Consumer culture is promoting immediate gratification, and the rise of digital financial services is increasing the risk of indebtedness while debt reduces well-being and affects mental health. The authors assess the effects of consumer information provision, debt literacy, chronic debt and attitudes toward debt on the intent to purchase on credit.
An online survey including an experiment with a credit offer vignette was conducted in a representative sample of Estonia (n = 1204). Treatment conditions depicted either the total cost and duration of the credit agreement or the annual percentage rate.
Receiving modified information resulted in a 26 to 30 percentage points decrease in propensity to purchase on credit. Purchasing on credit was associated with attitudes towards credit and chronic debt, but not with debt literacy.
The findings reveal large effects of information provision and highlight the limited effects of debt literacy on credit decisions. Limitations may emerge from differences in financial regulation across countries.
The authors' results highlight the importance of applying behavioural insights in consumer credit information provision, both in the financial sector and policy. Testing the messages allows having evidence-based solutions that promote responsible purchasing on credit.
The findings call for changes in credit information provision requirements. Their effect is significantly larger compared to the literature, emphasizing the role of credit information provision in less regulated online markets.
