Consumers Are Paying Their Credit Cards At The Expense of Their Mortgages

Given these tough economic times, many consumers are being forced to prioritize their bill payments because they simply don`t have the means to meet all of their financial obligations. In the past, Americans tended to favor making mortgage payments at the expense of their credit cards, preferring to protect their house payments while allowing credit card accounts to slip into delinquency. However, ever since 2008, that trend has reversed.

The Atlanta Journal-Constitution reports that according to Charlie Wise, TransUnion`s research and consulting director, consumers are evaluating their assets and protecting the ones that best provide them with what they need to weather the nation-wide economic downturn. And that asset is, according to Wise, not necessarily their home but their credit card, which affords them some flexibility financially.

In 2008, the percentage of consumers current on their credit card payments but late with their mortgage payments was 4.3% in contrast to 7.4% in 2010. The percentage of people delinquent with their credit card payments but up-to-date with their mortgages dropped to 3% in 2010 from 4.1% in 2008.

This attitude shift is not really all that shocking, according to foreclosure expert Dan Immergluck. He claims that many of the individuals undergoing foreclosure come to realize and accept the fact that they are losing their homes, which inspires them to do what it takes to preserve any financial tools that remain. The fact is that many people who find themselves in deep financial trouble rely upon their credit cards to live on which makes them an important lifeline for survival.

However, a recent Fannie Mae survey of homeowners reveals that expectations of seeing any increase in home values are low, but overall consumers still place value on home ownership.

The amount of credit card accounts in delinquency by 90 days or more dropped to the lowest point in over a decade earlier this year to 0.6%. TransUnion predicts that rate to fall near 0.7% for the year and remain stable throughout 2012.

Bryant Park

Bryant Park is a financial consultant for one of the companies listed on Wall Street. He writes on a variety of topics ranging from credit cards to different loans that can be availed by consumers. He holds a bachelor degree in Financial Services from Dartmouth College.