The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt

84 Pages Posted: 11 Dec 2023

See all articles by Benedict Guttman-Kenney

Benedict Guttman-Kenney

University of Chicago - Booth School of Business

Paul Adams

Innovations for Poverty Action

Stefan Hunt

Financial Conduct Authority

David Laibson

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Neil Stewart

University of Warwick

Jesse Leary

Amazon

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Date Written: December 2023

Abstract

We run a field experiment and a survey experiment to study an active choice nudge. Our nudge is designed to reduce the anchoring of credit card payments to the minimum payment. In our field experiment, the nudge reduces enrollment in Autopaying the minimum from 36.9% to 9.6%. However, the nudge does not reduce credit card debt after seven payment cycles. Nudged cardholders tend to choose Autopay amounts that are only slightly higher than the minimum payment. The nudge lowers Autopay enrollment resulting in increasing missed payments. Finally, the nudge reduces manual payments by cardholders enrolled in Autopay.

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Suggested Citation

Guttman-Kenney, Benedict and Adams, Paul and Hunt, Stefan and Laibson, David I. and Stewart, Neil and Leary, Jesse, The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt (December 2023). NBER Working Paper No. w31926, Available at SSRN: https://ssrn.com/abstract=4660251

Benedict Guttman-Kenney (Contact Author)

University of Chicago - Booth School of Business ( email )

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Paul Adams

Innovations for Poverty Action ( email )

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Stefan Hunt

Financial Conduct Authority ( email )

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David I. Laibson

Harvard University - Department of Economics ( email )

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Neil Stewart

University of Warwick ( email )

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Jesse Leary

Amazon ( email )

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