Minimum payments and debt paydown in consumer credit cards

• 成果类型: Article
• 署名作者: Keys, Benjamin J.; Wang, Jialan
• 署名单位: University of Pennsylvania; National Bureau of Economic Research; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.09.009
• 发表日期: 2019
• 页码: 528-548
• 关键词: Anchoring; liquidity constraints; Credit cards; consumer finance; Minimum payments

摘要

Using a data set covering one quarter of the U.S. general-purpose credit card market, we document that 29% of accounts regularly make payments at or near the minimum payment. To explain the prevalence of low payment amounts, we exploit changes in issuers' minimum payment formulas to quantify the explanatory power of two potential theories: liquidity constraints and anchoring. At least 22% of near-minimum payers (and 9% of all accounts) respond to the formula changes in a manner consistent with anchoring as opposed to liquidity constraints alone. Our results show that anchoring to a salient contractual term has a significant impact on household repayment decisions. (C) 2018 Elsevier B.V. All rights reserved.