ANALYZING THE PAYMENT BEHAVIOR AND BASIC CHARACTERISTICS OF CREDIT CARD HOLDERS

Abstract

In this study the credit card holders (respondents) were divided into two groups, the obedient (O) and the disobedient (DO) groups. Obedient payers were those who had their entire credit card balance every month and those who made their monthly payment on time, while disobedient payers were those who made monthly payment not on time and those regularly carry unpaid credit card debt. Using the cross-tab analyses and inferences, this paper attempts to identify the basic characteristics associated with each group of card payers. The characteristics focused on two main factors; the demographic factors and the income factor. The demographic factors were comprised of the holders’ race, age, gender, marital status and education level. The findings of the study indicated that, significant results were documented in the income, age, and status factors. From the income analysis, those who earned between RM1001-4000 had a higher tendency to make payment on time (Obedient) compared to those from other income categories. Other than income factor, the age factor also was identified as having a significant association with the credit card payment behaviour. In particular, card holders aged 45 years and below had a higher tendency to make payment on time (Obedient) than the other age categories. Apart of the findings, the respondents payment behavior was detected to also have a significant association with the marital status factor. The result obtained gave an indication that, card holders under divorced status had a higher tendency to be in the Obedient group than those who were single and married. Based on these findings we concluded, in order in ensure payment received on timely basis from the card debtors, institutions that issue credit cards should give priority to those who are 45 years or below, earning between RM1001-RMI4000 per month, and were married or with divorced status.