A noted business school has published a study that suggests there are psychological factors when it comes to paying bills. Households in Florida and throughout the country maintain an average balance of $16,000 in credit card debt at any given time. Many consumers pay only the minimum payment due each month, even if they in a position to pay more.
Recipients of a bill often look at the minimum payment printed on the statement and simply remit that amount each month. Many could afford to pay more, but choose not to do so. The belief is that as long as someone is making the minimum payment, they are doing well, regardless of the balance on the account.
The research points to a psychological phenomenon called anchoring that could be a factor in how credit card debt is viewed. Anchoring means that something has an influence on decision making, even if that something is irrelevant. In the case of a credit card statement, the minimum payment information is prominent on the bill and could influence consumers’ behavior.
Companies have been required to add disclosures on their bills regarding minimum payments as a result of the Credit Card Act of 2009. However, experts say that this has not significantly changed payment behavior. It is estimated that anywhere from 9 to 20 percent of borrowers base their payments on the minimum due.
Florida residents may feel overwhelmed with their level of credit card debt and not know what steps to take to get into a better financial situation. Many in these circumstances seek the advice of experienced legal counsel. A skilled attorney can often help borrowers consolidate their debts as part of a plan to significantly reduce or eliminate credit card debt.
Source: wbtv.com, “Anchoring: Why credit card debt weighs us down –“, Feb. 9, 2017