Credit Card Debt: Nescience or Necessity?

This paper attempts to assess whether the driving factor behind the rising credit card indebtedness of consumers in Turkey is financial illiteracy. Using the results of a nationwide survey, the authors conclude that even though credit card borrowing frequency and debt amount are affected by components of financial literacy, being credit-constrained has a very pronounced impact. An exploratory analysis finds that the probability of irrational credit card borrowing is increased by being credit-constrained but not affected by financial literacy. These findings suggest that credit card debt is at least as much a result of necessity as nescience.