Interest Rate Misperception and Excess Borrowing in the Consumption Credit Market

Last registered on October 31, 2022


Trial Information

General Information

Interest Rate Misperception and Excess Borrowing in the Consumption Credit Market
Initial registration date
October 26, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
October 31, 2022, 3:57 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.



Primary Investigator


Other Primary Investigator(s)

PI Affiliation
UC Berkeley

Additional Trial Information

Start date
End date
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
We elicit consumer perceptions about the interest rate associated with credit-card borrowing. Combining bank account data and surveys, we find that consumers have very noisy perceptions about the true interest costs associated with credit card debt. Total borrowing decreases with perceived interest rates only for those with negative perception errors. Using an information treatment that informs the true costs of credit-card borrowing, we find that every percentage point decrease in the perceived rate increases borrowing by 143.1 US dollars.
External Link(s)

Registration Citation

Han, Tianyu and Xiao Yin. 2022. "Interest Rate Misperception and Excess Borrowing in the Consumption Credit Market." AEA RCT Registry. October 31.
Experimental Details


Information treatment about the true interest costs of credit card borrowing.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
Borrowing and spending after the experiment.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We surveyed 1166 consumers and collected their monthly checking and credit card account data from January 2019 to February 2021. For a random 40% of the 353 participants who have repaid any interest-incurring credit card debt in 2020 and before the experiments, we reveal the following information at the end of the survey on a new page:

The annualized interest rate on credit cards is around 20%. This rate is equivalent to a monthly interest rate of about 1.51%. If you carry over 8,000 CNY of debt on a credit card to the next billing cycle, then there will be around 120.8 CNY in interest rate in the next month.
Experimental Design Details
Randomization Method
The randomization is based on a uniform random number generator.
Randomization Unit
The randomization is at the individual level.
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
1 cluster.
Sample size: planned number of observations
353 individuals.
Sample size (or number of clusters) by treatment arms
140 treatment, 213 control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number


Post Trial Information

Study Withdrawal

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Is the intervention completed?
Data Collection Complete
Data Publication

Data Publication

Is public data available?

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials