American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt
American Economic Journal: Economic Policy
(pp. 72–105)
Abstract
We test a nudge in a field experiment on credit cards. The nudge shrouds the autopay enrollment option for cardholders to automatically pay exactly the credit card minimum payment each month. After six months, the nudge decreases the fraction of cardholders who only pay exactly the minimum by 23 percent. However, the nudge does not significantly reduce credit card debt. Nudged cardholders often choose autopay amounts that are only slightly higher than the minimum payment. The nudge reduces autopay enrollment, which increases missed payments. The nudge reduces manual payments by autopay enrollees. Cardholders frequently lacking liquid cash best explains our results.Citation
Guttman-Kenney, Benedict, Paul Adams, Stefan Hunt, David Laibson, Neil Stewart, and Jesse Leary. 2025. "The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt." American Economic Journal: Economic Policy 17 (4): 72–105. DOI: 10.1257/pol.20230568Additional Materials
JEL Classification
- C93 Field Experiments
- D12 Consumer Economics: Empirical Analysis
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth