Abstract:
Credit cards become increasingly popular in Sri Lanka while a total of 78,201 new issues were in 2019
first quarter (Central Bank report). Credit card usage affects the consumption patterns of people,
sometimes leading to purchase excessively with impractical confidence (Omar, et al., 2013). According
to the central bank report, around total of 118,905 cards are being defaulted where the payment is in
arrears for 90days or more in 2019 showing an increment in credit card debts, which may result in stress
among card users. In view of the timeliness and relevance of this issue, this study aims to investigate
the impact of unrealistic optimism and compulsive purchasing on debt-stress among credit card users
in Sri Lanka.
This study employs the quantitative approach in collecting data using self-administered questionnaires
among 301 credit cardholders in Western Province, Sri Lanka who were chosen based on the nonprobabilistic convenience sampling method. This study found a moderate positive impact of both the
unrealistic optimism and compulsive purchasing on debt stress. Further, a moderate positive correlation
was found between unrealistic optimism and compulsive purchasing too. This research contributes to
fill the gap in the extant literature by broadening the understanding on concepts such as unrealistic
optimism, compulsive purchasing, and debt stress which is prevalent among credit card users. Further,
as managerial implications, this study provides a better understanding on cardholders in Sri Lanka
which might be a good reference for banks, card service providers and investors in developing their
policies. Further, it will support the business sector to develop the Sri Lankan non-cash payment market
while policymakers and tax authorities can understand the causes of high credit card debts.
