CHICAGO (3/24/14)--Consumers are making mortgage payments before squaring away credit card balances for the first time since 2008, a TransUnion study released last week found.
But car payments remain miles ahead.
As of September 2013, the number of 30-day delinquencies for auto loan payments sat at 0.89%, almost a full percentage-point lower than both mortgage and credit card payments, which sat at 1.79% and 1.86% respectively (
The 30-day delinquency rate in September 2012 for mortgages was 2.42%, while it was just 1.81% for credit cards.
"One of the biggest impacts of the Great Recession to the credit system was its influence on consumer-payment patterns," said Ezra Becker, co-author of the study and TransUnion vice president of research and consulting (
March 21). "As unemployment rose and home prices cratered, increasingly more consumers were faced with financial constraints and had to make difficult choices--and many chose to value their credit-card relationships above their mortgages."
That trend appears to be shifting.
But while auto loans have been the most popular for consumers to pay back for more than a decade--a fact some believe is largely driven by the perceived inconvenience of public transit--financial planners say consumers should start ranking their cars below their mortgages as well.
Defaulting on a car loan might mean having to take the bus or the train to work. Defaulting on a mortgage, meanwhile, might put someone out on the street.
"You should pay your home, food and utilities before transportation," Kimberly Foss, founder/president of the Roseville, Calif.-based financial-planning firm Empyrion Wealth Management, told
, adding, "If you get kicked out of your house, you have no roof over your head, nowhere to live."