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Evaluating the efficacy of credit card regulation

Karin Braunsberger (College of Business Administration, University of South Florida St Petersburg, St Petersburg, Florida, USA)
Laurie A. Lucas (School of Business, Arkansas Tech University, Russellville, Arkansas, USA)
Dave Roach (School of Business, Arkansas Tech University, Russellville, Arkansas, USA)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 1 May 2005



In the USA, the Federal Reserve Board (FRB) has adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The present study aims to use the elaboration likelihood model to explore how consumers might respond to the revised credit card disclosure requirements, focusing specifically on college students.


Each subject was randomly assigned to one of two financial scenarios and asked to choose, among competing offers, the credit card that presented the “best” match to the scenario. Subsequently, all subjects completed measures designed to test hypothesized relationships within the framework of the elaboration likelihood model.


College students possess a fairly low level of knowledge of credit cards and thus are not very well equipped to make educated choices concerning such cards.

Research limitations/implications

The use of a rural student sample is a limitation and future research should investigate different populations, including those in urban and international markets.

Practical implications

Since the variable APR information appears to distract consumers from taking into account other important cost information, credit card issuers should develop solicitations that aid consumers in making knowledgeable choices.


The present research is the first to investigate the impact of the FRB's recently adopted final rule amending the Truth in Lending Act's Regulation Z. The findings should thus be of interest to regulators, credit card issuers, and consumer advocates.



Braunsberger, K., Lucas, L.A. and Roach, D. (2005), "Evaluating the efficacy of credit card regulation", International Journal of Bank Marketing, Vol. 23 No. 3, pp. 237-254.



Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited