Decoding the consumer payment hierarchy in the United States

The world changed drastically in 2020 as we grappled with the economic impacts of the COVID-19 pandemic. Changes in financial situations and stay-at-home orders caused a temporary — and in some cases, longer-term — shift in how consumers prioritize their payment obligations. When consumers can’t meet their financial obligations, they make decisions about which loan product they pay first. We call this the consumer payment hierarchy.

The payment hierarchy is not about understanding trends in delinquency for a single product. Instead, it analyzes how consumers are rank ordering their payments, particularly in times of financial strain. Under the analytic approach used in this study, if consumers with credit cards and other products in their wallet default on credit cards at lower rates relative to other products, they are prioritizing their credit card payments.

In our study, we identified four trends in the payment hierarchy across the globe:

  1. The pandemic spurred shifts in the delinquency spread between cards and personal loans


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