Store cards: is it a matter of convenience or is the facility used to sustain lavish consumption?

Abstract

AbstractStore cards are generally much easier to obtain than most other credit systems, and are therefore afforded less respect than, for example, bank credit cards. Many consumers who adopt store cards are not necessarily competent to manage the credit limits that are so generously approved. Overspending thus seems almost inevitable. Evidence to substantiate concerns about store card use will be useful to alert consumers about responsible use of store cards and will support the basic sentiments of consumerism, i.e. to enhance consumer education and to properly inform and protect consumers. The intention is to compare the most important reasons provided for the adoption of store cards and buyer behaviour, as well as satisfaction with store cards of two dissimilar groups of store cardholders, based on the premise that exposure to and experience with large shopping malls and related facilities would be influential. Store cardholders' control of credit limits and use of supplementary store card services are correlated with satisfaction with the commodity. The research is exploratory and descriptive in kind. A structured questionnaire was used to collect data during August to October 2006: 267 questionnaires were retrieved. A remarkable congruence in the reasons why store cards were acquired by the two samples was evident. Both valued the convenience of store card use and were impressed by the open‐ended revolving credit options. Additional incentives, however, seemed of limited importance. Noticeable differences between the samples are mostly related to the financial consequences of store card use. Impulsive buying and poor planning were blamed for a continual increase in store card installments. This coincides with Soman and Cheema's conclusion that less experienced consumers tend to optimize a credit limit as an indication of their future earnings potential. More experienced store cardholders seemed significantly more satisfied with the facility than their counterpart. Rapid reuse of store cards after settlement of accounts indicates difficulty to quit using the facility. This supports the notion that self‐control over spending is effortful. The consequent challenge to retailers would be to exercise greater caution with the approval of credit limits to encourage more responsible use of store credit accounts.