cards as well as on the importance of financial education. were less likely to carry balances. Student card holders held

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 305
revolving debt significantly more often than working pro- By analyzing a sample of college students in the United
fessionals. Finally, they found that self-control, self-esteem, States and China, Norvilitis and Mao (2013) found that Chi-
and self-efficacy were related negatively to the frequency of nese students were less confident in their ability to manage
holding revolving debt. People who scored high on one or money and credit. Thus, self-reported financial confidence
some of these variables were able to manage their financial and wealth satisfaction levels should be considered when
accounts by avoiding carrying excessive debt. examining Chinese students’ credit card usage. Within the
context of Chinese culture, children are not considered
A study by Sharpe, Yao, and Liao (2012) used a sample of independent until they graduate from college and join the
2,071 Chinese urban households and found that the credit labor force. The majority of Chinese college students re-
card ownership of Chinese individuals was related to age, ceive financial support from their families because their in-
education, and income level. Approximately 60% of credit comes from part-time jobs or scholarships usually do not
card owners were younger than 35 years and were more cover their college expenses. Norvilitis and Mao (2013)
aware of the general risks associated with using credit concluded that 11% of Chinese parents have paid the credit
cards. Their findings suggested that younger affluent indi- card debts of their children who are in their 20s. Parental
viduals are more likely to utilize credit cards as a new pay- involvement is another influence on credit card use for Chi-
ment method. nese college students.

There has been limited research conducted on credit card Characteristics of American Students’ Paying Behavior
use from the perspective of college students. Most Chinese Data on college students’ financial behavior in China is lim-
college students receive financial support from their parents ited. College students in the United States have a longer his-
and thus have a greater temptation to spend. Although they tory of credit card usage than Chinese students (Norvilitis
have no stable source of income, their level of consump- & Mao, 2013). The behavior of US students may provide
tion is high. For example, the per capita annual expendi- insights into how Chinese students behave because they are
ture of urban residents in 2015 was approximately 21,392 likely to adopt Western spending and borrowing concepts.
yuan (approximately US $3,396 in 2015), while over half of
Chinese college students spend 1,000–3,000 yuan monthly Based on the existing research, most US college students
(approximately US $159–$476 in 2015), and about one- with positive credit card balances pay their credit bills in
third of them spend 3,0005,000 yuan monthly (approxi- full each month (Joo, Grable, & Bagwell, 2003; Staten &
mately US $476 to $781 in 2015) (​People.​cn, 2016). To Barron, 2002; Tan, 2003; Robb & Sharpe, 2009). Their year
identify respondents who fit the profile of “young affluent in college was related to their debt payment behavior. Fresh-
Chinese,” Worthington et al. (2011) employed a survey to men and sophomores were more likely to pay their balances
evaluate students on the Ningbo campus at the University in full each month, while students with less educated par-
of Nottingham. They noted that the responding undergradu- ents were more likely to carry a revolving balance (Robb &
ate students had a median annual income of 20,000 RMB Sharpe, 2009). Xiao, Tang, Serido, and Shim (2011) found
(approximately US $3,096 in 2011), which indicated that similar results indicating that parental socioeconomic sta-
they received allowances from their parents. The majority tus, such as income and education, had a negative effect on
of undergraduate students in the sample had a credit card, students’ revolving credit card debt. They also found that
and nearly three-quarters used credit cards several times students who had a higher level of self-efficacy were more
a month. These students stated that the convenience that likely to perform positive financial behaviors. Students who
credit cards provide was the most important reason for their felt more confident about controlling their finances were
usage. The students in the sample reported that they used more likely to perform positive financial behavior as well.
credit cards for shopping instead of cash withdrawals. They Furthermore, Lyons (2004) pointed out that whether or not
were aware of the high costs of taking cash advances on the student was financially independent played a key role in
credit cards and also had concerns that using credit cards whether she/he engaged in risky financial behavior. Being
encourages people to spend beyond their budgets; however, financially independent decreased the likelihood of paying
they believed that by exercising self-control, they could ef- credit card balances in full each month. Other studies have
fectively control their spending habits. confirmed that financial independence from parents was

306 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018
positively related to having high credit card debt and not to carry outstanding balances. There was no significant re-
paying balances in full each month (Mendes-Da-Silva, Na- lationship between other resources and credit card usage.
kamura, & Moraes, 2012). In addition, Tan (2003) found
that female students were more likely to have problems Considering the importance of financial independence and
repaying debt. This is consistent with findings from Jas- financial knowledge in forming good financial behaviors
sim and Taylor (2010) that state that a higher percentage and based on results from prior literature, we hypothesize
of male students paid off their credit card balances in full that:
every month when compared to female students.
H1: The likelihood of engaging in undesirable financial be-
Role of Financial Knowledge haviors is lower for Chinese college students who are fully
Several studies have examined the relationship between financially dependent on their parents.
financial knowledge and the credit card usage of college
students. Although these studies analyzed college students H2: The likelihood of engaging in undesirable financial be-
in countries outside of China, results may provide insight haviors is lower for Chinese college students who have a
into the analysis on Chinese college students. Robb (2011) higher level of financial knowledge.
found that a greater level of financial knowledge was as-
sociated with more responsible credit card usage for US Methodology
college students. Students who received a higher score on Data
financial literacy questions were less likely to make only the In this study, we used data collected by the Central Univer-
minimum payment and less likely to take cash advances. sity of Finance and Economics to explore the factors related
A recent study in Turkey found that students with higher to college students’ credit card usage. Data were collected
financial literacy scores were more likely to pay their bills in 2014 via the Internet and WeChat before and after partici-
on time (Akben-Selcuk, 2015). Xiao et al. (2014) found that pation in the “College Students Financial Literacy Educa-
both objective (content knowledge demonstrated by test tion Program,” a 1-year program cosponsored by the China
scores) and subjective (self-assessed understanding of con- Foundation for Poverty Alleviation and Citi Foundation.
tent knowledge) knowledge decreased US college students’ The program is designed to effectively enhance college stu-
undesirable credit paying behaviors. Some examples of dents’ financial knowledge and financial capacity as well as
these behaviors are not paying balances in full and borrow- the responsibility they exercise when utilizing credit card.
ing behaviors, such as taking cash advances on credit cards. The course contents covered topics such as the use of banks,
establishing financial goals, and the basics of credit, sav-
A study by Norvilitis and MacLean (2010) examined the ings, and investments.
impact parents have on college student credit card usage.
The sample of 173 college students were asked where they Respondents were students from 10 universities in Beijing
learned the most about managing their finances. The re- and Tianjin, China. Student organizations helped promote
sults showed that most students learned about money from the educational program. Survey participation was volun-
their parents. Other financial knowledge resources included tary. Volunteers were randomly selected to participate in the
school, friends, the media, and their own experiences. They program. An initial survey was conducted to collect infor-
indicated that there was no difference in credit card debt re- mation on the demographic and economic characteristics of
gardless of which resource they received knowledge from. the program participants and their parents, in addition to
Their findings complemented those of Bowen’s (2002), information about the respondents’ financial attitudes, life
who found that the level of financial knowledge of teens satisfaction, and self-reported financial knowledge. The to-
and their parents was unrelated. In contrast, Pinto, Parente, tal sample size of the initial survey was 1,359.
and Mansfield (2005) pointed out that college students re-
ceived more credit card knowledge from their parents than To examine factors related to credit card usage, we elimi-
any other resources. Students who learned more informa- nated respondents who reported that they did not have a
tion about credit cards from their parents were less likely credit card. The final sample size was 499 (49.1% male,
50.9% female). Table 1 shows the characteristic of the

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 307
TABLE 1. Sample Characteristics by Credit Card Usage
Take Cash Advances on
Credit Card Paying Behavior Credit Card
Pay Between Mini-
Characteristics mum and Full Pay in Full Parents Pay No Yes Total
Gender
  Male 14.8 26.5 7.8 14.6 34.5 49.1
  Female 11.2 27.7 12.0 15.6 35.3 50.9
Year in school
  Freshman 17.4 36.3 14.8 17.2 51.3 68.5
 Sophomore or higher 8.6 17.8 5.0 13.0 18.4 31.5
Parents’ monthly income
 0–4,999 yuan 15.8 30.5 8.4 14.2 40.5 54.7
 5,000 yuan or more 10.2 23.6 11.4 16.0 29.3 45.3
Parents’ highest education
 High school or lower 19.4 35.1 9.6 16.2 47.9 64.1
 Associate degree or higher 6.6 19.0 10.2 14.0 21.8 35.9
Last year total income
 0–4,999 yuan 14.8 32.1 8.4 14.6 40.7 55.3
 5,000 yuan or more 11.2 22.0 11.4 15.6 29.1 44.7
Full financial dependence on parents
  Yes 12.6 26.5 14.8 16.2 37.7 53.9
  No 13.4 27.7 5.0 14.0 32.1 46.1
Know credit card cash withdraw rate
  Yes 6.6 16.6 2.8 3.4 22.6 26.1
  No 19.4 37.5 17.0 26.9 47.1 73.9
Source of financial knowledge
  Parents 11.2 20.8 9.2 10.6 30.7 41.3
  Internet 8.4 19.0 7.0 11.6 22.8 34.5
 Other sources 6.4 14.2 3.6 8.0 16.2 24.2
Calculated level of financial knowledge
  Low 13.4 15.0 4.0 8.8 23.6 32.5
  Medium 8.6 30.3 11.6 14.0 36.5 50.5
  High 4.0 8.8 4.2 7.4 9.6 17.0
Note. Numbers in percentages. Sample size = 499.

sample of students. The respondents on average were 19 that they took cash advances on their credit cards. The over-
years of age (standard deviation = 1.6), and the majority whelming majority of the students (94.8%) reported that
were freshmen (68.5%). More than half of the students were they had between one and three credit cards, while only
unemployed (60.1%) and completely financially dependent 5.2% reported that they had four or more credit cards. Ap-
on their parents (53.9%). The majority of the students who proximately 15.8% of the respondents used their credit
were employed worked less than 10 hr/week. Nearly all the cards several times a week; 39.9% used them several times
students lived in a dorm (97.4%), and none of them was monthly, and 31.9% reported that they rarely used credit
married. Among the students who had at least one credit cards. Furthermore, 9.8% of respondents used credit cards
card, 26.0% of them reported that they paid between the for financial emergencies, and only 2.6% of respondents
minimum and the full payment, and 69.7% of them reported used their credit cards every day.

308 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018
Variables on the number of correct answers. The number of correct re-
The dependent variables were made up of the answers from sponses to the questions about financial knowledge was used
two questions about credit card usage and were as follows: to assess an individual’s level of objective knowledge (Fer-
(a) how do you pay your credit card bills? and (b) do you take nandes, Lynch, & Netemeyer, 2014). Students who answered
cash advances against your credit? The first dependent vari- less than seven questions correctly were considered to have
able was designated to determine whether or not respondents a low level of financial knowledge. Students who answered
paid more than the minimum payment on their credit card seven or eight questions correctly were categorized as hav-
debts each month. The survey asked the respondents how they ing a medium level of financial knowledge, and those who
paid their credit card debts. The four primary payment method answered nine or more questions correctly were considered
responses were (a) paying the minimum payment; (b) paying to have a high level of financial knowledge. A total of 337
the amount between the minimum payment and the full pay- respondents answered at least seven questions correctly, in-
ment; (c) paying in full; and (d) my parents pay. These meth- dicating that half of the students possessed at least a medium
ods were mutually exclusive since respondents could choose level of financial knowledge. Additionally, 85 of the students
only one answer. The first three responses involve students demonstrated a high level of financial knowledge.
who receive allowances from their parents but manage credit
card payments on their own. The “my parents pay” response We omitted the variables from our model that contained too
refers to the situation where parents take responsibility for many missing values. For example, we excluded academic
managing their children’s credit card bills. When we looked performance from the model, as only 166 out of 499 respon-
at frequency tables formed for the first two options and also dents provided their grade point averages. Information on
the categorical predictor variables, some of the cells included living arrangement was also excluded because most students
a small number of observations, or others had no observation. lived in dormitories. We also eliminated marital status from
In order to avoid having categories with small numbers of cas- the model due to the fact that no respondents were married.
es, this study combined the first two options into one category Some variables contained categories with very few cases, so
and kept the other two categories separate. The second depen- we combined some categories. For example, we pooled re-
dent variable focused on respondents who took cash advances spondents who were sophomores, juniors, and seniors and
on their credit cards (1 = yes; 0 = no). categorized them as “sophomore or higher.” In addition, we
tried to control the frequency of credit card usage and includ-
Based on the literature review, we selected independent vari- ed this variable as an independent variable in our regression
ables and organized them into four groups: (a) demographic models. However, this variable was insignificant and thus de-
characteristics that include gender, year in school, previous leted from the model selection process. Although the usage
year’s income, and financial dependence (whether completely frequency was diverse, it did not affect students’ credit card
dependent on their parents); (b) parental socioeconomic sta- usage behavior.
tus, such as parents’ income and highest level of education;
(c) financial confidence and satisfaction; and (d) sources and Multivariate Analysis Methods
level of financial knowledge. We performed a multinomial logistic regression to examine
factors related to the credit card payment behavior of college
To evaluate their financial confidence and satisfaction, stu- students. This analysis was used because the dependent vari-
dents answered the following two questions on a scale of able, “how do you pay your credit card,” is categorical and has
0–10 (10 indicated strongly agree, and 0 indicated strongly no internal order. It was also used because there were more
disagree): (a) “Are you satisfied with your current financial than two categories. We used a binary logistic regression to
situation?” and (b) “Do you have an adequate ability to man- test the second model because the outcome observed had only
age personal finances?” two possible outcomes. We conducted Pearson’s correlation
tests across independent variables. The number of hours that
In order to determine the respondents’ level of financial students worked per week was highly correlated with finan-
knowledge, the survey included 11 questions that covered cial independence. However, the interaction term was insig-
topics related to banking, credit cards, investment options, and nificant, as were the weekly work hours, and thus, both were
other factors. Possible scores ranged from 0 to 11, depending excluded from the models.

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 309
TABLE 2. Multinomial Logistic Analysis of Credit Card Payment Behaviors (Reference Category = Parents
Pay)
Pay Between Minimum and Full Pay in Full
Standard Odds Standard Odds
Parameter Coefficient Error Ratio Coefficient Error Ratio
Intercept 1.5054 0.5670 1.1973 0.5174
Male (reference category = female) 0.3586 0.2975 1.4313 0.1200 0.2618 1.1275
Year in school (reference category =
freshman)
 Sophomore or higher 0.4634 0.3486 1.5895 0.6015 0.3093 1.8249
Parents’ monthly income (reference
category = 0 –4,999 yuan)
 5,000 yuan or more −0.2583 0.3260 0.7724 −0.1974 0.2855 0.8209
Parents’ highest education (reference
category = high school or lower)
 Associate degree or higher −0.7693* 0.3249 0.4633 −0.4039 0.2758 0.6677
Last year total income (reference cat-
egory = 0 – 4,999 yuan)
 5,000 yuan or more −0.5199 0.3162 0.5946 −0.7929** 0.2777 0.4525
Full financial dependence on parents
(reference category = no) −0.8174* 0.3180 0.4416 −0.8133** 0.2830 0.4434
Know credit card cash withdraw rate
(reference category = no) 0.5911 0.3814 1.8060 0.8604* 0.3404 2.3641
Source of financial knowledge (reference
category = parents)
  Internet −0.1539 0.3333 0.8574 0.0973 0.2897 1.1022
 Other source −0.0264 0.3892 0.9739 0.2609 0.3449 1.2981
Calculated level of financial knowledge
(reference category = low)
  Medium −1.3100*** 0.3406 0.2698 −0.1727 0.3150 0.8414
  High −0.9613* 0.4302 0.3824 −0.3322 0.3969 0.7173
Wealth satisfaction (0 – 10) −0.0403 0.0609 0.9605 −0.0416 0.0538 0.9593
I feel that I have strong ability to manage
my assets (0 to 10) 0.1187* 0.0570 1.1260 0.1656** 0.0504 1.1801
Chi-square of the likelihood ratio test 99.0002***
Note. Analysis of Central University of Finance and Economics datasets. Sample size = 499.
*p < .05. **p < .01. ***p < .001.

Results were 45.3% more likely to pay their credit card debts in full
Table 2 reports the results from the multinomial logistic analy- compared with students with lower incomes. Students who
sis of the respondent students’ credit card use behaviors when were completely financially dependent on their parents were
using “parents pay” as the reference category. As shown in Ta- 44.3% more likely to make full credit card payments, com-
ble 2, factors negatively associated with the likelihood of pay- pared with financially independent students. Factors posi-
ing credit card balances in full each month, aside from having tively associated with paying credit card balances in full each
their parents pay, included higher past-year income and full month, aside from having their parents pay, included having
financial dependency on parents. These results rejected the knowledge about credit cards and a strong self-perceived
first hypothesis and were inconsistent with results from prior ability to manage assets. Students who knew credit card cash
literature (e.g., Lyons, 2004; Mendes-Da-Silva et al., 2012). advance rates were 2.4 times more likely to pay credit card
Those who had incomes over 5,000 yuan in the previous year balances in full compared with students who reported no such

310 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018
knowledge. Students who had higher confidence levels in re- Table 3 shows the results from the binary logistic analy-
gards to their asset management skills had increased odds of sis of students’ behavior with respect to credit card cash
making full payments by 18.0%. advances. Compared with freshman students, students
in higher grades were 50.1% less likely to take cash ad-
Factors negatively associated with making at least the mini- vances. Students, whose parents had associate degree or
mum payments other than having their parents pay included higher, were 46.6% less likely to take cash advances com-
parents’ highest education, full financial dependency, and pared with students whose parents had high school or low-
students’ calculated level of financial knowledge. Com- er degrees. Students who reported knowledge of the cash
pared with those whose parents had high school degrees withdrawal rates were 5.6 times more likely to withdraw
or lower, students whose parents had associate degrees or cash from their credit cards compared to those who had no
higher were 46.3% more likely to pay at least the minimum such knowledge. Compared with students who acquired fi-
payment. Students who were fully financially dependent on nancial knowledge from their parents, those who reported
their parents were 44.2% more likely to make at least the the Internet as their source of financial knowledge were
minimum payment. Students who had a medium or high 58.5% more likely to take out cash advances. Students
level of financial knowledge were 27.0% and 38.2% more who reported a high level of financial knowledge were
likely to make at least the minimum payment, respectively. 54.4% less likely to take cash advances than those who
In addition, students who had higher confidence in regards reported a low level of financial knowledge. This result
to their asset management skills had increased odds of mak- confirmed the second hypothesis. Students who had high-
ing at least the minimum payments by 12.6%. er confidence levels in regards to their asset management

TABLE 3. Binary Logistic Analysis of Taking Cash Advance on Credit Cards

Parameter Coefficient Standard Error Odds Ratio
Intercept 2.2234 0.4332
Male (reference category = female) −0.1872 0.2177 0.8293
Year in school (reference category = freshman)
 Sophomore or higher −0.7023** 0.2427 0.4954
Parents’ monthly income (reference category = 0–4,999 yuan)
 5,000 yuan or more −0.2322 0.2414 0.7928
Parents’ highest education (reference category = high school or lower)
 Associate degree or higher −0.6265** 0.2382 0.5345
Last year total income (reference category = 0–4,999 yuan)
 5,000 yuan or more −0.0533 0.2358 0.9481
Full financial dependence on parents (reference category = no) 0.0481 0.2273 1.0493
Know credit card cash withdraw rate (reference category = no) 1.7179*** 0.3092 5.5728
Source of financial knowledge (reference category = parents)
  Internet −0.5359* 0.2505 0.5851
 Other source −0.4249 0.2762 0.6538
Calculated level of financial knowledge (reference category = low)
  Medium 0.0585 0.2462 1.0602
  High −0.7848* 0.3138 0.4562
Financial satisfaction (0–10) −0.0299 0.0447 0.9705
I feel that I have strong ability to manage my assets (0 to 10) −0.0885* 0.0419 0.9153
Chi-square of the likelihood ratio test 74.1956***
Note. Analysis of Central University of Finance and Economics datasets. Sample size = 499.
*p < .05. **p < .01. ***p < .001.

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 311
skills showed a decrease in the odds of taking cash ad- financial knowledge came from the Internet. One possible
vances by 8.5%. explanation is that parents told their dependents to take cash
advances because they planned on taking care of the fees.
Discussion and Implications This may be prevalent among students who attend a college
Using data from 10 universities in China, this study explored away from their hometown.
factors related to Chinese college students’ credit card usage
behaviors. Overall, the findings are consistent with previous In addition to identifying which students were most likely
research. Factors such as previous year’s income, financial de- to engage in undesirable financial behaviors, the findings
pendence, and self-reported asset management abilities were of this study have clear implications for financial educa-
associated with respondents’ paying behavior. For example, tors and parents. Students who engaged in harmful finan-
students who reported a stronger ability to manage their assets cial behaviors, such as paying between minimum and full
were more likely to pay off their credit card debt each month. payments and/or taking cash advances as a normal means
This finding was consistent with that of Xiao et al. (2011), to access cash, need to understand the consequences of
who found that students who feel more confident about man- such behaviors. Financial educators and parents should
aging their finances were more likely to engage in responsible make an effort to not only educate college students about
financial behaviors such as paying credit card balances in full the immediate consequences of such behaviors (e.g., fees
and not taking cash advances. Unlike prior research findings, and interest charges) but also about the long-term conse-
gender was found to be unrelated to credit card paying behav- quences (e.g., a poor credit history, decreased probabil-
ior among Chinese college students. ity of acquiring debt in the future, and increased costs of
borrowing). However, financial dependence may prevent
Financial dependence decreased the probability of paying college students from identifying with these consequenc-
credit card balances in part or in full each month. Instead, es and weaken the effect of such education. Financial
students who were financially dependent on their parents independence may make the education more effective as
were more likely to let their parents pay their credit card students can relate to it.
balances. It was interesting to note that students who had
higher incomes in the previous year were less likely to pay Several factors make it difficult for Chinese college stu-
their monthly credit card debts in full and more likely to dents to achieve complete financial independence from
have their parents pay. One possible explanation for this is their parents. The main factor is the influence of Chinese
that students with higher incomes received those incomes traditional family values. Chinese parents tend to invest
in the form of allowances from their parents. In the Chi- everything they have in their children’s education, which
nese culture, college students rely on their parents’ finan- they believe can help their children achieve a relatively
cial support until they graduate from college and enter the high social-economic status. The expectation is that when
job market (Wang, Kong, Shan, & Vong, 2010; Liu, 2014). they are older, their children will take care of them. Ac-
They often do not worry about credit card balances or other cording to Zhu (2016), in order to repay parents’ earlier
financial matters because of the common expectation that educational investment, children with a higher education
their parents will support them. level are more likely to provide greater financial sup-
port to their parents. In addition, adult children have the
Palmer, Pinto, and Parente (2001) pointed out that post- legal obligations to provide financial support and emo-
acquisition parental involvement (financial assistance tional care to older parents. “Supporters of the elderly
from parents to their dependents) leads to higher totals of shall fulfill their obligations of providing for the elderly
credit card balances. It was interesting but not surprising economically, taking care of them in daily life and com-
to find that students whose parents engage in postacquisi- forting them mentally, attending to their special needs.
tion involvement engaged in less responsible credit card ‘Supporters’ refer to the children of the elderly and other
usage behaviors than those who were independent from persons who are under the legal obligation to provide for
their parents. However, it was surprising to find that stu- the elderly” (Law of the People’s Republic of China on
dents who acquired their financial knowledge from parents the Protection of the Rights and Interests of the Elderly,
were more likely to take cash advances than those whose 2015). In this cultural climate, Chinese college students

312 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018
are likely to believe that receiving financial support from limitation of the current study is that the number of credit
their parents is normal. According to Liu (2014), only a cards that the students owned was not included. The in-
small proportion of students make money to pay their own formation was collected in the survey; we excluded this
tuition. Another factor that negatively affects Chinese col- variable because of the small sample size regarding stu-
lege students’ financial independence is course arrange- dents who own multiple credit cards. Future study should
ments in Chinese universities. Students attend college as consider whether ownership and usage of multiple credit
cohorts, and their plans of study are largely determined cards are significantly related to undesirable credit paying
by their academic units, which have inflexible schedules. behaviors. Future research is necessary to explore factors
This lack of flexibility also makes it difficult for college associated with financial literacy among college students
students to find a job that is flexible in time and that also in China and evaluate the effectiveness of financial educa-
pays enough to support their tuition and living expenses. tional programs. Future studies should consider whether
Because of these factors, it is understandable that Chinese the number of credit cards owned is related to undesirable
college students have to somewhat rely on their parents credit paying behaviors.
for financial support. However, their parents should learn
not to encourage their children in college to engage in un- References
desirable credit card behaviors. On the contrary, parents Akben-Selcuk, E. (2015). Factors influencing college stu-
should encourage their children in college to engage in dents’ financial behaviors in Turkey: Evidence from a
responsible financial behaviors during their college years national survey. International Journal of Economics
and prepare them for a financially responsible life after and Finance, 7(6), 87–94. http://​dx.​doi.​org/​10.​5539/​
they graduate from college. ijef.​v7n6p87
Bowen, C. F. (2002). Financial knowledge of teens and
The findings of this study also provide implications for their parents. Journal of Financial Counseling and
policymakers and educators. Because of the prevalence of Planning, 13(2), 93–102.
unemployment and full financial dependence on parents China Real News. (2014). Chinese credit cards top 400 mil-
among Chinese college students, policymakers should lion Chatham: Newstex. Retrieved from http://​proxy.​
consider whether it is appropriate for these college stu- mul.​missouri.​edu/​login?​url=​http://​search.​proquest.​
dents to use credit cards. Due to some of the malpractice com/​docview/​1553034123?​accountid=​14576
behaviors of credit card salespersons at banks, including China Real News. (2015). Chinese five biggest banks’ cred-
opening a credit card account without the consent of the it card issuances account for 64.5% of total issued by
student, the regulator virtually stopped the banks from listed banks Chatham: Newstex. Retrieved from http://​
marketing credit cards to college students in 2009. How- proxy.​mul.​missouri.​edu/​login?​url=​http://​search.​pro-
ever, in recent years, with the rapid onset of effects from quest.​com/​docview/​1727776564?​accountid=​14576
the Internet and smartphones, more institutions and plat- Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014).
forms have been using the Internet to market credit card Financial literacy, financial education, and downstream
products to college students, resulting in some students’ financial behaviors. Management Science, 60(8),
over-indebtedness and bad credit records. Appropriate use 1861–1883. http://​dx.​doi.​org/​10.​1287/​mnsc.​2013.​1849
of a credit card is necessary to address regarding issues Jassim, A. A., & Taylor, J. C. (2010). College students’
related to credit. Therefore, it might be a good idea for credit card usage and debt. Competition Forum, 8(1),
policymakers to allow banks to issue small-limit credit 101–110.
cards, for example, with a limit of 500 yuan, helping the Joo, S., Grable, J. E., & Bagwell, D. C. (2003). Credit card
students build a good credit history before they start using attitudes and behaviors of college students. College
higher-limit credit cards. Students who engage in harmful Student Journal, 37(3), 405–420.
financial behaviors, such as not making minimum pay- Law of the People’s Republic of China on the Protection of
ments and/or taking cash advances as a normal option to the Rights and Interests of the Elderly. (2015). 2 Stand-
obtain cash, need to be educated with respect to credit ing Committee of the National People's Congress. 14.
card usage. Therefore, it is necessary to offer financial Li, W., Wang, R., & Xu, X. (2014). The effects of college
planning courses on college campuses nationwide. One students’ attitude change on the using of credit card.

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 313
 Proceedings of the 2014 International Conference on Economic Issues, 32(4), 690–698. http://​dx.​doi.​org/​10.​
Global Economy, Commerce, and Service Science 1007/​s10834-​011-​9259-y
(GECSS-14). Atlantis Press. Robb, C. A., & Sharpe, D. L. (2009). Effect of personal fi-
Liu, H. C. (2014). An analysis of consumer behavior of col- nancial knowledge on college students’ credit card be-
lege students born in the 1990s in China. Canadian So- havior. Journal of Financial Counseling and Planning,
cial Science, 10(6), 186–189. 20(1), 25–43.
Ludlum, M., Tilker, K., Ritter, D., Cowart, T., Xu, W., & Sallie Mae. (2013). How America Pays for College 2013.
Smith, B. C. (2012). Financial literacy and credit cards: Sallie Mae’s National Study of College Students and
A multi-campus survey. International Journal of Busi- Parents. Conducted by Ipsos Public Affairs. Retrieved
ness and Social Science, 3(7), 25–33. from http://​news.​salliemae.​com/​files/​doc_​library/​file/​
Lyons, A. C. (2004). A profile of financially at-risk college HowA​meri​caPa​ysfo​rCol​lege​2014FNL.​pdf
students. Journal of Consumer Affairs, 38(1), 56–80. Sallie Mae. (2016). Majoring in money: How American col-
http://​dx.​doi.​org/​10.​1111/​j.​1745-​6606.​2004.​tb00465.x lege students manage their finances. Conducted by ipsos
Measures for the Supervision and Administration of the public affairs. Retrieved from https://​news.​salliemae.​
Credit Card Business of Commercial Banks. (2011). 2 com/​sites/​salliemae.​newshq.​businesswire.​com/​files/​
China banking regulatory commission. 44–45. doc_​library/​file/​SallieMae_​MajoringinMoney_​2016.​pdf
Mendes-Da-Silva, W., Nakamura, W. T., & Moraes, D. Cde. Sharpe, D. L., Yao, R., & Liao, L. (2012). Correlates of
(2012). Credit card risk behavior on college campuses: credit card adoption in urban China. Journal of Fam-
Evidence from Brazil. BAR - Brazilian Administra- ily and Economic Issues, 33(2), 156–166. http://​dx.​doi.​
tion Review, 9(3), 351–373. http://​dx.​doi.​org/​10.​1590/​ org/​10.​1007/​s10834-​012-​9309-0
S1807-​76922012000300007 Staten, M., & Barron, J. M. (2002). College student credit
Norvilitis, J. M., & MacLean, M. G. (2010). The role of card usage (Credit Research Center Working Paper
parents in college students’ financial behaviors and atti- No. 65). Retrieved from http://​faculty.​msb.​edu/​prog/​
tudes. Journal of Economic Psychology, 31(1), 55–63. CRC/​pdf/​WP65.​pdf
http://​dx.​doi.​org/​10.​1016/​j.​joep.​2009.​10.​003 Statista. (2016). Annual growth of the total number of cred-
Norvilitis, J. M., & Mao, Y. (2013). Attitudes towards credit it cards in China from 2007 to 2014. Retrieved from
and finances among college students in China and the http://www.​statista.​com/​statistics/​450052/​china-​credit-​
United States. International Journal of Psychology, card-​number-​growth/
48(3), 389–398. http://​dx.​doi.​org/​10.​1080/​00207594.​ Tan, D. L. (2003). Oklahoma college student credit card
2011.​645486 study. Norman, OK: University of Oklahoma, Center
Palmer, T. S., Pinto, M. B., & Parente, D. H. (2001). Col- for Student Affairs Research.
lege students’ credit card debt and the role of parental Wang, H., Kong, M., Shan, W., & Vong, S. K. (2010). The
involvement: Implications for public policy. Journal of effects of doing part-time jobs on college student aca-
Public Policy & Marketing, 20(1), 105–113. http://​dx.​ demic performance and social life in a Chinese society.
doi.​org/​10.​1509/​jppm.​20.​1.​105.​17293 Journal of Education and Work, 23(1), 79–94. http://​
​People.​cn. (2016). Chinese college students need to correct dx.​doi.​org/​10.​1080/​13639080903418402
bad spending habits of over consumption. Retrieved Wang, L., Lu, W., & Malhotra, N. K. (2011). Demograph-
from http://​edu.​people.​com.​cn/​n1/​2016/​0922/​c1053-​ ics, attitude, personality and credit card features corre-
28731888.​html late with credit card debt: A view from China. Journal
Pinto, M. B., Parente, D. H., & Mansfield, P. M. (2005). of Economic Psychology, 32(1), 179–193. http://​dx.​
Information learned from socialization agents: Its rela- doi.​org/​10.​1016/​j.​joep.​2010.​11.​006
tionship to credit card use. Family and Consumer Sci- Worthington, S. (2003). The Chinese payment card market:
ences Research Journal, 33(4), 357–367. http://​dx.​doi.​ An exploratory study. International Journal of Bank
org/​10.​1177/​1077727X04274113 Marketing, 21(6/7), 324–334. http://​dx.​doi.​org/​10.​
Robb, C. A. (2011). Financial knowledge and credit card 1108/​02652320310498474
behavior of college students. Journal of Family and Worthington, S., Stewart, D., & Lu, X. (2007). The adoption
and usage of credit cards by urban-affluent consumers in

314 Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018
 China. International Journal of Bank Marketing, 25(4), Xiao, J. J., Tang, C., Serido, J., & Shim, S. (2011). An-
238–252. http://​dx.​doi.​org/​10.​1108/​02652320710754024 tecedents and consequences of risky credit behavior
Worthington, S., Thompson, F. M., & Stewart, D. B. (2011). among college students: Application and extension
Credit cards in a Chinese cultural context—The young, of the theory of planned behavior. Journal of Public
affluent Chinese as early adopters. Journal of Retailing Policy and Marketing, 30(2), 239–245. http://​dx.​doi.​
and Consumer Services, 18(6), 534–541. http://​dx.​doi.​ org/​10.​1509/​jppm.​30.​2.​239
org/​10.​1016/​j.​jretconser.​2011.​07.​003 Zhu, H. (2016). Adult children’s characteristics and inter-
Xiao, J. J., Ahn, S. Y., Serido, J., & Shim, S. (2014). Earlier generational financial transfers in urban China. Chi-
financial literacy and later financial behaviour of college nese Journal of Sociology, 2(1), 75–94. http://​dx.​doi.​
students. International Journal of Consumer Studies, org/​10.​1177/​2057150X15624085
38(6), 593–601. http://​dx.​doi.​org/​10.​1111/​ijcs.​12122

Journal of Financial Counseling and Planning, Volume 29, Number 2, 2018 315
Reproduced with permission of copyright owner. Further reproduction
prohibited without permission.