Barbara Kiviat covers credit cards and consumer behavior today for Time Magazine. Reacting against the flurry of articles recently that focus on the lender side of the credit card problem, she summarizes nicely the challenges on the consumer end towards changing plastic-swiping behavior. One of the central points she makes is that consumers oftentimes “make decisions that are not in their economic best interest.” Some of the examples she presents include:
- the tendency for consumers to take the credit card offer that has the lowest introductory rate, resulting in higher finance charges over time
- a MIT experiment, in which the people demonstrate a willingness to pay twice as much for something with a credit card than if they were to pay with cash
- the rise of disclosure requirements over the last 20 years has not translated into better-informed financial decisions
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