Increasing financial literacy through Intro Psych: Anchoring & operant conditioning

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Earlier this week it was announced that U.S. consumer credit card debt has surpassed one trillion dollars for the first time. Interestingly, there is a positive correlation between household income and the number of households who have carried their credit card debt for more than a year. “Bankrate found that 72 percent of cardholders with credit card debt and annual household incomes of $100,000 or more have been in debt for at least a year. The percentage drops to 70 percent for households with credit card debt and incomes between $80,000 and $99,999; 63 percent for people earning between $50,000 and $79,999; and 53 percent for folks making under $50,000.” (Singletary, 2023).

That is a lot of people who are paying interest on their credit card balances. The current average credit card interest rate is a whopping 24.69% (Black & Saks Frankel, 2023). The average U.S. consumer has $5,947 in credit card debt (Dickler, 2023). At least some consumers pay off their credit cards every month, but let’s take someone who is carrying $5,947 in debt on a credit card with a 24.69% interest rate. Nerdwallet’s credit card interest calculator can tell us how much interest we’d pay this month: $121.87.

Credit card issuers vary on how they determine minimum payments. For balances over $1,000, the minimum payment for the major credit card issuers is commonly 1% of the balance owed plus interest and fees (Tsosie, 2022). For our hypothetical person who owes $5,947, their minimum payment would be $59.47 (1% of the balance) plus $121.87 (interest) for a total of $181.34. That $59.47 barely touches the principle. Why don’t credit card issuers have an even lower minimum, say, below the amount of interest? Because U.S. federal guidelines discourage it (Tsosie, 2022).

Interestingly, but perhaps not surprisingly, 29% of credit card holders make only the minimum payment or up to $50 above minimum. Why? Anchoring appears to be the culprit. These credit card holders seem to use the minimum payment as the anchor and then adjust up from that (Keys & Wang, 2019). When covering anchoring bias in Intro Psych, this example would provide an opportunity to give students a financial literacy booster.

When young adults make the transition to independent living, do they have the financial literacy skills to help them keep their debt to a minimum? “Julie O’Brien [PhD in Social Psychology], head of behavioral sciences at U.S. Bank, said before they transition into the real world, it’s important to help your children understand the psychological side of finances. Buying new things can create positive emotions, which mentally reinforces to teens that spending is a good thing. Meanwhile, saving money doesn’t produce instant gratification, making it more difficult to do” (Glass, 2023). I’d even add that paying down credit card debt can be aversive. Giving money to a credit card issuer means less money for me to use. Reframing should help, though. The less money I owe on my credit cards, the less interest I’ll pay, and the more money I will have for me in the long run. Let’s say that instead of paying $121.87 in interest every month, I took a year’s worth of that interest ($121.87 x 12 months = $1,462.44) and put it into a 9-month CD that earns 5%. At the end of that term, I’d get all of my money back plus I’d make $73.12.

I have noticed an interesting trend among some of my students. They have turned increasing their credit score into a game. Every time they pay down their debt, their credit score goes up. Several of my students have celebrated their increased credit scores as their good news for the week in our class online discussion boards. Their classmates have congratulated them and followed up by asking how they did it.  

Talking about financial behavior in terms of reinforcement and punishment makes our coverage of operant conditioning another opportunity to talk about financial literacy.



Black, M., & Saks Frankel, R. (2023, August 7). What is the average credit card interest rate? Forbes Advisor.

Dickler, J. (2023, August 10). Average consumer carries $5,947 in credit card debt—A 10-year high. CNBC.

Glass, K. (2023, July 18). The life skills teens should know before leaving home. Washington Post.

Keys, B. J., & Wang, J. (2019). Minimum payments and debt paydown in consumer credit cards. Journal of Financial Economics, 131(3), 528–548.

Singletary, M. (2023, August 9). Credit card debt tops $1 trillion, trapping even six-figure earners. Washington Post.

Tsosie, C. (2022, November 28). How credit card issuers calculate minimum payments. NerdWallet.


About the Author
Sue Frantz has taught psychology since 1992. She has served on several APA boards and committees, and was proud to serve the members of the Society for the Teaching of Psychology as their 2018 president. In 2013, she was the inaugural recipient of the APA award for Excellence in the Scholarship of Teaching and Learning at a Two-Year College or Campus. She received in 2016 the highest award for the teaching of psychology--the Charles L. Brewer Distinguished Teaching of Psychology Award. She presents nationally and internationally on the topics of educational technology and the pedagogy of psychology. She is co-author with Doug Bernstein and Steve Chew of Teaching Psychology: A Step-by-Step Guide, 3rd ed. and is co-author with Charles Stangor on Introduction to Psychology, 4.0.