Navarro, Daniel J., Salisbury, Linda Court, Lemon, Katherine N. (Katherine Newell) , Stewart, Neil, 1974-, Matthews, William J. and Harris, Adam J. L. . (2011) Minimum required payment and supplemental information disclosure effects on consumer debt repayment decisions. Journal of Marketing Research, Vol.48 (Special Issue). S60-S77. ISSN 0022-2437

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Abstract

Repayment decisions—how much of the loan to repay and when to make the payments—directly influence consumer debt levels. The authors examine how minimum required payment policy and loan information disclosed to consumers influence repayment decisions. They find that though presenting minimum required payment information has a negative impact on repayment decisions, increasing the minimum required level has a positive effect on repayment for most consumers. Experimental evidence from U.S. consumers shows that consumers’ propensity to pay the minimum required each month moderates these effects; U.K. credit card field data indicates that these effects are also moderated by borrowers’ credit limit and balance due. However, increasing the minimum level is unlikely to completely eliminate the negative effect of presenting minimum payment information. In addition, disclosing supplemental information, such as future interest cost and time needed to repay the loan, does not reduce the negative effects of including minimum payment information and has no substantial positive effect on repayments. This research offers new insights into the debt repayment process and has implications for consumers, lenders, and public policy.

Item Type:	Journal Article
Subjects:	B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HG Finance
Divisions:	Faculty of Science > Psychology
Library of Congress Subject Headings (LCSH):	Decision making, Consumer credit, Disclosure of information, Credit cards, Public policy, Consumer behavior
Journal or Publication Title:	Journal of Marketing Research
Publisher:	American Marketing Association
ISSN:	0022-2437
Date:	2011
Volume:	Vol.48
Number:	Special Issue
Page Range:	S60-S77
Identification Number:	10.1509/jmkr.48.SPL.S60
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/36032

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