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

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