Increasing number of customers sidelining mortgage payment for credit card dues

An increasing number of the people in the United States are willing to sacrifice their home and the various things in it to pay off their outstanding credit card bills. The willingness of customers to sacrifice their homes to pay off credit cards shows the change in the thinking pattern of consumers after being through a terrible financial crisis in the recent past. Before the onset of the recession, majority of the consumers gave prominence to purchasing homes in order to ensure a roof over their head. However, the onset of recession led to piling up of dues not just on mortgages, but also credit cards.

Now, with the recession fast becoming a thing of the past, Americans are left with the choice of either paying off their mortgages first or their credit cards. Undoubtedly, most of them are willing to pay off the latter and let go of their house if need be.

As per the statistical data available from TransUnion, one of the three main credit bureaus in the country, the percentage of people paying off their credit card debts and defaulting on their mortgage loans continues to remain above the normal range despite economic recovery in sight.

Nonprofit credit education firm, CredAbility’s Executive VP, Mark Cole, said that this is an apt logical response of any person going through financially distressing situations. During the recession, these people did not have a nest egg and hence had to depend on their credit cards to take care of the monthly expenses.

According to the current payment hierarchy, homes have transformed from being assets to liabilities. Also, the consequences of missing a mortgage payment are not as severe and the process of foreclosure can be extremely cumbersome and time consuming, sometimes running into months. As compared to this, the credit card can be more useful since it helps in taking care of the current need for food and other utilities. In the past many people bought a home not because they needed it, but because the banks were very lenient while offering home loans. Therefore, most of them also lack the emotional bonding with their home. It does not make a lot of difference to such people if banks decide to relinquish their property and put it up for sale. In fact, a number of people who have stopped making their mortgage payments more than a year ago have not received any call from their lenders asking them to pay up their dues. Considering all these aspects, customers are trying to stay current on their credit cards as compared to mortgages.

Increasing number of customers sidelining mortgage payment for credit card dues

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