Magazine article American Banker

Card Bill Payment Trumps Mortgage

Magazine article American Banker

Card Bill Payment Trumps Mortgage

Article excerpt

Byline: Kate Fitzgerald

Certain effects of the economic downturn have begun to ease, but one recession-hatched trend persists: Cash-strapped consumers continue to show a preference for paying their credit card bills over their mortgages, TransUnion LLC said.

The Chicago credit bureau's study of 27 million credit records showed that last year when consumers were unable to meet all their financial obligations, they were more likely to fall behind on their mortgages than on their credit cards.

Although consumers' financial situations may be improving, their bill-payment hierarchy continues to buck pre-recession patterns, the study suggests.

In previous decades, consumers were more likely to default on credit cards before letting their mortgage payments fall behind, said Sean Reardon, a consultant with TransUnion's analytic and decision services group.

"When forced to prioritize, consumers have always ranked their securitized assets, such as their home or car payment, first," Reardon said.

But a reversal of the traditional payment hierarchy began to surface during the first quarter of 2008, Reardon said.

For the first time, the percentage of consumers who were keeping up with their credit card payments while delinquent on their mortgage payments surpassed the percentage of consumers who were current on their mortgage payments and behind on their credit card accounts.

When the payment hierarchy flipped approximately three years ago, "most analysts" predicted that the trend would end after the recession. …

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