Piecemeal Repayment: Paying Toward Specific Purchases Promotes Higher Repayments Toward Debt Balances

Grant Donnelly, Harvard Business School, USA
Zoe Chance, Yale University, USA
Michael Norton, Harvard Business School, USA
This paper examines what might happen if consumers were to make payments toward line items on a credit card bill rather than the aggregated balance. Under this repayment option, consumers repay significantly more because they feel more aware of what they are paying off, resulting in greater feelings of impact.
[ to cite ]:
Grant Donnelly, Zoe Chance, and Michael Norton (2015) ,"Piecemeal Repayment: Paying Toward Specific Purchases Promotes Higher Repayments Toward Debt Balances", in NA - Advances in Consumer Research Volume 43, eds. Kristin Diehl and Carolyn Yoon, Duluth, MN : Association for Consumer Research, Pages: 90-94.