The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt

A-Tier
Journal: American Economic Journal: Economic Policy
Year: 2025
Volume: 17
Issue: 4
Pages: 72-105

Authors (6)

Benedict Guttman-Kenney (Rice University) Paul Adams (not in RePEc) Stefan Hunt (not in RePEc) David Laibson (Harvard University) Neil Stewart (not in RePEc) Jesse Leary (not in RePEc)

Score contribution per author:

0.670 = (α=2.01 / 6 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

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.

Technical Details

RePEc Handle
repec:aea:aejpol:v:17:y:2025:i:4:p:72-105
Journal Field
General
Author Count
6
Added to Database
2026-01-25