Balancing savings and debt: Findings from an online experiment

Balancing savings and debt: Findings from an online experiment

Abstract

One of many financial challenges facing consumers is to balance the goal of having a savings cushion that offers financial security with the goal of limiting the amount of debt they hold. In fact, most U.S. consumers hold savings and debt at the same time. People take on debt for many reasons, with the cost of holding different types of debt varying substantially.

In holding savings and debt simultaneously, however, consumers face a choice: how much debt to pay down versus how much savings to retain. The Office of Research released a research brief summarizing the results of an online experiment exploring how the amount of available savings may influence decisions about using savings to pay down credit card debt.

Full content of the publication

Tags

Credit Card Debt Savings

Authors

CFPB

Web

Additional Information

Date published

01/01/2021

Document Type

Research

Geographies

United States

Target

General

Pages

19

Source

CFPB

Related publications

27 May 2021

Financial education and savings and investment decisions: an analysis of the Survey of Financial Competencies (ECF).

This working paper studies and explores the information from the Financial Literacy Survey from a double perspective. On...

31 March 2021

The financial resilience of households: 22 country study with new estimates, breakdowns by household characteristics and a review of policy options

Some households are less resilient to financial shocks than others. This may be because they have low levels of savings,...

31 March 2021

The impact of education on savings and financial behavior

This paper estimates the effect of years of education on savings, financial market participation, and choices between di...