An experimental study on student credit cards in Singapore : how credit limits, privileges and money attitudes affect card application decisions and intended card usage

Abstract

This study examines how credit limits and privileges impact college students’ intentions to apply for and intentions to use student credit cards in the local Singapore context. It also adds to the limited available literature on money attitudes influencing students’ preferences for the two product attributes of student credit card in question.

Through an experimental task performed on 240 university students in Singapore, analysis using ANOVA shows that while an increase in credit limits increase both intentions to apply for and intentions to use student credit cards. In contrast, an increase in privileges does not have the same significant effects. Segmentation based on money attitudes reveals that the effect of a higher credit limit on enticing increased application for student credit cards is leaning towards individuals with low money attitudes.

Our findings shed light on the consumer behaviour of potential student credit card users and the possible ways to market the product in Singapore. Credit card issuing banks looking at increasing application rates for student credit cards can propose to the Monetary Authority of Singapore for an upward push for credit limits. They should also be cautioned that when a low level of privileges is presented, it would attract application from individuals with low money attitudes, who are less likely to spend excessively due to their budget-minded nature, and thus often deemed as ‘less profitable’ by banks.