Nudging is a psychological term. It refers to the attempt to influence behavior by carefully selecting the choices that are presented to people.
The minimum payment amounts dictated by law on credit card statements sometimes create nudging in an unintended direction. The theory behind these laws is that, absent a mandatory minimum payment, many card holders will pay less (or nothing), thus building up huge interest charges that will overwhelm them. However, an academic study suggests that, among those who wanted to pay off only part of their bills, the minimum payment typically was well below what they otherwise would pay. These people, on average, paid 43% less than they would have in the absence of a minimum payment amount. This, of course, leads them to incur nearly twice as much in interest charges, the exact opposite of the law's intent.
