For the first time since 2008, people have changed the order in which they pay bills — but some experts say Americans still don’t quite have their priorities straight.
(MORE: Pay Down Debt or Save?)
"Auto loans have always been in first place,” says Ezra Becker, co-author of the study and vice president of research and consulting for TransUnion.
Becker says he expects that this trend toward prioritizing mortgages over credit cards will continue. Meanwhile, just a year earlier, consumers were favoring their credit cards over their mortgages: The 30-day delinquency rate in September 2012 for mortgages was 2.42 percent, while it was just 1.81 percent for credit cards.
Fallout from Great Recession
The study's authors think some of this might have to do with the severity of the housing crisis in the area, “with cities such as Los Angeles — which was greatly impacted by the mortgage crisis — experiencing much different consumer-payment patterns than cities such as Dallas, which had a more stable housing situation,” they write.
Mortgage and Utilities First
The reason: “If you get kicked out of your house, you have no roof over your head, nowhere to live,” she explains.
Karen Ramsey, president and founder of Seattle-based financial firm RamseyInvesting.com, also says that consumers who can’t pay all their bills should prioritize paying off their mortgage before their cars, since many people can take public transportation. The credit card is the lowest priority in this situation, she says.
(MORE: Truth About Free Credit Scores)
Try Negotiating Before Missing a Payment
Ramsey says that credit-card companies are often the most willing to negotiate a revised payment plan for cash-strapped borrowers. “You don’t always get your way with these things, but it’s worth a shot,” says Foss.
Catey Hill is a freelance personal finance writer, who has written for Next Avenue, The Wall Street Journal, SmartMoney, Worth, MarketWatch.com, Forbes.com and others.
Next Avenue Editors Also Recommend:
- 6 Ways to Negotiate Lower Doctor Bills
- How to Prevent ‘Cramming’ Fees on Your Phone Bills
- 4 Great New Tools to Manage Your Money
If so, thank you. Your financial gift helps us fulfill our mission of being an essential source of news and information for older adults. Just as important, your contribution demonstrates that you believe in the value of our work. We have a lot of exciting things planned in 2020 and we need your help to make sure they happen.
Haven’t given yet? Please make a gift today and help us reach our end-of-year goal — any amount helps. Thank you.
This article is reprinted with permission from MarketWatch.com. © 2015 Dow, Jones & Co., Inc. All Rights Reserved.