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Study on overdraft fees / installment loans
Project
Project code: 2810HS034
Contract period: 25.08.2011
- 24.05.2012
Budget: 99,530 Euro
Purpose of research: Inventory & Assessment
This project aims at evaluating the availability, pricing and use of overdraft credit by different consumer groups. It will assess to what extent access and conditions of access are different with regard to the alternative, currently less expensive, form of credit which is the instalment credit. The iff, together with ZEW as subcontracter, will conduct expert interviews with consumer and provider associations, individual providers, and will analyse existing economic, legal and sociological literature to obtain an overview of existing problems related to overdraft credit for consumers. Further tasks of the research will include evaluating existing statistics (SAVE Study data) on consumer behaviour in relation to overdraft credit, and conducting a representative survey of providers to collect all necessary information on the characteristics of overdraft and overrunning product offerings, as well as instalment credit. The survey will not only provide details on specific consumer segments of the market, but will inform on provider behaviour, namely on how they treat consumers with existing overdrafts and on the recommendations they make, e.g. in communicating on less expensive product offers. With interest rates only one element of the total cost of credit, and risk-based pricing strategies for instalment credit common practice, analysis will take all conditions for different consumer groups into account when reaching conclusions about access, pricing, discrimination and provider behaviour. A final part of the study will be a legal analysis of the existing terms for adjustment of variable interest rates on overdraft credit, in relation to effectiveness, transparency and their future impact on interest rate development. The study's policy recommendations will include an analysis of possible legal options from information duties, anti-discrimination measures, interest rate restrictions, and other national and international propositions.
Section overview
Subjects
- Home Economics
- Communication Sciences
