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Can reminders about financial rules of thumb reduce credit card debt?

On Behalf of | Sep 23, 2016 | Debt Relief

Research shows that American consumers are falling behind on credit card payments in far fewer numbers than in years past. At the same time, however, it also shows that the number of consumers who rely on their credit card as their default method of payment seems to be growing.

Indeed, the credit reporting agency TransUnion found that the average credit card debt increased to $5,247 in the second quarter of 2016 and that as many as 133 million people carry a balance on at least one card.

Interestingly enough, researchers with the D2D Fund and the Urban Institute recently conducted a study sponsored by the Consumer Financial Protection Bureau to determine whether some reminders about financial basics could actually help consumers lower their credit card debt.

What did the study do? 

The researchers first selected 14,000 customers with an Arizona-based credit union at random, all of whom carried month-to-month balances on their credit cards rather than paying it off each month.

Over a six-month period, these participants, who were unaware of the study but whose financial data remained anonymous, were sent messages reminding them of two financial basics in a randomized manner, including emails twice a month, banner ads on the credit union website and a refrigerator magnet.

What were the two financial basics shared in these messages?   

The two financial basics shared with the study participants were 1) to always use cash for purchases under $20 and 2) paying with a credit card adds roughly 20 percent to the purchase cost.

What were the results?

As far as the first financial basic was concerned, the researchers found that it produced a “moderate” effect with credit card balances roughly 2 percent — or $104 — lower than they would have been without this particular message.

While the second financial basic saw a far less pronounced effect overall, it did seem to resonate among those under 40, with credit card balances roughly $160 lower than they would have been without this particular message.

The researchers stopped short of declaring a real winner, but did indicate sharing of these sorts of financial basics, while helpful, should be done on a limited basis so as to avoid both “overexposure and fatigue.”

It’s important to remember that if your credit card debt has become insurmountable that you are not without options. Indeed, a skilled legal professional can outline these debt relief options and help you work toward securing a fresh financial start.


Kingcade & Garcia | A Miami Law Firm