Homeowners are paying credits cards before their mortgage

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TransUnion, the third-largest American consumer credit reporting agency, has recently released a report showing more and more consumers are paying their credit card bills instead of their mortgages. The study revealed that Americans who are current on their credit cards but delinquent on their mortgage increased from 4.3 percent in the first quarter of 2008 to 6.6 percent in the third quarter of 2009.

“This goes against conventional wisdom and that has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages,” said Sean Reardon, author of the study and a consultant in the analytics and decisioning services business unit of TransUnion.

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Posted by Sharon


Comments (7)

Diane Osowiecki
Diane O and Friends - Benchmark Realty - Franklin, TN
Greater Nashville Real Estate

Maybe they are not paying their mortgage because it does not allow for a minimum payment option. 

Feb 16, 2010 01:27 AM
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Broker / Owner - Progressive Realty Corporation

As people continue to do strategic defaults on their homes or plan do a short sale, they would plan to keep their credit cards afterwards, so that would make some sense in a weird way.

Feb 16, 2010 01:28 AM
Mark Hall
Realty One Group Cascadia - Vancouver, WA
Homes for Sale Vancouver Washington

Lenders are more forgiving. Stop paying your mortgage and you can live in the house for months. Stop paying on your credit cards and they get cut off in a few weeks.

Feb 16, 2010 01:33 AM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

I'm with Diane, it's probably the minimum payments. Also if you are really short of cash you use your cards for everyday stuff and need it for basic things like on-line purchases or reservations.   

Feb 16, 2010 01:37 AM
Lyle Allen
DSN Satellite - Lansing, MI

Diane-- Minimum payment option! Now thats an idea. Could you imagine if that were possible when it comes to paying your mortgage.


Progressive Realty-- Definitely in a weird way.

Mark Hall-- You are absolutely Right! Why pay when you can live for free. lol (temporarily)

Feb 16, 2010 01:39 AM
RJ Baxter
Fairway Independent Mortgage Corporation - Lakewood, CO

I am seeing this more and more too and I think people are just saying "screw it" on their homes because so many are so far under water.

Feb 16, 2010 02:28 AM
Ronald Gillis
Southwest Florida Notaries (Mortgage Notary Signing Agent) - Port Charlotte, FL
CNSA Southwest Florida. Notaries, Port Charlotte, 941-7-NOTARY

On the surface, it seems surprising, but as a couple people pointed, after you think about it, it isn't so surprising after all.  Even more amazing, from my viewpoint, was learning how so very messed up our entire economic system really is and how very close we are to a total implosion.  I cross my fingers I don't see it in my lifetime, but fear it is right around the corner!  What shocked me more, was about fifteen months ago, I started researching foreclosures and various aspects of them.  I quickly found some 'experts' willing to admit 80% of foreclosures don't have the legal grounds to do so, yet in reality, it is almost all do not have the legal grounds.  Of course the banks and their attorney's find ways around that, but the bottom line is, they do not have the legal grounds to take the actions that they do.  To me, that is really backwards!

Feb 16, 2010 02:55 PM