Consumers’ credit card repayment decisions: The role of higher anchors and future repayment concern

McHugh, S. ORCID: 0000-0001-6357-2979 and Ranyard, Rob (2016) Consumers’ credit card repayment decisions: The role of higher anchors and future repayment concern. Journal of Economic Psychology, 52. pp. 102-114. ISSN 0167-4870

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We investigated two aspects of credit card repayment decisions: the extent to which the anchoring effect of minimum repayment information may be mitigated by information on alternative anchors, specifically repayments that would repay the balance in two years (Study 1) or nine months (Study 2); and the role of future repayment concern. In two experiments, three realistic credit card statements were presented with different outstanding balances. Participants, who were randomly allocated to one of four information conditions depending on supplementary information provided on the statements, stated how much they would repay that month. They were then asked about concerns they would have about repayment difficulties if they had a fixed consumer loan over three years. In Study 1 the alternative two-year repayment anchor had a negative effect on percent repayment, whereas in Study 2 the nine-month repayment anchor had a significant positive effect, especially for those with higher future repayment concern. Also, in both studies, future repayment concern had a direct inverse effect on repayment decisions which partially mediated the effect of disposable income. It is concluded that the addition to credit card statements of a table of cost and duration information for a range of repayment amounts may usefully support repayment decisions.

Item Type: Article
Uncontrolled Keywords: anchoring, consumer credit, decision making, minimum repayment
Divisions: School of Education and Psychology > Psychology
Depositing User: Tracey Gill
Date Deposited: 09 Nov 2017 11:19
Last Modified: 06 Mar 2018 15:44
Identification Number: 10.1016/j.joep.2015.12.003

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