Financial literacy and its impact on the credit card debt puzzle

Authors

  • Laura C. Ricaldi Department of Finance and Economics, Utah Valley University
  • Terrance K. Martin Department of Finance and Economics, Utah Valley University
  • Sandra J. Huston School of Financial Planning, Texas Tech University

DOI:

https://doi.org/10.61190/fsr.v30i2.3477

Keywords:

2016 survey of consumer finances, Financial literacy, Credit card debt puzzle, Behavioral life-cycle

Abstract

The credit card debt puzzle is not well understood. Households exhibit inefficient behavior when they have sufficient liquid assets to pay off their credit card balance, but do not. Based multinomial regression analyses of the 2016 Survey of Consumer Finances, the study discovered that households that display this behavior are more likely to have lower financial literacy than convenience users. The findings suggest financially literate households are less likely to display irrational behavior regarding the credit card debt puzzle.

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Published

2022-06-30

How to Cite

Ricaldi, L. C., Martin, T. K., & Huston, S. J. (2022). Financial literacy and its impact on the credit card debt puzzle. Financial Services Review, 30(2), 107–124. https://doi.org/10.61190/fsr.v30i2.3477

Issue

Vol. 30 No. 2 (2022): Summer 2022

Section

New Original Submission

License

Copyright (c) 2022 Academy of Financial Services

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