Minimum Payments Alter Debt Repayment Strategies Across Multiple Credit Cards
Consumers repay debt sub-optimally across multiple credit cards. We find that consumers know they should focus payments on high-interest cards, but they underweight the importance of interest rates. Minimum payments further interfere with implementation of the optimal strategy, causing participants to spread their payments across more, lower interest accounts.
Abigail Sussman and Samuel Hirshman (2019) ,"Minimum Payments Alter Debt Repayment Strategies Across Multiple Credit Cards", in NA - Advances in Consumer Research Volume 47, eds. Rajesh Bagchi, Lauren Block, and Leonard Lee, Duluth, MN : Association for Consumer Research, Pages: 232-236.
Abigail Sussman, University of Chicago, USA
Samuel Hirshman, University of Chicago, USA
NA - Advances in Consumer Research Volume 47 | 2019
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