One in 4 credit card users had the money to pay off debt — but didn't

About 23 percent of credit card customers carried card debt despite having enough in their deposit accounts to pay it off, a new study has found.

On average, customers earned just 15,000 won ($11) a year in deposit interest while paying around 250,000 won in credit card interest — a net annual loss of roughly 230,000 won.

A joint research team from Princeton University, the University of Chicago and Stanford University published the findings in PNAS Nexus, Volume 5, Issue 8. The team drew on 38 months of transaction records from Australia's Commonwealth Bank and a field experiment involving 125,328 customers.

The research team focused on what they called "co-holding" — keeping money in low-interest deposit accounts while carrying high-interest credit card debt.

The team tracked the transaction histories of 2,307 customers over 38 months. At the median, customers were in a co-holding state for 23 of those 38 months.

More than a third of customers had enough in their accounts to pay off their card balance in full and still have money left over.

The pattern could not be explained by emergency savings being locked away, lingering old debt or dormant accounts. In practice, deposit balances fluctuated by an average of 23.4 percent month to month, while card balances moved by 16.9 percent — indicating that customers were actively moving money in and out of their accounts while continuing to make new card purchases.

To test whether customers simply lacked awareness, the research team divided 125,328 participants into three groups.

The first group received no message. The second received a notification when opening the bank app, telling them they had enough in deposits to pay off their card debt and that each repayment would reduce their interest burden.

The third group received a more detailed notification spelling out the math: paying off $100 would save $20 a year in interest, while leaving that money in a deposit account would earn just $1.

The results showed little difference. Customers who received a notification repaid an average of 1.41 million won, compared with 1.39 million won among those who did not — a gap of 1.4 percent that was not statistically significant.

The notifications reached 83 percent of participants; 35 percent opened and read them, and 5 percent navigated to the transfer screen. While the notifications prompted customers to make repayments more frequently and to pay above the minimum more often, the total amount repaid remained unchanged.

The research team also conducted a survey to better understand why customers behaved this way.

When asked whether they knew they could save money by using their deposits to pay off card debt, 76 percent said they already did. Only 7 percent said they were unaware.

The survey results contradicted the conventional view that co-holding stems from inattention or a lack of information. Customers were deliberately leaving debt unpaid even though they knew they had the funds to cover it. The team noted, however, that the data alone could not determine which explanation was correct.

The researchers suggested that customers may have reasons of their own for maintaining the arrangement despite the financial cost — such as the psychological comfort of keeping a cash buffer, or a tendency to mentally separate savings from debt.

The team acknowledged limitations: the experiment ran at a single Australian bank over one month, and the notifications were a light-touch intervention capped at two per customer.

Meanwhile, the team found that co-holding customers were nearly twice as likely to be in arrears as those who did not co-hold.

DOI: 10.1093/pnasnexus/pgag256

Rafael M Batista, Ella Mao, Abigail B Sussman, Neale Mahoney, Jessica Min, "Disclosing the costs of co-holding liquid assets and high-interest debt has limited impact on behavior," PNAS Nexus, Volume 5, Issue 8, August 2026, pgag256.