Evaluation Scotland Wales
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Intentions, beliefs and actions to pay credit card debt

Evidence type: Evaluation i

Description of the programme

Around one-in-four payments on credit cards are at or close to the contractual minimum in the UK. The majority of payments are made ‘manually’ – typically online – where consumers need to proactively make a payment to their credit card company once a month. This system of payments seems to be driven by there being minimal payment information available to the consumer. A smaller proportion of customers have automatic minimum payments set up, that help them avoid late-payment fees. However, in this scenario manual payments are only made infrequently, meaning that by just paying the minimum payments consumers are prolonging their debt cycle. In addition to the financial costs, struggling to repay debts has been found to have a strong negative correlation with psychological wellbeing.

This 2018 evaluation from the Financial Conduct Authority, collaborating with three UK financial lenders, tests whether consumers would benefit from:

  • Increased disclosure on credit card statements;
  • Automatic minimum payment ‘nudges’.

The study

There are two main experiments conducted as part of this work:

  1. Experiment one partners with one UK lender and adds extra, personalised repayment information to credit card statements showing the time and cost to pay off credit card debt if the consumer only makes minimum repayments compared to if they try to pay if off in three years. This intervention targeted 29,683 consumers without automatic credit card payments set up. In this experiment the control group received their normal credit card statements. The treatment groups received new, graphical information added to the front page of their normal statements, with the first treatment group receiving a graphic of how long it would take to pay off their debt, and the second group receiving the same plus extra information about the costs of their borrowing under different scenarios.
  2. The second experiment targeted consumers on automated minimum payments. Trials were implemented between 2016-18 on 153,758 credit card accounts issued by three UK lenders. The control group received no communications beyond what they would usually expect to receive. The treatment groups received personalised extra communications concerning their credit card debt. Treatment groups one and two received bespoke personalised disclosure information detailing how long it would take them to repay their debt under different scenarios, with the second treatment group also receiving information about their projected interest costs.

In the final part of the testing, half of the people who received letters in the treatment groups from two of the lenders were selected to receive a further reminder, with the same design as the initial communications but with a reference to that earlier communication.

Before going into the field, all of the materials from both experiments were qualitatively tested on a small sample of consumers to gauge their reactions.

Key findings

  • There were no statistically significant differences between the treatment groups and the control group in experiment one, suggesting the interventions regarding statement disclosure did not have an effect on consumer outcomes.
  • The average effects within the treatment groups in experiment two reduced automatic minimum repayment use by 0.9-2.0 percentage points within the two statement cycles following the intervention.
  • Most changes in automatic payments occur in the few days after receiving communications. The effect sizes are similar across lenders despite one lender sending disclosures via email rather than by letter.
  • Adding information about the cost of debt to the disclosure does not significantly change responses, though adding a reminder does increase response rates.
  • An explanation for continuing to only make minimum payments appears to be that consumers have mistaken beliefs, under-estimating how long debt will take to be paid off while only making the minimum payments and avoiding any information that tells them otherwise.
  • The intervention does not reduce credit card debt over a longer time period. It appears that the intervention simply brings forward the timing of any additional payments rather than increasing the total value of the extra payments.
  • Continuing patterns of repeated minimum payments among consumers with automatic minimum repayments do not always appear to be explained by liquidity restraints/lack of available funds.

Points to consider

  • Methodological strengths/weaknesses: Findings are tested for statistical significance, adding more robustness to the analysis.
  • Control groups are used, allowing findings from the intervention group to be compared with groups not receiving the same intervention for benchmarking purposes.

  • Generalisability/ transferability: The evaluation is of significant interest to those looking to commission or authorise interventions designed to positively influence consumer behaviour regarding credit card debt.
  • Relevance: The findings are based on consumers from three major UK lenders and should not necessarily be seen as representative of the entire market (though given the numbers involved in the trials it is likely that the results are a fair indicator of credit card behaviour nationwide).

Key info

Activities and setting
In partnership with three UK lenders, interventions are measured against a control group to assess the impact of disclosure on increasing credit card payments.
Programme delivered by
Financial Conduct Authority/Anonymous UK lenders
Year of publication
United Kingdom
Contact information

Paul Adams, Benedict Guttman-Kenney, Lucy Hayes, Stefan Hunt, David Laibson and Neil Stewart

Financial Conduct Authority