Temporal dynamics of payment choices: Unraveling the interplay between time preferences and credit card utilization in Japan

Abstract

This study investigates whether the present bias influences the payment behavior of credit card holders in Japan. We hypothesize that credit card holders with present bias prefer to delay bill payment, even at the cost of accepting interest charges. To test this hypothesis, we utilize a dataset comprising 128,032 observations from a leading securities company. Our analysis reveals that a significant number of respondents indeed delayed credit card bill payments, suggesting a potential association with present bias behavior. Probit regression models further confirm the link between impatience, impulsivity, and credit card payment behavior. Specifically, impatience and impulsivity exhibit a positive association with credit card payments, indicating that impatient and impulsive credit card users are more likely to postpone payment, even when interest charges are incurred. The implications of this study extend to both credit card users and issuers, highlighting the influential role of impulsivity in the timely payment of bills.

Keywords

• Credit card debt
• bill payment behavior
• impatience
• impulsive
• time-consistent decision-making
• Japan