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03/02/2010 -
Are credit cards more important than mortgages?That's what recent data would suggest, fortunately for businesses that count credit card processing among their merchant services.
A study released Wednesday by credit research firm TransUnion found that the majority of consumers pay their credit cards before paying their mortgages, accelerating a trend that has been seen since the first quarter of 2008.
TransUnion calls this a "new payment hierarchy."
"The implosion of the mortgage industry over the last 24 months, the resetting of adjustable-rate mortgages and the weak job market have all come together to redefine how consumers are managing their finances and meeting (or not meeting) their credit obligations," said Ezra Becker, director of consulting and strategy in TransUnion's financial services business unit.
The study's author, Sean Reardon, told Reuters that the reason for this surprising priority shift may be because paying a credit card bill gives consumers more "monetary leeway" in their daily activities.
"You cannot buy groceries with your house," Reardon told Reuters.
As this trend is expected to continue at least as long as the recession's effects linger, merchants may find that their credit card processing activity remains elevated.
