Unsticking credit card repayments from the minimum: Advice, anchors and financial incentives

Hendy, P; Slonim, R; Atalay, K

Unsticking credit card repayments from the minimum: Advice, anchors and financial incentives

Hendy, P Slonim, R Atalay, K

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Publisher:: Elsevier BV
Publication Type:: Journal Article
Citation:: Journal of Behavioral and Experimental Finance, 2021, 30, pp. 100505
Issue Date:: 2021-06-01

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Field	Value	Language
dc.contributor.author	Hendy, P
dc.contributor.author	Slonim, R
dc.contributor.author	Atalay, K
dc.date.accessioned	2022-07-24T05:28:35Z
dc.date.available	2022-07-24T05:28:35Z
dc.date.issued	2021-06-01
dc.identifier.citation	Journal of Behavioral and Experimental Finance, 2021, 30, pp. 100505
dc.identifier.issn	2214-6350
dc.identifier.issn	2214-6369
dc.identifier.uri	http://hdl.handle.net/10453/159144
dc.description.abstract	A significant proportion of credit card users persistently make the minimum repayment on their debt. Using an online experiment, we study how behavioral factors (advice, anchoring, and financial incentives) affect minimum debt repayment behavior. Our results show that although information interventions (advice and anchoring) have significant nudging effects on increasing repayments, the interventions that combine information with financial incentives have the largest effect, roughly doubling the information effects. Our results show that advising individuals to make a higher repayment and offering a financial incentive has a significant impact on individual debt repayment decisions, and can thus substantially reduce future debt burden.
dc.language	en
dc.publisher	Elsevier BV
dc.relation.ispartof	Journal of Behavioral and Experimental Finance
dc.relation.isbasedon	10.1016/j.jbef.2021.100505
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1502 Banking, Finance and Investment
dc.title	Unsticking credit card repayments from the minimum: Advice, anchors and financial incentives
dc.type	Journal Article
utslib.citation.volume	30
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-07-24T05:28:34Z
pubs.publication-status	Published
pubs.volume	30

Abstract:

A significant proportion of credit card users persistently make the minimum repayment on their debt. Using an online experiment, we study how behavioral factors (advice, anchoring, and financial incentives) affect minimum debt repayment behavior. Our results show that although information interventions (advice and anchoring) have significant nudging effects on increasing repayments, the interventions that combine information with financial incentives have the largest effect, roughly doubling the information effects. Our results show that advising individuals to make a higher repayment and offering a financial incentive has a significant impact on individual debt repayment decisions, and can thus substantially reduce future debt burden.

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http://hdl.handle.net/10453/159144