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People Paying Credit Cards Before Mortgages

May 13, 2011
Plain English Version

Americans are choosing to pay their credit card debt before they make their mortgage payments.

A new study says the number of Americans who default on their mortgages, but pay their credit card bills is rising. More than half the people not paying their mortgage are paying off their credit cards.

The report concludes credit cards are essential to meet current needs. Houses have become liabilities. Credit cards also replace savings to make immediate purchases. Home foreclosures take a long time. Credit cards are useful for food and utility bills.

Experts say this is the wrong way to look at the problem. Losing a home can be a financial disaster. It can hurt a family for years. Credit card debt is simply annoying.

In fact, a survey said 91 percent of consumers would pay their mortgage before their credit cards. The situation for subprime homebuyers is different.

Another study said 30.4 percent of subprime households were behind on their mortgage payments but current on their credit card payments. Only 12.3 percent were late on their cards but up to date on their home loans.

Experts are not sure paying credit cards first is a trend or just a response to current economic conditions.

The Washington Post

 

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