Ben Keys
Assistant Professor, Harris School of Public Policy, University of Chicago
Assistant Professor, Harris School of Public Policy, University of Chicago
Benjamin J. Keys is an assistant professor at the University of Chicago Harris School and Co-Director of the Kreisman Inititative on Housing Law and Policy at the University of Chicago. He teaches courses on housing policy and the financial crisis, and statistics for public policy, and studies issues related to urban economics, labor economics, and consumer finance. Prior to joining the faculty of Chicago Harris, Keys worked as a staff economist at the Board of Governors of the Federal Reserve System in the division of Research and Statistics. His recent research focuses on credit cards, subprime mortgages, homeowner refinancing decisions, Fannie Mae and Freddie Mac, student loans, and personal bankruptcy. Keys holds a bachelor’s degree from Swarthmore College and an M.A. and Ph.D. in economics from the University of Michigan. His research has been published in academic journals such as the Quarterly Journal of Economics, the Review of Financial Studies, and the Review of Economics and Statistics.
What factors impact how much consumers repay on their credit cards each month? This paper examines the drivers of payment behavior using the CFPB credit card database, which includes the monthly account activity of a large fraction of U.S. consumers from 2008-2012. We find that consumers’ payment behavior is consistent and strongly bimodal: Most accounts are either paid in full or paid near the minimum amount each month, with very few intermediate payment amounts. We then evaluate the impact of two types of policy changes: 1) changes in the minimum payment formulas implemented by individual issuers, and 2) new payment disclosures mandated by the CARD Act of 2010. The formula changes led to small increases in the payments made by consumers previously paying the minimum. On average, the CARD Act disclosures increased consumer payments by $19 per month from February 2010 to December 2012. However, both the formula changes and the CARD Act’s 3-year payment disclosure had the effect of decreasing the fraction of accounts paid in full by 1%. Our results suggest that anchoring and the salience of minimum payments play important roles in consumer decision-making in the credit card market.