As the downturn in the economy deepens, U.S. credit card users are increasingly having a difficult time managing their personal debt according to the results of a new survey by Standard & Poor's about how American consumers use credit cards to manage personal debt.

With declining home prices and rising inflation, credit cards have solidified their place in consumers' wallets, although credit cards are being used as a source of cash rather than a substitute for it. The survey showed that 10% of Americans are taking out more cash advances on their credit cards than in the past.

The survey also showed U.S. credit card users are struggling under a burden of high credit card balances. One in five individuals surveyed indicate they are "sometimes" (14%) or "always" (6%) unable to pay their credit card and/or loan(s) balances each month. An additional 8% can only make minimum payment required and another 8% either always or sometimes pay less than the minimum.

In terms of the dollar value of balances carried by credit card users, 22% have between $5,000 and $20,000 in credit card debt, while 3% have more than $40,000 in credit card debt. When looking at their debt as a percentage of their available credit, 25% are at or near the maximum limit of their primary card with an additional 20% are at or near the limit of their secondary card. Over the past year, 13% of respondents have found it a lot more difficult to keep up with credit card payments, while 25% have found it somewhat more difficult. That compares to just 10% who said it was less difficult.

When asked to prioritize their monthly bills, 35% of respondents said their mortgage was the bill they would pay first while 26% of those surveyed said it was their credit cards.

"This survey bears out the change in consumer behavior we've heard about during the last 18 months. Homeowners almost always paid their mortgage first, now over a quarter of Americans say their credit card is the monthly bill with the highest priority," said David Wyss, Chief Economist of Standard & Poor's. "With the value of homes dropping, consumers are no longer able to refinance their credit cards into home equity loans. As a result, we should expect to see the rise in balances and delinquencies continue."

The findings of the study generally confirm what we are seeing in securitized card receivables. As we anticipated in our scenario analyses, losses have continued to increase in line with the economic downturn. However, thus far, S&P-rated credit card ABS have demonstrated more resiliency compared with other securitized asset types. Relative ratings stability in card ABS to date may be explained by the fact that about 85% of S&P-rated outstanding card ABS are backed by assets originated by the top 6 large, well capitalized, highly rated U.S. banks. We believe these lenders are experienced in managing portfolios through multiple business and economic cycles. Additionally, there are few S&P-rated pure non-prime pools left in the market due to consolidations and exits of non-prime card lenders over the past years.