The easy-money effect : credit card spending and hard-work reminders

• Main Authors: Wong, King Yin, Lynn, Michael
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2019
• Subjects: DRNTU::Business::Marketing::Consumer behavior; Credit Cards; Spendthrift
• Online Access: https://hdl.handle.net/10356/105161; http://hdl.handle.net/10220/47967
• Institution: Nanyang Technological University

Purpose This research paper aims to examine the proposed easy-money effect of credit cards, which stimulates consumers to over spend. This paper shows how such easy-money effect could be weakened. Design/methodology/approach In Study 1, an Implicit Association Test (IAT) was conducted with a sample of 169 participants to test the proposed easy-money effect. In Study 2, experimental data were collected online from 365 participants to test the effectiveness of a hard-work reminder in weakening the credit card’s easy-money effect on consumer spending. Findings The proposed credit card easy-money effect existed, with spendthrift participants associating money with hard work less in the implicit association test after being presented with a credit card cue versus neutral cue. The results from Study 2 show that spendthrift participants spent more on their dinner than tightwad participants when shown a credit card cue. However, this effect could be weakened when spendthrifts were also reminded of their hard work by a picture accompanied with words. Practical Implications This paper suggests that credit card’s spending-stimulating effect is due to consumers’ associations between credit cards and easy money. Based on this notion, this paper suggests conditions in which credit cards will stimulate more and less spending. Originality/value This is the first research attempt to examine the credit cards’ easy-money effect and the effectiveness of reminding consumers of their hard work to mitigate credit cards’ long-established spending-stimulating effect.