A new TransUnion study finds that consumers with the ability to pay larger amounts than the minimum payment due on their credit cards have significantly lower delinquency rates on not only their credit cards, but also their auto loans and mortgages.
A new TransUnion study finds that consumers with the ability to pay larger amounts than the minimum payment due on their credit cards have significantly lower delinquency rates on not only their credit cards, but also their auto loans and mortgages. Consumers that made the minimum payment on their credit cards, or close to it, generally had higher delinquency rates.
Courtney Moran, executive director with the Cornerstone Credit Union Foundation, says she’s not surprised.
“If someone is consistently making only the minimum payment, more than likely they simply don’t have the financial resources to pay any more than that,” suspects Moran. “That is why it’s so important that families have access to resources and information that will help them better understand what responsible use of credit means, as well as how to manage the household budget, develop good savings habits, etc.”
Moran says the Foundation strives to support credit unions in their efforts to provide much needed financial education in their schools and communities. The Foundation not only provides grants, but also supports programs such as financial education reality fairs, retirement fairs, BizKid$, and the National Endowment for Financial Education’s High School Financial Planning program. The Foundation also collaborates with organizations such as Consumer Credit Counseling of Greater Dallas to offer monthly financial education webinars.
Luis Caballero, asset development manager for the El Paso Affordable Housing CUSO, says the Foundation has been a long-time supporter of the CUSO and its outreach efforts.
According to Caballero, the majority of the CUSOs clients are those seeking help to purchase their first home. It is when working with CUSO staff that many of these clients realize the impact poor credit management has had on their credit scores.
“Often times people who seek help from the CUSO, don’t necessarily realize what impact late payments or minimum payments have on their credit scores,” he says. “Education is the key to improving your financial well-being, and the CUSO works diligently to provide education to those in the community who seek it.”
The TransUnion study also found that, of the consumers who make payments on their credit cards, each month about four in 10 will pay off their entire credit card balance. Six in 10 of those making payments on their credit cards will only pay part of their remaining balance, and of those six consumers two will pay off only the minimum owed.