The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt
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. (JEL C93, D12, D91, G21, G51)
Authors
- Stefan Hunt
- Neil Stewart (ORCID: https://orcid.org/0000-0002-2202-018X)
- Paul Adams (ORCID: https://orcid.org/0000-0002-6759-9527)
- David Laibson
- Benedict Guttman‐Kenney (ORCID: https://orcid.org/0000-0002-5369-3168)
- Jesse Leary
Institutions
- Innovations for Poverty Action (US)
- Harvard University Press (US)
- University of Warwick (GB)
- Dana-Farber/Harvard Cancer Center (US)
- Innovations for Poverty Action (UG)
- Rice University (US)
- Keystone College (US)
Publication Details
- Journal
- American Economic Journal Economic Policy
- Published
- 2025-10-29
- DOI
- https://doi.org/10.1257/pol.20230568
- Primary Topic
- Financial Literacy, Pension, Retirement Analysis
- Type
- article
- Field-Weighted Citation Impact
- 0.00