Consumer Demand for Credit Card Services

Daniel Grodzicki, Alexei Alexandrov, Özlem Bedre-Defolie, Sergei Koulayev

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


We apply a demand-based approach to study consumer behavior in the credit card market. Using a national database of U.S. card accounts, we find consumers internalize both rates and fees when making purchasing, borrowing, and late payment decisions on their card. Moreover, price effects broadly align with a rational model of card use. An exception is less borrowing in response to declining late-fees among subprime consumers. Extension of the rational model based on “focusing theory” explains this behavior. It also implies substantial indirect benefits of the CARD Act’s late-fee cap from subprime users’ re-focusing toward reducing their debt.

Original languageEnglish (US)
Pages (from-to)273-311
Number of pages39
JournalJournal of Financial Services Research
Issue number3
StatePublished - Jun 2023

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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