freakonomics.blogs.nytimes.com - 12/18/2008
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New research finds that credit-card holders pay down their debts more slowly when their statements suggest a minimum monthly installment. The Economist reports on the study, by University of Warwick psychologist Dr. Neil Stewart:
Mr. Stewart presented 413 people with mock credit-card bills of ...
marketnewslive.blogspot.com - 12/24/2008
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marketnewslive.blogspot.com —
Federal regulators have adopted sweeping new rules for
the credit card industry that will shield consumers from...
increases in interest rates on existing account balances. AP Personal Finance Editor Trevor Delaney explains.
(more)
Video - Your Money: New Credit Card Rules
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Credit card companies are smart
The visible hand in economics —
... payment. In the real world, this would roughly double interest charges.
By anchoring people’s choice at a low value the companies ensure people pay less than they would if they anchored from the full amount due. They thus end up paying more in interest and generating more revenue for the company. So next time you look at your CC bill, maybe look at the total bill and not the minimum to save yourself a few pennies.
ht: Freakonomics
Further reading
FT Alphaville —
Elsewhere on Thursday, - Horlick’s memory hole . - A four bad bears update. - “Here is a headline I am laughing at: ‘Bond investors turn bullish on treasuries.’” - Getting metaphysical about funds of funds. - Busting Bernie Madoff - The crusade . - “More than a decade ago, when I was in my late 40s, I handed over my life savings to Madoff’s firm.” - Credit card companies get behavioural. - Watch Fred Thompson explain bailout economics. - Watch a photographer shove Madoff . _______________________
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