Minimum required payment and supplemental information disclosure effects on consumer debt repayment decisions
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 0022-2437Full text not available from this repository.
Official URL: http://dx.doi.org/10.1509/jmkr.48.SPL.S60
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|
|Access rights to Published version:||Restricted or Subscription Access|
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