More consumers are choosing to pay credit card debts while letting the mortgage slip, helping push credit card delinquencies to their lowest point in 17 years, financial services and risk management firm TransUnion said.
Historically, Americans protected their house payment and were more apt to be delinquent on credit card payments, said Charlie Wise, the company's director of research and consulting. But crashing home values and desperation have caused that to flip since 2008.
Consumers are making tough choices based on which asset gives them what they need in tough times.
"Consumers are protecting their credit cards. It gives them financial flexibility," Wise said.
The number of consumers current on credit card payments but delinquent on mortgages was 4.3 percent in 2008 but rose to 7.4 percent in 2010.
Those delinquent on credit cards but current on mortgages fell from 4.1 percent in 2008 to 3 percent in 2010.
The shift in consumer attitude is not surprising, said Dan Immergluck, a professor of city planning at Georgia Tech and an expert on foreclosures. More people under foreclosure realize and accept they are losing their homes and so choose to protect their remaining financial tools.
Some people in financial trouble are living on their credit cards, which makes them a necessary lifeline, he said.
Immergluck said he does not think the payment trend shows evidence of a sea-change in people's valuation of homes, but rather reflects hard-nosed financial choices made by consumers.
A Fannie Mae survey of homeowners shows they do have lower expectations of seeing home values increase, but they still value ownership, he said.
The percentage of U.S. credit card holders who are 90 days delinquent on payments fell to .6 percent earlier this year, the lowest in more than a decade. TransUnion expects the rate to stay at around .7 percent for the year and remain stable in 2012.
Georgia's credit card delinquency rates were slightly higher at .89 percent earlier this year, but the company expects that to decline to about .74 percent by 2012. In 2003 delinquency rates were 2.28 percent.
That compares with Georgia's 60-day delinquency rate on mortgages, which stood at 6.74 percent for the year, and peaked in 2009 at 8 percent, TransUnion said.
Wise said the slowing in home foreclosure rates is because of some stability in the economy, slight increases in employment and a slowing of the foreclosure process this year due to problems discovered in mortgage documents across the country.
"We hope there will be a rebound in 2012," he said.
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