When money is short, credit cards last to get paid, poll finds
Americans still don't want to talk about credit card debt
A majority of Americans say they would pay their credit card bills last if hit with money troubles -- a reflection of the difficult times ahead for credit card companies hoping to collect on billions in outstanding credit card debt.
According to a new CreditCards.com poll, when finances are tight, nearly six in 10 people (59 percent) would pay their credit card bills last. A majority (52 percent) would pay the mortgage first and about four in 10 (38 percent) say they would pay for utilities (gas, electricity and water bills) before paying other obligations.
The scientific poll of 1,004 adults was conducted Dec. 12-15, 2008, by GfK Roper Public Affairs & Media by telephone using random digit dialing. The margin of error was plus or minus 3 percentage points. (See poll methodology.)
The results appear to bolster, at least in part, credit and banking industry analysts' predictions of rising credit card delinquencies and defaults in 2009. Employment and income are the major factors affecting ability to pay bills and repay loans. Job losses during the economic recession will continue to affect many borrowers' ability to pay everything from rent and mortgages to utility and credit card bills, financial planners say.
Fitch Ratings this week reported cardholder payment rates slowed in December 2008 to the lowest level since mid-2004. Charge-offs -- when banks write off credit card debt as uncollectible -- are also steadily climbing toward four-year highs in the economic downturn.
"Consumers continue to struggle amid a rapidly deteriorating employment situation and from declining property values and other measures of wealth," Mike Dean, Fitch's managing director, said in a press release.
The CreditCards.com poll conducted in September 2007 showed similar payment priorities: For a majority of people (54 percent), mortgages were the first bills paid, followed by utilities (34 percent) and credit cards (6 percent).
The December 2008 poll also found that a long-held stigma remains for many Americans. They are reluctant to talk openly about credit card debt. Given a list of 12 potential things to discuss during conversation with a person they just met, people were least likely to talk about credit card debt. Nearly 81 percent were somewhat or very unwilling to discuss the topic, putting discussing of credit card debt in a statistical dead heat with discussing details of love life. Nearly 81 percent were somewhat or very unwilling to discuss those intimate details.
The taboo topics at the top of the list of things that people say they are very or somewhat unlikely to talk openly about with someone they just met were:
- The amount of credit card debt (81 percent).
- Details of your love life (81 percent).
- Your salary (77 percent).
- The amount you pay for your monthly mortgage or rent (72 percent).
- Your health problems (62 percent).
- Your weight (50 percent).
- Your political views (42 percent).
- The death of a loved one (39 percent).
- Your views about religion (34 percent).
- Your age (24 percent).
- The price of a tank of gas (9 percent).
- The weather (5 percent).
Despite heightened public awareness of debt problems on both Wall Street and Main Street America, not much has changed in the past six months. The December 2008 poll results mirror a CreditCards.com poll asking the same question in June 2008. Credit counselors and financial experts recommend talking about financial problems as an important first step in getting out of debt and facing financial woes.
The survey was conducted from Dec. 12-15, 2008, by GfK Roper Public Affairs & Media on behalf of CreditCards.com, via random digit dialing phone interviews with 1,004 interview subjects. Interviewees were approximately split between males and females ages 18 and over, with 525 females and 479 males surveyed. The raw data were then weighted by a custom designed computer program that automatically developed a weighting factor for each respondent, employing five variables: age, sex, education, race and geographic region.
The total margin of error on weighted data for the full sample is plus or minus 3 percentage points at the 95 percent confidence level.
To comment on this story, write to Editors@CreditCards.com.
See other CreditCards.com polls: People scale back card use in changed economy, Credit card debt the new taboo topic, Medical debt can wipe families out financially, Millions will borrow to pay '08 winter heating bills, Gas prices will make '08 economy sputter, Snooping and arguments go along with joint credit, Type of credit card brings neither pride nor prejudice
- When comparing card offers, do a little surfing first – Sign-up bonuses, 0 percent interest periods and even interest rates can vary, sometimes by a wide margin ...
- 7 hot spots for credit card theft and how to cut your risk – Seven places and ways your credit card info may be stolen include leaving your plastic in the open in your car and phishing (smishing and vishing) scams ...
- One credit card for everything: Pros, cons and tips to make it work – Using just one credit card for everything can have pros and cons. Here's how to make the best out of having a single card in your wallet ...