During the recession, consumers vaulted credit cards to number one on their list of bills to pay first. However, during 2011 consumer priorities shifted to paying mortgages first, utilities second and credit card payments third. The U.S. housing market crisis confuses many consumers, with good reason. Homeowners in the Miami area are not strangers to bankruptcy.
In 2009, consumers felt that credit cards should be paid first, before mortgage payments and auto loans. Fast forward to 2011, and consumer priorities made a shift. The Auriemma Consulting Group recently surveyed over 500 credit card users. Respondents noted that 77 percent designated their mortgage payments as their top priority, followed by over half who felt utility bills were the next most important payments. Only 38 percent felt that credit cards were their next priority.
The “fear factor” surrounding foreclosure and loss of homes is now the top priority of consumers. Although the housing crisis has yet to abate, homeowners are more focused on keeping their mortgage payments current. Unsecured loans, such as credit card payments, are not as important as they once were.
This priority is understandable. The housing and mortgage crisis of the recession forced many homeowners to view their mortgage loans as higher than the value of their depressed home values. While we still await a strong real estate recovery, home values appear to be stabilizing. Homeowners’ valuing their mortgage payments as a top priority is wise.
Relegating unsecured loans, like credit cards, to a lesser priority is equally reasonable. Bankruptcy protection, while troubling, is much less traumatic than foreclosure.
Source: Collections & Credit Risk, “Consumers Go Back To Paying Mortgage First, Credit Cards Third: Study,” Andrea McKenna Brankin, Nov. 11, 2011