Strapped for Cash: Should You Pay Your Mortgage or Your Credit Card?

The current economic situation and persistent unemployment mean that an increasing number of people are facing a difficult decision: Pay the mortgage or make the credit card payment? This can be a tough situation, since you may want to meet all of your obligations. However, when it comes to making this decision, it is a good idea to consider the fact that your mortgage lender can take your house if you can't pay; your credit card issuer can't.

Secured vs. Unsecured Debt

Your mortgage is secured debt, which means that your home is collateral. If you miss enough payments, the bank can take your house back. Your credit card is unsecured debt. The credit card issuer takes a risk when approving the debt, and that means that if you don't pay, the issuer has fewer options. You can be sued for what you owe, but the creditor can't seize your property outright like a mortgage lender can.

In the end, it's probably best if you pay your mortgage before making your credit card payment, especially if keeping your house is important to you. Any time you miss a debt payment, your credit score will be impacted. The same is true if you only make a partial payment, whether it's to your credit card company or to your mortgage lender. If you are trying to save your home, you would be wise to keep the mortgage lender happy by doing what you can to make mortgage payments -- you won't lose your place to live if you don't pay your credit card issuer.