Permanently Thinking Temporarily

Consumers are paying credit cards bills before their mortgages, but will the pattern continue?


Consumers would still rather stay in control of their credit card payments than pay their monthly mortgage bill, suggests a recent study from TransUnion, a Chicago-based credit management firm. Can being temporarily current on credit card payments lead to a more permanent financial freedom?

"We continue to see a significant divergence in the rates of consumers opting to pay their credit cards while going delinquent on their mortgages,” says Sean Reardon, the author of the study and a consultant in TransUnion's analytics and decisioning services business unit in a press release.

The study noted that this trend away from mortgages toward credit cards has been the case for several years.

"The new payment hierarchy has persisted for longer than many industry experts initially believed, and provides evidence that consumers continue to adjust their payment behavior in response to their economic and personal financial environment," says Reardon.

However, consumers seem to be getting more responsible with their mortgages. This quarter marked the first decline in the number of consumers who are delinquent on their mortgages and current on their credit cards, but the percentage of people in this position still remains more than 72% higher than it was at the beginning of the Great Recession, he says.

Consumers may be favoring credit card payments for a number of reasons these days. For one, the unemployment rate rose significantly during the recession and, while it has been paring back, remains high. Or maybe the trend is due to home deprivation value rising (and keeping you on call with the local handyman for those added expenses). Or maybe it really IS that this generation of up-and-coming socialites just can’t seem to make a decision that results in a responsible, 15-year plan.

When you add in various factors, including the never-ending national concern of financial uncertainty, is it really that far-fetched to believe that consumers are going to hold on to credit card credit – the only guarantee they’ve grown accustomed to? That they will undoubtedly continue to receive funds to spend from their chosen financial institution, if they continue to show the commitment to spend and pay more on time to their lender?

This begs the question: In order to sustain a permanent lifestyle, can temporary ignorance in fact be bliss when it comes to delinquent mortgage payments? Consumers seem to want to continue to secure the financial ability to provide themselves with the necessities that keep them in the game: food on the table, clothes to wear on that interview, a much-needed getaway to relieve the stress of not getting that second interview.

Why not? Temporary residence can seem permanently more important if consumers have taken care of paying for necessary, daily expenditures. Either way, if this is a growing trend to stay, how are credit unions adjusting in order to keep their members committed to borrowing, spending, and repaying responsibly?


April 16, 2012


  • This is great stuff! - I'm sharing with my entire team.