Numbers always tell a story and lately that tale is about how consumers are prioritizing their credit card payments, giving them importance even over their mortgage payments, according to a survey done by the credit information group Experian.
The top three cities showing progress in increased bankcard payments, in descending order since 2007, are Cleveland, San Antonio and Cincinnati. To make an even five are Dallas and Houston.
“In looking at the numbers, we’re seeing that even in the cities at the bottom of the list, consumers are meeting their bankcard payment obligations better than before the recession,” said Experian’s president of analytics, Michele Raneri, as reported by a Collections & Credit Risk article. “While the Experian data shows an overall improvement to these 60 day delinquencies, as much as a 30 percent improvement is seen in the key Texas cities, which is a positive sign in what has been a slow economic recovery.”
Credit Bureau TransUnion recently conducted a similar study that yielded similar results. Their credit card deleveraging analysis indicated that, between the first quarters of 2009 and 2010, consumers paid approximately $72 billion more for credit card payments, than for new purchases.
Borrowers are so determined to pay down their credit card debt, in fact, that they are doing so even before paying their mortgages. TransUnion discovered that during the recession, mortgage delinquencies climbed much more rapidly than credit card delinquency rates.
Ezra Becker, vice president of research for TransUnion, told USA Today that, in the past, consumers were more likely to pay their mortgages before their credit card bills, but the sharp decline in home values has caused some to rethink their priorities.
“If you bought your home for $300,000 and the house across the street is selling for $130,000, you have less motivation to pay your mortgage. You feel like you’re never going to get even,” Becker said.
In addition to borrowers reprioritizing their bill payments, some other contributing factors to the declining credit card delinquency rate is the fact that total consumer debt is less overall, credit is more difficult to obtain and card -issuing companies have been writing off balances that are six months past due as uncollectable, known as “charge-offs.”