Study: Consumers apt to pay off small debts before large ones

Perhaps in response to mounting consumer debt, Americans appear to be tackling small debts before large ones, despite evidence that suggests bigger payments are more economical. According to a study by the American Marketing Association and published in the Journal of Marketing Research, U.S. consumers put forth a "disproportionate amount of effort" to pay off their smallest debts first, instead of reining in their larger debts, which tend to have higher interest rates and are therefore more costly. The study's author assert that consumers feel smaller dues are more manageable and offer the impression that debts are being paid off. "The authors say understanding how consumers manage debt can help lenders develop tools that can help consumers get out of debt more quickly," a report summary points out. "For example, a credit card company, if so inclined, could draw attention to interest rates by highlighting the total dollar amount of interest that has accrued on the debt." This would be instead of the common practice of reserving interest rates accrued since the previous billing cycle to the small font at the end of a statement.