The semblance of success in nudging consumers to pay down credit card debt

Guttman-Kenney, Benedict, Adams, Paul, Hunt, Stefan, Laibson, David, Stewart, Neil ORCID: 0000-0001-8036-6392 and Leary, Jesse (2025) The semblance of success in nudging consumers to pay down credit card debt. American Economic Journal: Economic Policy, 17 (4). 72 - 105. ISSN 1945-7731

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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. (JEL C93, D12, D91, G21, G51)

Item Type:	Article
Divisions:	LSE
Subjects:	B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HG Finance
JEL classification:	C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Date Deposited:	07 Nov 2025 09:06
Last Modified:	07 Nov 2025 09:06
URI:	http://eprints.lse.ac.uk/id/eprint/130080

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