Credit card cue effect : how mere exposure to credit card cues promotes consumers’ perceived financial well-being and spending

Abstract

Purpose: Extant literature has mixed results regarding the credit-card-cue effect. Some showed that credit-card cues stimulate spending, whereas others were unable to replicate the findings or found that cues discourage consumer spending. The purpose of this paper is to investigate how consumers’ sensitivity to the pain of payment affects their mental associations about credit cards and how the differences in credit-card associations moderate the credit-card-cue effect on spending, providing a possible explanation for the mixed results in the literature. Furthermore, this paper examines the role of consumers’ perceived financial well-being, measured by their perceptions of current and future wealth and their sense of financial security, in mediating this moderation effect.

Design/methodology/approach: An experimental study was conducted with a sample of 337 participants to test the hypothesized model.

Findings: After being shown credit-card cues, spendthrift participants had more spending-related thoughts and less debt-related thoughts, perceived of themselves as having better financial well-being, and consequently spent more than tightwad participants.

Originality/value: To the authors’ knowledge, this is the first study to investigate the direct link between an exposure to credit-card cues and perceived financial well-being, and one of the few to show evidence of the moderating effect of consumers’ sensitivity to the pain of payment on spending when credit-card cues are present. This study suggests that marketers may use credit-card cues to promote consumer spending, whereas consumers, especially spendthrifts, should be aware of how credit-card cues may inflate their perceived financial well-being and stimulate them to spend more.