When bills must go unpaid now, credit cards are at the top of the list, a Federal Reserve survey finds. That changed during the recession, when credit card bills were paid because they were viewed as a financial lifeline.
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That’s because some had come to think of their mortgage as a lost cause, while keeping a credit card in good standing was their lifeline for day-to-day expenses.
According to the Federal Reserve Board’s latest Survey of Household Economics and Decisionmaking, however, Americans’ collective bill-paying hierarchy appears to have fully reverted to its pre-recession norm, with credit card payments back to being last in line.
The Fed found that of those surveyed, 22 percent expected they would forgo payment on some of their bills during the month of the survey. Within this group, approximately one-fifth of Americans, almost half (49 percent) said their credit card would go unpaid or only partially unpaid that month.
Meanwhile, the percent of payment-deferring respondents who said their mortgage bill would go unpaid numbered only 17 percent, about a third of those who said they’d forgo their full credit card payment.
In between credit cards and mortgages were phone and utility bills, which 27 and 26 percent, respectively, said they would leave at least partially unpaid that month.
Though auto and student loans might appear to be receiving higher priority than mortgage payments, at 14 and 10 percent non-payment rates, it’s important to note that a smaller share of the U.S. population has these obligations in the first place, so fewer consumers would report deferring them.
The Federal Reserve Board has conducted this survey annually for five years, with the latest findings detailed in its Report on the Economic Well-Being of U.S. Households in 2017. Including responses from over 12,000 U.S. adults, the census-representative findings were released in late May 2018.