Disclosing the costs of co-holding liquid assets and high-interest debt has limited impact on behavior

Abstract

Abstract

Abstract Why do consumers simultaneously maintain low-yield liquid assets and high-interest revolving debt? This behavior, known as ``co-holding,'' affects 23\% of credit card users in our sample from a major international bank and costs the typical co-holder hundreds of dollars annually in unnecessary interest charges. Our analysis of 38 months of detailed banking records reveals that co-holding is remarkably persistent, with typical co-holders maintaining this behavior for most months observed. Our analysis also reveals that co-holding is not a static financial position: co-holders regularly deposit and withdraw from asset accounts while simultaneously making new credit card purchases. To test whether co-holding could be addressed through information disclosure, we conducted a large-scale field experiment (n = 125,328), providing clear information about co-holding behavior and its costs. Customers received targeted messages through their bank's mobile app, where they could easily transfer money from assets to pay down debt. Despite sufficient power to detect economically small effects, we found no meaningful changes in debt repayment amount, though customers did respond in other ways---making more frequent repayments and paying above required minimums. These results challenge explanations based on limited attention or information gaps and suggest that simple information disclosure, even when carefully designed and delivered through trusted channels, may not effectively address costly financial behaviors.