Prevention, resolution, or counseling: Testing three approaches to reducing debt payment delinquencies in a large-scale field experiment

Abstract

In this study, we partnered with a large credit union to conduct a 10-arm field experiment aimed at reducing delinquent payments on installment debts. This experiment tested common behavioral interventions such as payment reminders against more novel approaches such as magnet reminders and savings accounts that automated emergency savings. It also tested the impact of offering financial counseling services. Our findings indicate that the email reminders—which emphasized resolving current delinquencies in some treatments and preventing future delinquencies in others—were effective at reducing moderate and severe payment delinquency rates. Other, more intensive treatments, which required participants to enroll in a new account or financial counseling, likely did not have an impact due to low takeup rates. We also find limited evidence that certain interventions were more effective for individuals with higher credit risk.