The option to automatically pay the minimum due on a credit card sounds like a valuable tool—it makes missing a payment and incurring any related fees or other penalties far less likely. But it also makes it more likely that consumers will pay only the minimum due month after month, rather than paying larger portions of their balances. Research from Chicago Booth PhD candidate Benedict Guttman-Kenney and colleagues finds that as a result, automatic minimum payments end up costing consumers as they rack up greater interest expenses. What’s more, the researchers find it can be difficult to “nudge” credit-card holders to make larger payments—but the findings do suggest one promising solution.

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