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RESEARCH INSIGHT | Do Minimum Payment Warnings Help Consumers?

The Research

Credit card companies increasingly encourage their customers to use online payments, sometimes using “save a tree” arguments to deter them from receiving paper copies of their bills. But how does this affect credit card holders’ repayment decisions? Online payment formats typically use an “active choice” payment format, in which customers can choose to pay the minimum, the full balance, or “other amount.” This format differs from the minimum payment warning (MPW) disclosure, which shows the actual amount consumers pay over time if they only pay the minimum amount. The MPW is mandatory on traditional monthly billing statements but is typically absent in online payment settings.

The authors find that when the MPW is made salient, consumers showed increased choice of the “three-year payoff amount” described in MPW disclosures and decreased choice of the minimum required amount across all choice formats. Moreover, the presence of MPW increased consumer feelings about making the right decision, primarily for financially vulnerable people.

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What You Need to Know

  • In light of this study’s findings, policymakers may consider making MPW disclosures mandatory in online contexts as well as offline.
  • Consumers should be aware of the differences in online versus offline disclosures and be sure they have pertinent information on payoff costs.
  • Firms may be able to increase customer goodwill by presenting MPWs in their online payment format.


The increasingly common online credit card repayment formats typically involve consumers’ active choice from among various payment amounts. Consumers rarely view minimum payment warning (MPW) disclosures while repaying online; therefore, the common shift toward online repayment means that the MPW is not salient for most credit cardholders. This article aims to shed light on credit cardholders’ payment decisions under this “active choice format” and explore effective online interfaces for payment decisions. Drawing on research in active choice, the authors demonstrate in three experiments that, compared with the “open format” used in traditional monthly statements, active choice format increases consumers’ full balance payment propensity and overall repayment amount, and this effect is even stronger when current account balance is included in the choice context. Furthermore, presence of the MPW disclosure significantly decreases payment of the minimum required amount and increases payment of the “three-year payoff amount.” Finally, presence of MPW increased consumer feelings about making the right decision, primarily for financially vulnerable people. These findings, based on hypothetical scenario choices, offer interesting theoretical and important policy implications.

Linda Salisbury and Min Zhao, “Active Choice Format and Minimum Payment Warnings in Credit Card Repayment Decisions,” Journal of Public Policy & Marketing, 39 (July 2020),