Floridians prioritize car and credit card payments over mortgage payments

With unemployment still high, personal bankruptcies continuing to rise, and the housing market remaining in a downward spiral, more individuals are changing the way they pay their bills. According to TransUnion, people are likely to pay their car payments before paying their credit card or mortgage payments, meaning that credit card and mortgage delinquencies are more common these days than car payment delinquencies.

Specifically, the national average on 60 day delinquencies for car loans is .81%, while the 90 day delinquency average for credit cards is 1.10%. Although these are relatively small percentages in this current economic situation, the most staggering number is the delinquency on mortgages at 6.25%, almost six times higher than the other loans.

Not surprisingly, the states that have been hardest hit with foreclosures, bankruptcies, and unemployment also have the most delinquencies. Nevada, which boasts the highest number of personal bankruptcy filings in the country, also has the largest number of mortgage delinquencies at 14.53%. The credit card and auto delinquencies are also higher than the national average, at 1.98% and 1.16% respectively. Florida is not far behind, with its mortgage delinquency rate at 13.34%. Florida, however, has better statistics for its auto and credit card delinquencies, at .99% and 1.47%, respectively.

Why is this trend in the way people make payments occurring? According to the Director of Consulting and Strategy for TransUnion, “Consumers recognize that their credit cards are their primary purchasing vehicles in this economy.” Using this logic, it appears that people, who are unemployed, want to maintain a good relationship with their credit card companies as they find themselves using these same cards for everyday necessities, such as food, paying utilities, clothing, and gas. Additionally, people find that they need their cars to go to jobs or to interviews for a job, and as such, do not want to have their vehicle repossessed. Individuals, in these situations, cannot afford to have these cards or cars taken away, as they provide for their basic needs. Their homes, however, do not hold the same weight.

Aside from individuals needing to use their credit cards and vehicles, they are also reluctant to pay their mortgages on time because of the lack of equity in their homes. People can see the value in their credit cards, paying for food, and their cars, getting to them work, but they cannot see value in a home, in which they owe 20% more than what the home is currently worth. Instead, individuals would rather have a home foreclosed on and continue to keep food on the table. Additionally, more and more individuals care less about a foreclosure remaining on their credit report for seven years. They simply rationalize that they will not own a house for a couple of years and rent instead. Until the housing markets rebounds for a number of consecutive months and unemployment reverses, it is likely that this trend will continue and even increase. It is not hard to understand, however, as people without jobs simply want to take care of their family, food, clothing, etc., and credit cards supply them with that opportunity.