The weak economy and high unemployment have stretched the budget to the breaking point for many Americans. Struggling to decide which bills they can pay, a new study finds a surprising number of people will go delinquent on mortgage and credit card bills before lapsing on their monthly car loans.
Traditionally, American consumers have put a high priority on paying their mortgage on time, no surprise since losing one’s home is a life-changing experience. Credit card debt, with traditionally high interest rates, have followed close behind. But at a time when people may need a car more than ever simply to find a job, there has been a “reversal in payment patterns,” according to TransUnion Vice President Ezra Becker.
“With unemployment remaining high and real estate values remaining stagnant or further depreciating, consumers continued to pay their credit cards ahead of their mortgages,” said Becker, who is in charge of research and consulting at TransUnion’s financial services business unit. “However, the importance of their auto loans appears to have trumped even the value they place on their credit cards.”