Understanding and knowledge of credit cost and duration: Effects on credit judgements and decisions
McHugh, Sandie ; Ranyard, Rob ; Lewis, Alan
Journal of Economic Psychology, 2011, Vol.32(4), pp.609-620 [Peer Reviewed Journal]
measures of consumer credit cost and using them appropriately in credit judgements and decisions
UK adults’ understanding of the relation between two key measures of credit cost, APR and TC:
participants consistently overestimated TC, can be understood in terms of estimation strategies
participants had an appropriate understanding of the relation between APR and TC
The common error we found in understanding the relationship between APR and FC or TC could lead people to make poorer credit decisions
the effect of APR and TC information on credit decisions:
APR information would influence credit decisions. This was broadly confirmed
TC information would moderate the effect of APR information
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