Consumers are paying their mortgages first, again

Auriemma Consulting Group conducted an online survey of 509 U.S. adult credit card users in September 2011 regarding payment priorities. Payment priorities shifted from credit cards to mortgages; credit cards were the number one priority in 2009 and 2010, but moved to number three in 2011.

Highlights

When the responders were asked their top financial obligations,  83 percent said credit cards,  59 percent  said utility payments, and 51 percent said mortgages or rent.  Payment priorities did not match their financial obligations. When asked about their highest priorities, 77 percent of respondents selected mortgage payments as the first, 52 percent selected utility payments next and 38 percent selected credit cards as third. Compared to 2009, credit cards were the first priority, mortgages were the second and auto loans were the third. The percentages were not given by Auriemma for the 2009 survey.

When asked the top reason for not missing a credit card payment this year,  57 percent said avoiding late fees,  41 percent said maintaining a card with either a low interest rate or rewards points, and 35 percent said  they were concerned about the impact on their credit scores.

According to Bob Taglin, Auriemma director, “ In 2009, foreclosures were not an instant reality, and many consumers chose to pay down card debt first instead of pay into failed mortgages. Now those foreclosures are coming to fruition and are more likely to happen if consumers do not make mortgage payments. We agree that a large percentage of mortgages have already been written off, settling the market. Homeowners who got burned or saw others get burned have returned mortgage payments to #1.”

The key reasons for the changes were that consumers don’t want to lose their home and don’t want to be without utilities; credit card debt was less important in comparison.  Consumers have been paying down credit card debt; does this mean that credit card debt will be rising again?

Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.