Financial Literacy, Attitudes, and Financial Satisfaction: An Assessment of Credit Card Debt-Taking Behavior of Australians

Financial Services Review Vol. 28 (4) pp. 273 - 301

Financial Services Review Vol. 28 (4) pp. 273 - 301

47 Pages Posted: 23 Apr 2020 Last revised: 29 Apr 2021

See all articles by Muhammad S. Tahir

Muhammad S. Tahir

RMIT University

Daniel W. Richards

York University - Faculty of Liberal Arts & Professional Studies

Abdullahi D. Ahmed

RMIT University - Faculty of Business

Date Written: March 24, 2020

Abstract

Unpaid credit card debt can be problematic; people should avoid it where possible. Unlike prior studies, this paper examines the relative strength of the association of financial literacy, attitude towards balancing spending and savings, and financial satisfaction with credit card debt-taking behavior by analyzing the 2016 wave of the Household, Income and Labour Dynamics in Australia (HILDA) Survey. We find that higher financial literacy is associated with less credit card debt. However, incorporating the other factors reduces this relationship. Our results advise policy-makers to include components in the financial literacy curricula which encourage savings attitude to reduce problematic debt-taking.

Keywords: HILDA, Financial Literacy, Credit Card Debt, Problematic Debt-Taking, Financial Behavior

JEL Classification: G51, G53, G40, D14, D10

Suggested Citation

Tahir, Muhammad S. and Richards, Daniel and Ahmed, Abdullahi D., Financial Literacy, Attitudes, and Financial Satisfaction: An Assessment of Credit Card Debt-Taking Behavior of Australians (March 24, 2020). Financial Services Review Vol. 28 (4) pp. 273 - 301, Financial Services Review Vol. 28 (4) pp. 273 - 301, Available at SSRN: https://ssrn.com/abstract=3563943 or http://dx.doi.org/10.2139/ssrn.3563943

Muhammad S. Tahir (Contact Author)

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Daniel Richards

York University - Faculty of Liberal Arts & Professional Studies ( email )

Toronto, Ontario M3J 1P3
Canada

Abdullahi D. Ahmed

RMIT University - Faculty of Business ( email )

GPO Box 2476V
Melbourne 3001, Victoria
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
93
Abstract Views
557
rank
341,683
PlumX Metrics