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National Financial Awareness Network, Inc.

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Personal Finance Executive Calls for More Choices on Credit Card Statements

Study shows asking for the minimum encourages prolonged debt. Personal finance executive calls on credit card companies to give more choices.

Columbia, MD, December 17, 2008 --( Representatives at the National Financial Awareness Network are calling on credit card companies to include more payment amount options on statements to encourage cardholders to pay more than the minimum monthly payment.

A University of Warwick psychological study released in October by Dr. Neil Stewart suggests that consumers are encouraged to pay less on their balances when credit card companies present the minimum monthly payment option amount on credit card statements. Results from the study show that the average payment increased by 70 percent when the minimum monthly payment amount was not included on the statement.

"This new study sheds light on the impact of presenting only one payment option on credit card statements, essentially encouraging consumers to pay far less than they otherwise would," said John Janney, President of the National Financial Awareness Network. "While we need minimums, consumers could benefit greatly if credit card companies included a few other payment amount choices."

Janney suggests that including the minimum as well as additional choices based on larger percentages of the outstanding balance could prompt cardholders to pay more towards their balances, effectively reducing their debts at a much faster rate. According to the study, such a change could also cut the amount cardholders pay in interest by roughly half.

For example, instead of only including a $250 minimum monthly payment amount for a $10,000 credit card balance, which is 2.5 percent of the balance, credit card statements could include a 5 percent ($500), 10 percent ($1,000), 20 percent ($2,000), the full balance ($10,000) and an "other amount" option as payment amount options.

"We already see a similar practice in the restaurant industry where some restaurants include recommended tip calculations on the bill," Janney explains. "A Monmouth University study by Dr. David Strohmetz suggests that this practice is having a positive impact on waiters' incomes, and I believe that applying this principle to credit card statements could have a positive impact on reducing consumer debt, especially with what we’ve learned from the Warwick study."

Janney said that America needs creative and well-informed solutions to consumer debt to help stabilize the economy in the long term. Long-term indebtedness, the hallmark of modern bank profits, has proved detrimental to consumers and the world economy. Utilizing psychological studies to positively influence consumers' financial wellbeing will benefit banks as well.

"When a lot of indebted consumers run out of money, banks lose," Janney concludes. "This may not have been the way banks thought during the easy-credit era, but I think it's clear from the current economic crisis that we need a fresh approach to how we balance consumers' financial wellness with banks' desire to turn a profit."

About NFAN

The National Financial Awareness Network is a Maryland-based personal finance publishing company that offers educational products and services, such as the popular Do-It-Yourself Debt Settlement Kit, Help For Debtors online support forum and their How to Get Great Credit e-book. For more information, please visit the NFAN website at

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National Financial Awareness Network, Inc.
John Janney

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