Abstract
In most countries, loan duration information is not usually provided with flexible credit such as store cards and credit cards. Two studies investigated the accuracy with which people could estimate loan duration, varying the supplementary information that was provided. In the first study it was found that estimation improved slightly when information about average monthly interest charges was provided, whereas it was slightly worse when the Annual Percentage Rate of interest (APR) was given. In the second study it was found that information on total interest charges improved estimation substantially. The results are interpreted in terms of psychological accounts, and it is concluded that providing information about total interest charges may help people to evaluate and budget better with flexible credit.
| Original language | English |
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| Pages (from-to) | 317-335 |
| Journal | Journal of Economic Psychology |
| Volume | 14 |
| Issue number | 2 |
| Publication status | Published - Jun 1993 |