On 26 July 2018, the Financial Conduct Authority (FCA) published a research note on the repayment of credit card debt. The FCA partnered with four credit card providers to test in practice how more than 200,000 consumers repay credit card debt faster, seeking to understand the effect of different policy options on consumers. Where field testing was not possible, hypothetical online experiments were used. The key findings of the research are as follows:
- consumers must pay a contractual minimum amount whenever payments are made. Previous research suggests that this minimum amount can have the effect of dragging down the repayment choices consumers make;
- removing the minimum repayment amount from the manual repayment screen had a large positive effect in two online experiments;
- in practice, removing an explicit option for the minimum amount from the direct debit setup screen caused many people to choose higher direct debit amounts as intended, and did move people away from minimum payments, but it did not reduce credit card debt; and
- it confirms findings in other contexts – such as pension auto-enrolment – that changing the context of choices can have a dramatic effect on decisions. However, consumer behaviour is difficult to change through either generic or targeted disclosures.