NEW YORK (AP) — The recession and its hangover may have turned bill-paying habits upside down. Cash-strapped Americans are paying off their car loans before they pay credit card bills and make mortgage payments, a study finds.
It used to be that Americans would pay their home loans first, then their credit card and car loans. After all, homes have been the most valuable possession for most people for decades, and nobody wanted to jeopardize that.
But TransUnion, a credit information company, studied the payment patterns of 4 million Americans with at least one car loan, one credit card and a mortgage and found a clear priority for staying current on the car loan.
Among Americans who were late on payments last year, 39 percent were delinquent on the mortgage while current on the car loan and credit cards, and 17 percent were late on credit cards while current on the other two.
Only 10 percent were late on the car loan while current on the other two.
"Today, most people need a car to get to a job or to look for a job, and that has made cars a priority," says Ezra Becker, the company's vice president of research and consulting.
When TransUnion first did the study in 2006, staying current on the mortgage was the priority: Only 3.6 percent of Americans were late on the mortgage and current on other payments. More people — 5 percent — were late only on credit cards.