More Americans using credit cards to stay afloat

Seven years in the credit-counseling business didn’t prepare Ann Estes for the alarming trend she began noticing last fall: As her clients’ mortgage bills became unaffordable, a growing number of them began paying their credit card bills before


Across the nation, credit counselors are reporting the same trend. Credit bureau analyses of consumer payment data show that financially squeezed borrowers have begun paying their credit card and car bills before their mortgages. That’s a striking reversal from the norm, one that reflects rising desperation. It suggests that some people essentially have given up trying to stay current with their mortgages and instead are focused on using credit cards to squeak by.

…When Phyllis Coleman’s mortgage payment jumped 26% last year, she began withdrawing cash from her credit cards to pay the mortgage. That worked for a few months, until Coleman, 50, of Fairfield, Calif., maxed out on the cards’ credit limit. She defaulted on her mortgage and now faces foreclosure on her home.

Eventually, she also had to stop paying her credit cards, which she’d been relying on to cover daily expenses. “It became too much,” Coleman says, “when gas started going up. I just got deeper and deeper” in debt.

Using credit cards for gas

Consumers with the least financial resources are pressured the most by a deteriorating economy and rising living costs. For this group, credit cards are simply a way to delay the financial pain.

In recent years, banks have ramped up card rewards, enticing more people to charge their purchases. As gas costs rise to levels many people can’t afford