Arbeitspapier

Why do banks reward their customers to use their credit cards?

Using a unique administrative level dataset from a large and diverse U.S. financial institution, we test the impact of rewards on credit card spending and debt. Specifically, we study the impact of cash-back rewards on individuals before and during their enrollment in the program. We find that with an average cash-back reward of $25, spending and debt increases by $79 and $191 a month, respectively during the first quarter. Furthermore, we find that cardholders who do not use their card prior to the cash-back program increase their spending and debt more than cardholders with debt prior to the cash-back program. In addition, we find that 11 percent of cardholders that did not use their cards in the previous 3 months prior to the cash-back program spent at least $50 in the first month of the program. Finally, we find heterogeneous responses by demographic and credit constraint characteristics.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 2010-19

Klassifikation
Wirtschaft
Thema
Household Finance
Credit Cards
Consumption
Financial Incentives
Rewards

Ereignis
Geistige Schöpfung
(wer)
Agarwal, Sumit
Chakravorti, Sujit
Lunn, Anna
Ereignis
Veröffentlichung
(wer)
Federal Reserve Bank of Chicago
(wo)
Chicago, IL
(wann)
2010

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Agarwal, Sumit
  • Chakravorti, Sujit
  • Lunn, Anna
  • Federal Reserve Bank of Chicago

Entstanden

  • 2010

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