Assisting Mental Accounting Using Smartphones: Increasing the Salience of Credit Card Transactions Helps Consumer Reduce Their Spending

Abstract

Credit card-related over-spending represents an important issue for consumers. Over-spending arises in parts from reduced payment transparency compared to cash and other payment methods. Additionally, week-by-week credit card spending exhibits high variance even on an intrapersonal level, which makes it hard to intuitively learn from prior transactions and control one's spending. As mobile-mediated information systems have been proven effective in delivering behavior change interventions, this study investigates the efficacy of using a novel smartphone application that increases the salience of credit card transactions to help consumers control their cashless payments better and ultimately spend less. We implemented a goal-setting feature and provided weekly goal attainment feedback highlighting ordinary, exceptional, or both types of purchases. This work was conducted as a field experiment, studying a large sample of credit card consumers in the wild over several months, which yielded a significant reduction in spending with unobtrusive interventions. It further highlights the importance of including exceptional purchases in households' spending budgets and discusses how people adjusted their consumption to lower their expenditures. © 2020 Elsevier Ltd