Chin, A and Bruine de Bruin, W orcid.org/0000-0002-1601-789X (2019) Helping consumers to evaluate annual percentage rates (APR) on credit cards. Journal of Experimental Psychology: Applied, 25 (1). pp. 77-87. ISSN 1076-898X
Abstract
To help consumers make informed decisions, regulators often impose disclosure requirements on financial institutions. However, disclosures may not be informative for consumers if they contain difficult-to-evaluate attributes, such as annual percentage rates (APRs). To improve a consumer’s ability to evaluate the relative attractiveness of products with difficult-to-evaluate attributes, evaluability theory suggests providing consumers with distributional information. Here, we tested whether credit card disclosures containing graphs of the distribution of APRs in the credit card market help consumers estimate the relative costs of credit and evaluate credit cards. In two studies, we found that consumers using standard credit card disclosures (without distributional information) underestimated the costs of credit card APRs relative to the market. We then built on the graph design literature to design different graphs for presenting distributional APR information. A comparison of the graphs we designed showed that a histogram was most successful at improving consumers’ estimates of APR costs relative to the market and modifying consumers’ evaluations of an expensive credit card. We discuss the implications of our findings for evaluability theory, graph design, and communication efforts that aim to provide consumers with meaningful financial disclosures.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 American Psychological Association. This paper is not the copy of record and may not exactly replicate the authoritative document published in the APA journal. Please do not copy or cite without author's permission. The final article is available, upon publication, at: https://doi.org/10.1037/xap0000197. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | credit card; financial disclosure; general evaluability theory; graphs |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Management Division (LUBS) (Leeds) > Management Division Decision Research (LUBS) |
Funding Information: | Funder Grant number Riksbankens Jubileumsfond M14-0138:1 |
Depositing User: | Symplectic Publications |
Date Deposited: | 03 Sep 2018 12:39 |
Last Modified: | 13 Mar 2019 15:14 |
Status: | Published |
Publisher: | American Psychological Association |
Identification Number: | 10.1037/xap0000197 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:135168 |