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Minimum Required Payment and Supplemental Information Disclosure Effects on Consumer Debt Repayment Decisions

Navarro-Martinez, Daniel and Salisbury, Linda Court and Lemon, Katherine N and Stewart, Neil and 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, 48 (SPL). 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 while 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 indicate that borrowers' credit limit and balance due also moderate these effects. 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: Article
Subjects: B Philosophy. Psychology. Religion > BF Psychology
H Social Sciences > HG Finance
Divisions: Faculty of Science and Health > Psychology, Department of
Depositing User: Jim Jamieson
Date Deposited: 24 Nov 2011 14:22
Last Modified: 24 Nov 2011 14:22
URI: http://repository.essex.ac.uk/id/eprint/1581

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