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

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Abstract

This study analyzes consumer rationality/irrationality and financial literacy in the credit card market. Through literature review, it reveals that consumers, as a whole, make a rational decision when they borrow using a credit card and bear the high interest rate. However, consumers make various mistakes in their individual financial decisions and credit card behavior. Financial literacy, affected by cognitive ability, financial knowledge and financial education can improve consumers’ behavior. This article presents new insights on the implications for consumers, credit card issuers, policymakers and researchers. It has both practical and academic contribution to the credit card market.

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Acknowledgements

The author would like to thank Editor Tina Harrison and the anonymous referee for their insightful comments. All the errors are my own.

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  1. Department of Business Administration, Hong Kong Shue Yan University, Braemar Hill Road, North Point, Hong Kong

    Na Shen

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Shen, N. Consumer rationality/irrationality and financial literacy in the credit card market: Implications from an integrative review. J Financ Serv Mark 19, 29–42 (2014). https://doi.org/10.1057/fsm.2014.4

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