Stewart, N. (2009). The cost of anchoring on credit card minimum payments. Psychological Science, 20, 39-41.

Minimum payments on credit card bills protect those who would otherwise make no repayment by preventing their debt from growing exponentially. But, for those paying off part of the bill, the anchoring phenomenon leads to the prediction that providing minimum payment information will have the unintended consequence of reducing repayments. Here, a survey of credit card holders found an association between the relative size of minimum payments demanded and the relative size of actual repayments. A hypothetical repayment experiment established a causal link between the inclusion of minimum payment information and reduced repayments. Repayments are lower because of anchoring on minimum payment information and interest charges are estimated to be higher as a result.

Clarification: Figure 1 shows the distribution of only the partial repayments and omits full repayments.

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