The Ironic Effects of Credit Card Balances and Credit Limits on Consumer Spending

This research examines how credit card balances affect consumer spending. In a series of five experiments, across three product categories, we demonstrate that credit card balances increase consumers’ spending by reducing their commitment to avoiding credit card debt. Ironically, we find this effect is strongest for people who are high in self-control. Additionally, we show that increasing the credit card limit can mitigate the effect by reducing the psychological impact of the balance. However, doing so also reduces consumers’ desire to pay off the balance at the end of the month.


Keith Wilcox and Lauren Block (2011) ,"The Ironic Effects of Credit Card Balances and Credit Limits on Consumer Spending", in E - European Advances in Consumer Research Volume 9, eds. Alan Bradshaw, Chris Hackley, and Pauline Maclaran, Duluth, MN : Association for Consumer Research, Pages: 461.


Keith Wilcox, Babson College
Lauren Block, Baruch College


E - European Advances in Consumer Research Volume 9 | 2011

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