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The tough economy is causing consumers to use credit cards as a source of cash instead of as a substitute for it, survey data released this week by Standard & Poor's suggest. In an online survey of 1,002 U.S. adults conducted in late August, 10% of respondents said they were taking out more cash advances on their credit cards than in the past. Some 14% of respondents said they sometimes are unable to pay off their credit card balances each month, while 6% said they always are unable to pay off their balances. Another 8% said they routinely make only the minimum payment required, and 8% said they always or sometimes pay less than the minimum required. Twenty-two percent of respondents said they have between $5,000 and $20,000 in credit card debt, while 3% said their credit card debt exceeds $40,000. In addition, 25% of respondents said they were at or near their maximum credit limits on their primary card, and 20% were at or near the maximum limit on their secondary card. Thirteen percent said that, over the past year, they have found it much more difficult to keep up with their credit card payments, while 25% have found it only somewhat more difficult and 10% said it was less difficult. Asked to prioritize the urgency of their household bills, 35% said they would pay their mortgage bill first, while 26% said they would pay their credit card bill first. "With the value of homes dropping, consumers are no longer able to refinance their credit cards into home equity loans," said David Wyss, S&P's chief economist. "As a result, we should expect to see the rise in balances and delinquencies continue."
