Why consumers are paying down credit card before mortgage
Posted by Frugal on March 8th, 2010
Here is the article from Marketwatch.com, reporting consumer behavior is changing, putting credit card debt before mortgage. Why would anybody put the priority of unsecured debt over debt that is secured by the home & the roof over someone’s head? It is puzzling to all the bankers and people who only crunch out a meaningless FICO number.
The reason is extremely simple. Paying down minimum payment on credit cards will allow the continual usage of the credit cards to pay for food & bills. Paying down an up-side-down mortgage is throwing away good money. Besides, these stupid banks are still hoping for the impossible, for the housing prices to come back right away, and not willing to write off the loans. Or I should say the bankers just want to keep their jobs so that the bank will not be declared as insolvent, and overtaken by FDIC. In the meantime, the bankers continue to siphon off FDIC & US taxpayers’ money by paying big bonuses, and the unscrupulous housing speculators continue to enjoy totally free rent on the back of the entire financial system. Of course, it takes all the number crunching for FICO to realize this, and a gigantic financial losses for bankers to come to their common sense: no one in their own self-interest is going to pay down an under-water 100% or 125% LTV mortgage that is growing to 120% to 150% LTV mortgage.
By the way, if taxpayers don’t pay bonuses to AIG, and funnel all the bailout money to these bankers/fraudsters, we will lose all the top “talents” who are too greedy to even understand the above truth.
More related posts:
Digg it Del.icio.us Reddit Furl BlinkList Newsvine Yahoo MyWeb
March 11th, 2010 at 1:35 am
Been sometime since I last stopped by… but yeah, after reading your article which applies to me since my home is underwater, what do you recommend?
So my loan is an ARM 5/1 @ 5.875%, mortgage balance $550k, 2.5 years more to go.
Home purchased in June 2007 for $712k, with 20% down. I don’t pay PMI for my monthly repayments. 2010 County Assessor’s valuation is $550k which is quite accurate for properties in my area. My loan is not owned by Fanny/Freddie.
I looked at the Obama loan modification plan but I don’t fall into any category, and the Obama refi plan sounds like there is PMI costs added on.
What are my options?
Thx Frugal.
March 16th, 2010 at 12:08 am
It’s amazing how the top “talent” can’t understand this simple truth. I don’t own a home, so this doesn’t apply to me, but if I were underwater, I’d certainly prioritize my credit card bills in order to at least keep this lifeline open should times get even harder.
@Sadness: Have you considered approaching your bank? Then again, if your loan is current, they might not even want to listen to you. Go figure!
April 7th, 2010 at 5:30 pm
http://www.abercrombieofficial.org/
Abercrombie and Fitch is a great casual clothing brand in the United States that set off a global fashion cyclone. It’s today’s most popular brand among young Americans as well as one of the most fashionable brands for the
American college students.Womens Abercrombie Fitch is one of them. Founded in 1892，Abercrombie and Fitch is a century-old brand in New York. Such a kind of young, dynamic and innovative work that walks in the era of cutting-edge, is surprisingly as much as a hundred years of history. Not only that, in recent years, with a high profile, high-quality and ultra-fresh style, it also constantly spilled over from the United States and Canada, resulting in a new index for the world’s new fashion.