Have economic times turned horribly bad for you?
Do you find it harder and harder to make your monthly payments?
Have you recently been laid-off or is your job on the rocks?
Unemployment rates affect the number of credit card delinquencies, of course. But, you might be surprised (or not) at the number one cause for credit card delinquencies.
The housing crisis
As home prices continue to plummet across the nation, the number of credit card delinquencies has hit record highs. Let’s look at an extremely common situation that is plaguing American families…
Dad has been laid-off from his job and Mom is a stay-at-home mom who does not bring in any income. The family is working with the bank to keep their home, but the amount of unpaid mortgage payments keep piling up. The car payment is due without any way to pay it.
How can the family keep food on the table?
The credit card
However, the family doesn’t have any way to make the minimum credit card payment.
So, what debt gets paid dead last?
Credit card debt
Statistics show that American families are less concerned with making credit card payments than they are with making mortgage payments or car payments. When Americans are forced to prioritize their bills (due to any unforeseen circumstance such as a layoff, change in employment status, disability, death, etc), the order in which they get paid are always as follows:
The electricity bill
The grocery bill
The car payment(s)
How can a society that places so much emphasis on credit card living be so negligent to pay the credit card bill?
The fact of the matter is that American families can still continue to survive if they don’t pay the credit card bill. They can’t survive for very long without a home. They can’t survive for very long without electricity. They certainly can’t survive without food.
The number of credit card payments that were more than sixty days late rose more than 3.75%. The number of charge offs during the same rose to 7.5%.
What exactly is a charge-off?
It is the debt that a creditor deems completely uncollected.
The crash of the housing market has prevented American families from paying their mortgages, their car payments, their electricity bill, the food bill…let alone the credit card payment. The housing market needs to be saved before the number of credit card delinquencies catches a break.