Consumers more likely to pay credit card than mortgage
The economic downturn has forced many consumers to make difficult financial choices, one of them being the choice to make a credit card payment or a mortgage payment. Historically consumers would protect their mortgage while letting a credit card fall delinquent if forced to make the choice, but a new trend shows that consumers are choosing to pay off credit debt at an increasing rate.
A study released by Chicago-based credit bureau Trans Union found that 6.6% of consumers were delinquent on mortgages but current on credit card payments in the third quarter of 2009 but that only 3.6% of consumers were delinquent on credit card payments while remaining current on mortgage payments.
Sean Reardon, author of the study, attributed this shift to a “perfect storm” of lowering housing prices and rising unemployment. Consumers know that they may be losing equity on a mortgage but they need to stay current on credit cards since they may be living on them for day-to-day expenses.
