Gathergood, J., Sakaguchi, H., Stewart, N., & Weber, J. (2017). Learning, liquidity and credit card fees. Available at SSRN:

Declining penalty fees and charges on financial products are often interpreted as evidence of consumers learning from experience. Using data from a quarter of a million new credit card openings, we investigate whether the observed decline in fees is attributable to learning or other factors. We show the decline in late payment fees is entirely explained by some consumers switching to automatic payments after forgetting to repay once. More sophisticated consumers are more likely to make this switch, thereby insuring themselves against future forgetting. But less sophisticated consumers continue with manual repayments and incur higher future fees. However, the decline in some fee types is not due to learning. Cash advance and over-limit fees fall over time due to time-varying liquidity constraints, which are concentrated around the time of account opening.