TransUnion (hat tip Calculated Risk) details:
A new study developed by TransUnion confirms that the "new" payment hierarchy -- where consumers pay their credit cards prior to their mortgages -- is continuing, with the trend occurring more readily than ever before.This response has been even more pronounced in areas that have suffered more on a relative basis (i.e. Florida and California).
"Conventional wisdom has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages," said Sean Reardon, the author of the study and a consultant in TransUnion's analytics and decisioning services business unit. "However, a recent TransUnion analysis has found that increasingly more consumers are paying their credit cards before making mortgage payments. This analysis reaffirms the results of a previous TransUnion study that examined data between the third quarter of 2006 and the first quarter of 2008."
These numbers are astounding.
Source: Transunion
Some insta-theories about drivers:
ReplyDelete* Credit cards, credit card rates and credit scores are now so necessary and punitive that they have pushed to the front of the line.
* Consumers have discovered that the mortgage holders react very slowly, while the credit card companies react really fast.
* Both of those are rational man-ish; so a third driver is shifting norms -- but I don't see why one flavor a debt would have a greater or lesser call upon one's normative behavior.
* Some large swath of consumers aren't in fact particularly attached to their home; i.e. they took to heart that it's only a transient investment.
Others?
personal banktuptcy law gives bank recourse to credit card debt dunnit? That's the reason you're getting the jingle mail....
ReplyDeleteCredit card companies are simply more aggressive on late payors...
ReplyDeleteSooner or later the myth will be exposesd and no one will give a shit about their FICO. Im over it and dont have a single thing financed anymore and never will again.
ReplyDeleteTyler Durden was right after all...