The Challenge

Over-indebtedness is a growing challenge in digital credit markets worldwide, particularly among credit card users who consistently fail to pay their full balances. For instance, in the Dominican Republic, 45 percent of credit card users roll over debt repeatedly. These challenges with debt can carry significant negative impacts, including higher financial vulnerability for consumers and slowing the economy. As financial education programs and regulations can be expensive to implement at scale, policymakers require a low-cost alternative to ensure that consumers are repaying their debt.

Behavioral “nudges”---interventions that target individuals’ psychology—offer an approach that may be able to promote repayment. Research suggests that many barriers to overcoming debt are not just economic but behavioral. This includes forgetting payment deadlines, underestimating the long-term costs of compounding interest, or feeling overwhelmed by debt and delaying taking action. Indeed, IPA evidence from other domains such as civil service compliance suggests that timely, well-crafted messages can help people improve their decision-making. Can these messages translate to the financial inclusion sector and serve as a cost-effective and scalable model for credit card debt reduction in the Dominican Republic and similar contexts?

The Evaluation

In partnership with IPA and SB, researchers are conducting a randomized evaluation in the Dominican Republic to measure whether nudge messages improve consumers’ credit card debt repayment. Messages will be sent through SMS and push notifications on SB’s ProUsuario app and have been specifically designed to address behavioral barriers that hinder timely repayment.

The intervention involves approximately 80,000 active ProUsuario users who have had revolving credit card balances for at least three months. Participants will be randomly assigned to the following groups, balanced by number of credit cards and gender:

• Comparison group: Users will not receive any messages.
• Fixed nudge: Users will receive the same behavioral nudge once per month throughout the intervention period.
• Alternating nudges: Users will receive one message per month, alternating between different behavioral nudges. Message content will vary across months—for example, emphasizing either debt reduction or interest/cost salience.
• Combined nudge: Users will receive one message per month containing a combined nudge that addresses both debt costs and interest costs in the same message.

The intervention will take place over a period of six months to evaluate whether repeated messaging leads to sustained behavioral change and actual debt reduction.

Researchers will collect administrative data from SB to measure indicators including total debt payment amounts, balances, missed payments, and behavior across multiple credit cards. They will also conduct a cost-effectiveness analysis to assess implementation costs relative to improvements in debt repayment, informing decisions about scaling the intervention.

Results

Results will be available in 2026.

Sources

Implementing Partner