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Card bills before mortgage

By Lucy Lazarony · Bankrate.com
Monday, April 4, 2011
Posted: 10 am ET

Americans are putting their credit card bills first.

Consumers are paying their credit card bills before they pay their mortgages, according to a study from TransUnion, one of the major credit reporting agencies.

The percentage of consumers who are 30 days late on their mortgages and current on their credit cards rose to as high as 7.4 percent in the third quarter of 2010, before dipping to 7.24 percent in the fourth quarter of 2010, according to TransUnion.

The first sign that Americans were prioritizing credit card bills over mortgage payments occurred in the first quarter of 2008, when 4.3 percent of consumers were 30 days late on mortgage payments and current on their credit cards.

This consumer payment trend of putting credit cards before mortgages has continued ever since, according to TransUnion. This trend is most pronounced in California and Florida, two states greatly impacted by the mortgage crisis.

Within California, the percentage of consumers delinquent on their mortgages but current on their credit cards increased from 3.5 percent in the third quarter of 2007 to 10.2 percent in the fourth quarter of 2010.

In Florida, the percentage of consumers delinquent on their mortgages but current on their credit cards increased from 5.1 percent in the third quarter of 2007 to 14.5 percent in the fourth quarter of 2010.

The latest national study from TransUnion on this topic was conducted on consumers that had at least one credit card and one mortgage, and examined 30-day credit card and mortgage delinquency data between the third quarter of 2006 and the fourth quarter of 2010.

The percentage of consumers who are delinquent on their credit cards and current on their mortgages decreased to its lowest level ever -- 3.03 percent -- in the fourth quarter of 2010. This rate had been at 4.1 percent in the first quarter of 2008.

"Consumer preferences are evolving in this new post-recession environment, and TransUnion's payment hierarchy study provides a glimpse into how consumers are prioritizing their payments," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit in a press release.

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