Antecedents and Consequences of Risky Credit Behavior among College Students: Application and Extension of the Theory of Planned Behavior

TLDR

The 2009 Credit Card Act heightened policy focus on young adults’ risky credit behaviors, emphasizing parental responsibility and the need for financial knowledge and responsible practices. This study examines the psychological mechanisms behind college students’ risky credit card use and how parental influence and financial knowledge shape their financial behavior. Using an extended Theory of Planned Behavior framework, the authors surveyed first‑year students at a major public university to test the proposed model. Parental norms and socioeconomic status drive risky credit behaviors, subjective financial knowledge better prevents such behaviors than objective knowledge, and behavioral intention is the strongest deterrent, informing policy recommendations.

Abstract

The Credit Card Act of 2009 reflects increased public policy concern about the risky credit behaviors of young adults. This act promotes increased responsibility of parents and implies that young adults must acquire financial knowledge and practice responsible financial behaviors. This study addresses this public issue by investigating the psychological processes underlying young adults’ risky credit card behaviors and the role of parents and financial knowledge in the financial behavior of young adults. A conceptual model based on an extension of the theory of planned behavior is proposed. The authors collected data from a sample of first-year students at a major public university. The results show that both parental norm and parental socioeconomic status are important factors that influence students’ risky credit behaviors. Furthermore, subjective financial knowledge does more to prevent risky credit behaviors than objective financial knowledge. Finally, behavioral intention is the most important factor in preventing risky credit behaviors and credit card debt accumulation. The authors draw on their findings to provide public policy implications.