Consumer rationality/irrationality and financial literacy in the credit card market: Implications from an integrative review

Abstract

The use of the credit card is one of the most popular payment methods and the most convenient sources of finance all over the world. In the last 30 years, enormous technological changes, such as the introduction of the ATM and e-banking, have allowed the rapid development of credit card use. According to the earnings report of Visa Inc. (http://investor.visa. com/phoenix.zhtml?c=215693&p=quarterlyearnings), the quarter ending 31 March 2013 reports a total volume (payment and cash volume) in the Visa credit program of nearly US$700 billion, with a growth rate of 10.2 per cent (constant USD). In the United States, the average credit cardholder has 3.7 credit cards as of 2009 (Foster et al., 2011). The average US household owes $7128 on their credit cards as of October 2013 (www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/). Credit card debt is the third largest source of household indebtedness in the United States behind mortgages and student loan debt.