Home > Projects > Credit when it's due: Reducing credit card debt

Credit when it's due: Reducing credit card debt

Partner agencies: 
Department of the Treasury
Registration date: 
Wednesday, 19 July 2017

Consumers who only make the minimum repayment on their credit card could be paying hundreds of dollars a year in high interest payments. To help, BETA partnered with the Treasury and Westpac to see if reminders could encourage consumers to pay earlier and save money. We found any type of SMS reminder resulted in a $134 (28 per cent) increase in repayments in the following month, compared to those who received no message. However, different SMS messages all had a similar impact and we were unable to detect an effect from sending email reminders. Overall, the findings suggest that sending an SMS reminder to credit card consumers before their payment due date is a simple, cost-effective way to improve their financial wellbeing.

Additional trial information

Intervention start and end date: Monday, 05 June 2017 to Tuesday, 31 October 2017

BETA ethics pre-registration number: ETH 2017 – 006

Experimental design: Customers who meet the eligibility criteria are divided into two channels based on whether they are eligible to receive a SMS or email.

Randomisation is undertaken at the individual level.  For each channel, there are four treatment cells testing the impact of framing and motivational messages, against two control messages. 

Intervention(s): Customers receive messages either via SMS or email, which vary in the framing of language, and focus on either social norming or loss aversion.

Control condition: 2 control conditions. 1 group receives no message and the other group receives a simple message (serving a simple reminder function).

Outcome(s): Repayment of credit card balance.

Expected sample size: Approximately 24,000