Research Note: Helping credit card users repay their debt: a summary of experimental research

This research note summarises the findings of FCA Occasional Papers Nos. 42, 43, 44 and 45.

Research note (PDF)


One in four credit card payments are only at the contractual repayment amount (or just above it). Given the scale of the credit card market - £70 billion held in outstanding debt across over 30 million card holders - this is an important problem. Occasionally making a minimum payment may not be problematic, allowing consumers to manage payments in a temporary tight spot. Yet if consumers repeatedly make minimum (or very low) repayments there is little pay down of their credit card debt, meaning that high interest costs can quickly accumulate. Persistently carrying debt can also create other problems such as negatively affecting people’s credit scores or mental health.

Consumers can make payments in two ways – manually at any point in the month (eg through online payments), or automatically by setting up a Direct Debit. In both cases, consumers must pay a contractual minimum amount. We know from previous research that this minimum amount can have the effect of dragging down the repayment choices consumers make – a psychological concept known as anchoring or targeting.

In our research, we found that removing the minimum repayment amount from the manual repayment screen had a large positive effect in two online hypothetical experiments. It significantly increased the value of repayments made. In a separate, real-world test, providing information on monthly statements had no effect at all on manual repayment amounts. This was similar to results in the US.

In a real-world test of credit card users, removing an explicit option for the minimum amount from the direct debit setup screen was less successful. It did cause many more 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. This is partly because consumers offset higher automatic payments with lower manual payments and partly because it discouraged some people from setting up a direct debit at all. Targeting the information at consumers with a direct debit already set up for the minimum amount caused only a small decrease in minimum payments and did not reduce debt.

The research adds to our understanding of how effective disclosure is in changing behaviour. It also confirms findings in other contexts - such as pension auto-enrolment - that changing the context of choices can have a dramatic effect on decisions. Importantly, some of our findings suggest that initial effects on choices do not always translate into similarly dramatic effects on consumer outcomes.


Paul Adams, Benedict Guttman-Kenney, Lucy Hayes and Stefan Hunt