A review of credit card literature: perspectives from consumers

Abstract

<p>Examining consumers’ behaviours in choosing and using credits cards, this report was commissioned to present an empirical review of the credit card market, with the intention of providing insight for policy implementers in consumer protection within the UK market. We review the literature on credit card consumption from the perspectives of economics, finance, marketing and psychology, and discuss (1) how consumers source for and switch between credit card contracts, along with the mistakes they commonly make; (2) the determinants of borrowing behaviour using credit cards; (3) how consumers repay credit card debts and the impact of minimum repayment requirement presentation; (4) borrowing costs including interests and fees that consumers pay on credit cards; (5) the extent to which behavioural biases drive consumers’ behaviours. Although majority of the literature focuses on the U.S. market, we believe that these findings are highly applicable to the UK owing to the similarities between both countries’ credit card markets.</p>