Encouraging people to pay their credit-card bills on time may be as easy as a phone call. If it’s the right kind of phone call, that is.
There are two groups of people who are late on their credit card bills: Those who are unable to pay them and those who have forgotten to pay them, wrote researcher Nina Mazar this week in Harvard Business Review.
The study: Mazar, a behavioral scientist and professor at Boston University’s Questrom School of Business, and her colleagues Daniel Mochon and Dan Ariely studied credit-card delinquencies earlier this year, and designed three types of automated phone calls those customers would receive.
The first group: A call that asked recipients to choose a time frame when they would make their payment, between one and three days. It asked, “If you are going to pay within the next 24 hours, press 1,” and gave subsequent numbers for the next time frames.
It helped when people were encouraged to commit to making that final payment, even if they were only responding to a robocall.The second: A call that had customers select a time frame for paying the bill, but also included a personalized pledge. The customer had to “Press 1” to confirm their “commitment to this pledge” to pay within the selected time frame.
Researchers also tested a third option: An automated call that let customers either say they had already paid, they planned to pay within three days, or they wanted to speak to an agent.
The result: Those who also had to make a “pledge” to pay were 2.54 percentage points more likely to pay, and they would pay 0.51 days faster. It helped when people were encouraged to commit to making that final payment, even if they were only responding to a robocall.
Those who got to select a concrete time frame when they would pay their bill were 2.26 percentage points more likely to pay, and they would pay 0.23 days faster. Giving people a timeline may have helped take the pressure off and make the payment plan seem more manageable.
The researchers worked with a large North American store that offers credit cards, which they didn’t name. They looked at 50,000 customers over nine months and focused on people who had missed just one payment and were one month delinquent.
The takeaway: The findings could make an impact beyond just credit-card bills, Mazar said. “Asking people to express their intentions more precisely about when they will act and to take a pledge could work in areas ranging from tax compliance to medication adherence to students’ procrastination on assignments,” she said.
There were some obvious limitations to the study: Consumers who are unable to pay their credit-card bills wouldn’t benefit from such a phone call. But for those who paid late by accident, there could be significant savings. American consumers collectively have more than $1 trillion in credit card debt, paying thousands in interest.
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