Reducing Credit Card Delinquency using Broadcast Repayment Reminders

40 Pages Posted: 29 Jan 2021 Last revised: 9 Apr 2021

See all articles by Daniel Campbell

Daniel Campbell

Commonwealth Bank of Australia

Andrew R. Grant

University of Sydney Business School - Discipline of Finance; Financial Research Network (FIRN)

Susan Thorp

The University of Sydney Business School

Date Written: March 19, 2021

Abstract

A timely reminder on an app or website prompts delinquent credit card debtors with strong credit records to repay but is ineffective for debtors with weak credit records. We study field data from a 2015-16 randomized controlled trial of a broadcast reminder received by 30-days-overdue credit card debtors who log into the app or website of their credit provider. On average, the treated debtors were 2.7 percentage points more likely to repay all arrears than debtors in the control group. However, the effect of the repayment reminder depended on the debtor type; the broadcast reminder significantly raised repayment rates of high credit score delinquent debtors but did not significantly raise, and may have lowered, the repayment rate of lower credit score delinquents.

Keywords: consumer debt, randomized controlled trial, information avoidance

JEL Classification: D14, D18, G21, G28

Suggested Citation

Campbell, Daniel and Grant, Andrew R. and Thorp, Susan, Reducing Credit Card Delinquency using Broadcast Repayment Reminders (March 19, 2021). Available at SSRN: https://ssrn.com/abstract=3746676 or http://dx.doi.org/10.2139/ssrn.3746676

Daniel Campbell

Commonwealth Bank of Australia ( email )

1 Locomotive St
South Eveleigh, NSW 2015
Australia

Andrew R. Grant (Contact Author)

University of Sydney Business School - Discipline of Finance ( email )

H69 Codrington Business School Building
Sydney, NSW 2006
Australia
61-2-9036-6238 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Susan Thorp

The University of Sydney Business School ( email )

Abercrombie Building
H70
The University Of Sydney, NSW 2006
Australia
0290366354 (Phone)

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