Credit usage intentions amongst Generation Y students
Van Schalkwyk, Pieter Jacobus
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Part of modern consumerism is the switch from buying with cash to buying on credit. This is a global trend and consumers are spending more and saving less. Banks and retailers are taking full advantage of this fact and are encouraging consumers to open accounts and to buy on credit. Students are a prime target due to their future earning potential and many students are heavily indebted by the time they graduate. South Africa has more than 20 million credit-active consumers of whom approximately half are in arrears with their payments. The South African government, realising the extent of the problem, exacted the National Credit Act (NCA), which has been credited for somewhat shielding South Africa from the worst of the 2008 global recession. A recession many blame on the easy availability of credit. The first empirical objectives of this study were to determine Generation Y students’ actual credit use which includes types of credit used, sources of income, factors influencing Generation Y credit use, credit health and financial concerns. The next empirical objective was to determine Generation Y students’ materialism, status consumption, social comparison, and impulsive buying tendencies and their attitude towards money and credit and credit usage intentions in the South African context. The third empirical objective was to determine whether credit usage intentions among Generation Y students are a seven-factor structure consisting of materialism, status consumption, money as a motivator, impulsive buying, social comparison, attitude towards credit and credit usage intentions. The fourth empirical objective was to test a model of the influence of materialism, status consumption, social comparison, impulsive buying, money as a motivator and attitude towards credit shape on credit usage intentions among Generation Y students in South Africa. The last empirical objective was to determine the influence gender has on materialism, status consumption, social comparison, impulsive buying, money as a motivator and attitude towards credit. The sampling frame consisted of 26 universities in South Africa, of which four university campuses were selected. The selected university campuses included two from a traditional university, one from a university of technology and one from a comprehensive university. A convenience sample of 630 students was taken during 2017. Statistical analysis of the collected data included factor analysis, descriptive statistics, structural equation modelling and an independent samples t-test. The study found that 71 percent of students used some form of credit, mostly NSFAS, although 73 percent claimed to be dependent on parents and family as their primary source of income. Most students were able to fulfil their financial obligations. As such, only 7 percent were struggling to keep up and 9 percent were behind on payments. Tuition and related expenses were the participants’ biggest concern. The empirically tested model indicates that materialism and status consumption tendencies influence Generation Y students’ attitude towards money, which, together with impulse buying and social comparison tendencies, influences their attitude towards credit and consequent credit usage intentions. This study contributes towards understanding the motivations of students when purchasing products on credit. This study determined why Generation Y students chose to use credit, where they obtain credit and on what they spend the available credit. In addition, the study illustrates the relationship between materialism, status consumption, social comparison, impulsive buying, money as a motivator, attitude towards credit and credit usage intentions among Generation Y students.