Round up to save: Using round numbers to increase debt repayment and savings contributions (under review)


People tend to prefer round numbers when making spending decisions. How can we leverage the natural preference for round numbers to optimize monthly payments? We hypothesize that decision-makers will be willing to “round up” a monthly expense to contribute more money toward debt or savings accounts. Among 3,678 users of a financial technology platform, people were more likely to overpay their mortgage when it was presented as a round-up, rather than as an extra payment (Study 1). In a sample of 235 credit union members, 31% of participants rounded up their monthly loan payments to contribute to a separate savings account, with a marginal increase in participation when the total amount they could save by the end of their loan term was made salient (Study 2). These field experiments provide initial support for the utility of round-up appeals in accelerating debt repayment and increasing savings contributions.