Behavioral economics analysis of consumers' overspending behavior with credit card

The purpose of this research is to understand the determinants of credit card overspending behavior of consumers which results in growing credit card indebtness. For this purpose, consumers' overspending behavior with their credit card has been analyzed with the behavioral economics approach. For this research a survey was conducted in two biggest cities of Turkiye -İstanbul and Ankara. Sample is composed of 1145 participant between the age of 19 and 73. A comprehensive structural equation model is developed to identify psychological, cognitive, behavioral factors that affect the consumers' overspending behavior with credit card. We found that consumers' sense of mastery, considerations of future consequences, budget management skills and income adequacy perception have negative effect on credit card overspending behavior, We also demonstrated that consumers' risk preference, materialistic values (happiness dimension), compulsive buying tendency, social status consumption, credit card effect, credit card installment attitude and the number of credit card owned by the consumers have positive effect on credit card overspending behavior. These relations controlled with economic/demografic variables; income, education and age. We found support for theoretical expectations and added new findings for constructs and relationships studied for the first time. The effects of consumers' sense of mastery, income adequacy perception and credit card installment attitude on credit card spendings behavior were studied for the first time in the present study. As a result of the research, suggestions were made to consumers, policy makers and financial institutions to increase consumer welfare, financial and economic stability.