The incidence, scope, and purposes of credit card use among Maltese students within the 18-25 age bracket

Abstract

The endeavour of this dissertation was twofold. Firstly, it sought an understanding of whether young Maltese students use their credit cards in order to conduct day to day transactions or as a means of short term borrowing. Secondly, it sought to analyse the impact of credit cards on young students' liquidity constraint, their present and future ability to save, and the influence on their consumption pattern. These objectives were achieved by first conducting a survey of relevant literature and theory. Secondly, a sample based survey was conducted among students attending the University of Malta in order to determine any discrepancies between the students' behaviour and perceptions, and the available literature and theory. The results obtained from the survey exercise can by no means be generalised to the whole population of the University of Malta, given the relatively low response rate which was obtained. Having said this, the major discrepancies were noted in the incidence of credit card ownership and the average outstanding credit card balances. These were generally lower when compared to foreign based studies. The responses also showed that just over one third of card holders used their credit card as a means of borrowing by revolving debt, whilst the majority showed significant credit card management aptitudes. Furthermore, the research indicated that (1) Maltese students have ample possibilities of easing their liquidity constraint by utilising credit cards; (2) the majority of Maltese students do not tend to smoothen their consumption patterns by means of credit cards; and (3) credit cards have the potential to increase the future saving possibilities of Maltese students.