Senator The Hon. Zed Seselja
Assistant Minister for Treasury and Finance
A new study has today found that SMS reminders can help people reduce their credit card debt and save money on high interest fees.
Simple text reminders helped consumers pay off an extra $134 on average—an increase of 28 per cent. This single reminder had an effect twelve months later—with those receiving an SMS having paid off $365 more than those who didn’t.
Assistant Minister for Treasury and Finance, the Hon. Zed Seselja, said the results could play an important role in helping people to reduce debt and save.
“People who only make small repayments on their credit cards could be paying hundreds of dollars a year in high interest fees,” Assistant Minister Seselja said.
“Every card is different—but some have an interest rate as high as 20 per cent. So these reminders can give a significant saving over the life of a debt”.
“I recommend every bank offering a credit card to consider these results and the options for assisting customers reduce debt.”
The study was a partnership between the Behavioural Economics Team of the Australian Government (BETA), the Treasury and Westpac.
It drew on insights from the behavioural sciences, showing timely reminders, positive framing and salience can be effective in helping people to save.
“It’s only right we look at ways to help people save, and behavioural insights can play a key role in this,” Assistant Minister Seselja said.
“The field continues to show it can be effective in encouraging good financial decision-making—and I hope these results will have broader implications for other fields and products.”
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