Study finds minimum payment warnings nudge credit card payments up and down
Monday, June 23, 2014 - 12:00
in Mathematics & Economics
If you were warned how much extra credit card interest you'd pay by only making the minimum payment every month, you might want to increase your payments to retire the balance earlier, right? Not necessarily, according to a study by a Boston College marketing researcher who found that telling customers about the high cost of repaying the monthly minimum had little impact on repayment decisions. But when credit card consumers were shown a three-year payoff time frame with accompanying lower interest costs, this information "nudge" had both a positive and negative effect.