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If you’re wondering whether you can pay utilities with a credit card, the answer is likely yes. In many situations, you can break out the plastic and charge your electricity, wifi, phone, and other basic expenses.

That said, while using a credit card as your payment method may be the most convenient option for you, there are some factors to consider to make sure you are doing what’s best for your overall financial picture. While it can help you build credit, some bill processors may charge convenience fees. If you carry a balance on your credit card, you may end up paying interest as well.

In these ways, it may not be the most economical nor the most financially wise move to make. Read on to learn how to size up this situation and decide how to pay your utility bills.

What Bills Can You Pay With a Credit Card?

You typically can pay for most bills using your credit card. Some of these include:

•   Rent

•   Car insurance

•   Medical bills

•   Cell phone bills

•   Internet fees

•   Cable

•   Utilities (like electricity and sewage)

•   Subscription and streaming services

•   Taxes

Recommended: How to Build Credit With a Credit Card

Pros and Cons of Using a Credit Card to Pay Bills

Paying utilities with a credit card may seem like a great choice, there are some risks and downsides. Even if the answer to “Can you pay a utility bill with a credit card?” is yes, it may not be the best move. Consider these pros and cons before making your decision.

Pros

First, consider the benefits of using a credit card to pay your utility bill:

•   Potential to build credit score: Most credit cards report your payment activity to all three major credit bureaus — Experian, Equifax, and TransUnion. Paying consistently on time is one of the main factors that could help build your credit score.

•   Earn rewards: Using a cash back or rewards credit card to pay utility bills could help earn a percentage back on your spending or points toward, say, travel. Some cards may earn you higher rewards than others.

•   Help meet reward signup bonuses: Some credit cards offer a sign-up bonus if you can meet a certain spending requirement within a predetermined amount of time. Since you need to pay utilities every month anyway, charging it on a credit card can get you closer to the minimum spending requirements.

•   Convenient way to track spending: By putting your utility payments in your credit card, you can track it through your credit card statements each month, or when logging into your account online.

•   Easily dispute payments: Say you accidentally pressed the payment button twice, or there are some suspicious charges on your utility bill. Using a credit card means you can dispute it through your credit card issuer.

•   Can set up automatic payments: Depending on your utility company, you may be able to authorize automatic credit card payments. It could be helpful to ensure you pay utilities on time.

Cons

Next, review the potential disadvantages of breaking out your plastic to pay your utility bills.

•   Could negatively affect your credit score: Not paying your credit card bill on time could mean your score takes a dip. Plus, if you use your credit card for more than just utility payments, racking up a large balance could affect your credit utilization ratio (the percentage of available credit you’re using on revolving credit accounts). Higher credit utilization could signal to credit scoring agencies and lenders you need to rely on credit in your financial life. As such, could lead to negative affects on your credit score.

•   Potentially pay fees: Some utility companies charge a convenience fee, which is typically a percentage of your bill amount. In most cases, this fee is to help offset the processing fees charged by credit card companies. The cost may not be able to offset any rewards you earn. Fees can also easily add up if you regularly use your credit card for utility payments. Consider carefully whether this payment method is the best financial choice.

•   Possible interest charges: Aside from potential negative effects on your credit score, you’ll end up paying interest on any balances you carry from month to month. Often, the rates are in the double digits and higher which means you end up paying more overall for your utilities.

Recommended: Does Paying Utility Bills Build Credit?

Should You Pay Bills With a Credit Card?

Paying bills with a credit card can be a smart choice if you’re looking to build your credit and earn rewards. It does mean you need to be mindful of your credit behavior before doing so, or else you could face consequences such as excessive fees and interest charges.

For instance, perhaps you consistently pay your credit card bills each month (ideally the entire balance) and like the buffer you get between the grace period and when the payment is due.

In this case, you may be able to reap the benefits of using a credit card. However, if you get charged a convenience fee each time (and you have multiple bills to pay) and can only afford the minimum credit card payment, then you may want to reconsider using credit cards.

Whatever your choice, be sure to check the terms of your credit so you know when your due date is and other charges such as the interest rate and late fees.

How to Pay Utilities With a Credit Card

There are several options to pay utilities with a credit card, including directly through the utility company or through a third-party processing company. Each option typically asks you to sign up for an account online and verify information such as your address and other personal details. To pay, simply follow the prompts presented to you on the screen. There may be an option to select to charge your utility bills each month automatically.

Before pressing the “submit” button, look for information indicating any convenience fees you’ll pay in dollar amounts. Some utility companies also accept credit card payment by phone — call to check to see if this is an option for you, if you like. You want bill pay options to suit your needs, not just those of service providers.

Recommended: How to Pay Your Bills When You’ve Lost Your Job

How On-time Utility Payments Can Improve Your Credit

Utility payments aren’t directly reported to the three major credit bureaus, so they don’t necessarily have an effect on your credit. However, if you use a method of payment that does report to the credit bureaus — like credit cards — then it could have an effect.

For instance, if you consistently make on-time credit card payments, credit bureaus will report the positive behavior. Credit scoring agencies may look at this behavior more favorably and build your score as a result.

There are some credit bureaus that report your utility payments, but not all do. If you need the answer, you can look at your annual free credit report to learn more.

Tips to Paying Bills With a Credit Card

Whenever you pay by credit card, you’ll want to use your plastic responsibly and carefully. This holds true for paying utility bills by credit card, too. Here are some pointers.

•   Monitor your bank account to ensure there’s enough money when you pay your credit card bill, or you could risk overdraft or NSF fees.

•   Be sure to make at least the minimum credit card payment to prevent late fees and negative impact on your credit report.

•   Check to see whether any convenience fee is worth it or is offset by any rewards you earn.

•   Watch your credit utilization to prevent it from going too high.

•   Monitor your credit card transactions, and report any fraudulent activity.

The Takeaway

In many cases, you can pay for utilities with a credit card. But you’ll need to weigh whether this is the best move for you. It might be a way to conveniently take care of bills, earn rewards, and build your credit. Or it could lead to more credit card debt, interest payments, and convenience fees.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is it better to pay utilities with a credit card or bank account?

The choice to pay with a credit card or bank account depends on your financial situation and preferences. There are benefits to using a credit card such as earning rewards and tracking your payments, but you may have to pay a convenience fee for the privilege. And you could accrue more high-interest debt if you can’t pay the full balance each month.

Can I pay my mortgage and utilities with a credit card?

In most cases, you can pay your utilities with a credit card. Unfortunately, most mortgage companies don’t allow you to pay your monthly payments with a credit card. There may be third-party processing companies that allow you to do so, but you’ll most likely pay a convenience fee.

Is paying a bill with a credit card considered a cash advance?

No, paying a bill with a credit card isn’t considered a cash advance. However, some aspects of using payment apps, like PayPal and Venmo, may be treated that way.

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Photo credit: iStock/miniseries

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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If you’re considering a new credit card, frequent travelers may benefit from using a credit card with Priority Pass. Depending on the airport you happen to be in, you may be able to access lounges in the Priority Pass network. That could give you a welcoming lounge to relax, work, game, or even sleep in, plus food, drink, and other perks when traveling.

However, since there are different levels of access with Priority Pass, it’s important to understand what exactly the program offered involves, and whether it may make sense to become a member. Finding the right credit card can involve considering a variety of factors, so arm yourself with this intel.

What Is Priority Pass?

Priority Pass is a company offering a network of over 1,400 airport lounges, restaurants, and other services in 148 countries. Different features at qualifying airport lounges include free drinks and food, wifi, spa treatments, showers, and sleeping areas.

You can join Priority Pass with an annual membership, with different access tiers based on how often you travel. Some credit cards — typically luxury travel ones — offer free Priority Pass membership just for being a cardholder. That can make your time preflight or during a layover feel like a posh experience.

Depending on your membership, you may be able to bring guests free of charge into lounges.

Benefits of Priority Pass

There are an array of credit card rewards, such as cash back vs. miles. Here, a closer look at what you’ll enjoy if you get Priority Pass with your credit card.

Airport lounges within the Priority Pass network are popular with travelers because there are no requirements to access them other than being a member vs. some lounges that require you to fly with a certain airline on a specific class to gain access. Other benefits include worldwide access, luxury amenities, and complimentary food and drink. Here’s a closer look.

Airport Lounges

There are over 1,400 airport lounges worldwide, with many offering access within three hours of your flight. Though specific features differ between lounges, you can typically expect perks like complimentary food and beverages, wifi access, comfortable seating, workstations, and alcohol at select lounges. Some airport lounges may even allow you to pre-book or reserve lounge access so you’re guaranteed a spot when you arrive.

Restaurant Access

Priority Pass members also have access to a network of restaurants at select airport terminals. You will receive a credit to go towards a meal at participating restaurants, which can be a great way to save money on food. Depending on where you dine, there may also be promotional offers on occasion. Any amount you spend over the credited amount you will need to pay out of pocket. To receive the credit, you’ll typically present your Priority Pass card to a restaurant staff member and your boarding pass information.

Private Suites

How’s this for a perk? Select airports also offer private sleeping areas for you to rest, helpful if you’re between long haul flights. Most commonly, you’ll access through Minute Suites available at select locations. Members receive access to a private room which may include blankets, a workstation, white noise machine, and a daybed sofa if you want to take a nap.

Game Lounges

Some Priority Pass locations also offer lounges with gaming features. Called Game Space, these are locations where members can relax and play at various gaming stations with offerings for different ages. This might help time seem to pass a little more quickly before your flight.

Free Guests

Priority Pass members can take guests into lounges with them, often without an additional fee. Children are also allowed and may either count as an additional guest or be allowed in completely free of charge.

Recommended: How Do Credit Card Payments Work?

Why Get a Priority Pass Credit Card

Getting a credit card with Priority Pass access opens you up to a possible better travel experience than if you were to travel without lounge access. Many credit cards offer Priority Pass Select, a membership tier offering you access to certain airport lounges, restaurants and other experiences through the Priority Pass network.

You don’t need to pay an additional membership fee — your credit card’s annual fee typically should suffice. Priority Pass memberships can run up to several hundred dollars per year. If your credit card annual fee is around the same price, it may be worth it signing up for a card that offers Priority Pass as part of its rewards, especially if you can access other perks that more than offset the cost.

Examples of Credit Cards that Offer Priority Pass Membership

Credit card reward offers and perks can change quite often. Currently, these are among the credit cards that offer Priority Pass membership:

•   Capital One Venture X Rewards Credit Card

•   Chase Sapphire Reserve

•   Citi Prestige Card

•   The Platinum Card and Marriott Bonvoy Brilliant Card, both from American Express

•   Bank of America Premium Rewards Elite Card

Recommended: Guide to Automated Credit Card Payments

Pros and Cons of Paying for Priority Pass vs as a Priority Pass Credit Card Perk

There are both benefits and drawbacks to paying for Priority Pass membership yourself or getting on through

Pros

First, consider the advantages of getting Priority Pass as a credit card benefit.

•   Squeeze value out of card: Getting a credit card with Priority Pass membership included can help you to maximize the value of your card. As you evaluate credit card rewards, you want the benefits to more than offset the fees you pay.

•   Save on travel costs: Even if you don’t spend much time in airports, you can save money when traveling with the free meals feature at select Priority Pass restaurants.

Cons

Next, consider the potential disadvantages of getting Priority Pass with your credit card.

•   Fees: No matter if you have a credit card with airport lounge access or pay for a Priority Pass membership out of pocket, you probably have to pay an annual fee one way or another to gain access.

•   Charged for guests: Depending on the membership tier (even for memberships attached to a credit card), you could be charged for each guest that enters with you. If you’re using your membership that’s included with your credit card, you may want to ask if guests are free, or else you may get a “surprise” charge on your next statement. This can be important when traveling on a budget as a family too.

•   Select benefits: Not all Priority Pass memberships are the same. Ones attached to credit cards may change at any time, so you’ll need to ask what is included and what’s not. For example, some restaurants may not offer perks or discounts if you hold a certain credit card.

Priority Pass Tips

There are several ways to get the most out of your Priority Pass membership, whether or not you pay for it out of pocket or get one through a credit card.

•   To enroll out of pocket, head to the Priority Pass website and select the membership tier you want, and pay for the annual fee. You will need to provide details such as your name and address. Once paid, Priority Pass will send your membership card in the mail — you can activate the card online.

•   If you signed up for a credit card with Priority Pass access, you will also need to activate it. Depending on your credit card, you may need to activate your membership by first logging into your credit card account and selecting the correct link to follow the appropriate prompts.

Other tips to get the most out of your Priority Pass membership include:

•   Look up lounges in advance: When planning your flight itinerary and comparing airfare options, it can be wise to look at what layovers are available to you. If flights with similar itineraries are around the same price, consider booking one with better lounge access during your layover. Also check what lounge access you may have when coming back on your return flight. Some airports may also have more than one lounge, so pick one that seems like the best fit.

•   Prebook when possible: Some locations allow you to reserve a spot at an airport lounge. If it’s during peak travel season or you want to guarantee a place, pre-booking can increase the chances you don’t have to wait.

•   Check to see what benefits you have: Priority Pass Select memberships can vary, so it’s better to check ahead to see what you get. Same goes even if you’re paying for a different membership tier out of pocket.

•   Check benefits for authorized users: Some credit cards with Priority Pass memberships don’t allow authorized users the same access, whereas some do.

The Takeaway

Getting a credit card with Priority Pass membership can be beneficial, but only if you use this perk. You may also pay a higher annual fee since luxury credit cards are typically the only ones offering this type of benefit. If you’re not a frequent traveler, you may be better off with another credit card. You could likely pay out of pocket for the occasional use of a lounge.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the advantage of having a Priority Pass?

Priority Pass can make spending time in airports more comfortable and affordable. Having Priority Pass allows you access to over 1,400 airport lounges, restaurants, and services in over 148 countries.

Do you need your credit card with Priority Pass?

In most cases, you don’t need your credit card when accessing a Priority Pass lounge. You will need your membership card and your boarding pass.

Does Priority Pass give you free lounge access?

Yes, Priority Pass can give you free lounge access to over 1,400 airport lounges globally.

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Photo credit: iStock/jacoblund

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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In the ever-evolving landscape of real estate, the U.S. foreclosure market often unveils key trends that will shape the future of home ownership. According to property data provider ATTOM , the number of housing units with foreclosure filings in March was 32,878, a drop of less than 1% from the previous month and a 10% decline from the previous year. Rob Barber, CEO of ATTOM, highlights that this ongoing “persistently hot” housing market is likely due to sizable homeowner equity.

Foreclosure starts increased nationwide by 2%, with notable spikes in states like New Hampshire, Illinois, and Florida. Moreover, while there was a 7% increase in bank repossessions from the previous quarter, there’s a notable 20% decline compared to a year ago, indicating some stabilization in the REO (Real Estate Owned) sector. The average time to foreclose showed a slight increase from the previous quarter, but continues a downward trend observed since mid-2020, with states like Louisiana, Hawaii, and New York having longer foreclosure timelines, contrasting with states like Montana, Virginia, and Texas, which boast shorter timelines. Borrowers should stay up to date on their mortgage payments and work closely with their lenders to explore options for assistance if needed.

Read on for the foreclosure rates in March 2024 – plus the five counties, or county equivalents, with the highest rates within those states.

50 State Foreclosure Rates

As previously noted, foreclosure rates saw a negligible drop compared to last month and to last year. Read on for the March foreclosure rates for all 50 states — plus the District of Columbia — beginning with the state that had the lowest rate of foreclosure filings per housing unit.

District of Columbia

Ranking in population between Vermont and Alaska, the country’s second and third least populous states, Washington, D.C. observed 167 foreclosures in March, up about 17% from the previous month. With a total of 350,372 housing units, the foreclosure rate of the nation’s capital was one in every 2,098 households, putting it above the state of Illinois (#1).

50. Vermont

In 49th place for population, the Green Mountain State ranked 50th for its foreclosure rate in March. Of the state’s 335,138 housing units, 11 homes went into foreclosure at a rate of one in every 30,467 households. Only four counties in the state saw foreclosures. They were (from highest to lowest): Rutland, Windsor, Washington, and Chittenden.

49. Montana

Listed as 44th in population, the Treasure State rated 49th again for its foreclosure rate this month. With 24 foreclosures out of 517,430 housing units, Montana’s foreclosure rate was one in every 21,560 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wheatland, Chouteau, Deer Lodge, Richland, and Carbon.

48. South Dakota

The Mount Rushmore State nabbed the 48th spot once more for its foreclosure rate in March. Having 393,150 total housing units, the fifth-least populous state had a foreclosure rate of one in every 17,870 households with 22 foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Aurora, Codington, Minnehaha, Brown, and Meade.

47. West Virginia

Ranked 39th in population, the Mountain State claimed the 47th spot for the second month in a row. It has a total of 859,142 housing units, of which 58 went into foreclosure. This means that the foreclosure rate was one in every 14,813 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hancock, Tyler, Fayette, Berkeley, and Cabell.

46. Oregon

The 27th most populous state ranked 46th for highest foreclosure rate in March. Of the Pacific Wonderland’s 1,818,599 homes, 124 went into foreclosure, making for a foreclosure rate of one in every 14,666 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Jefferson, Clatsop, Douglas, Clackamas, and Coos.

45. Kansas

The Sunflower State ranked 45th for highest foreclosure rate this month. With 1,278,548 homes and a total of 100 housing units going into foreclosure, the 35th most populous state’s foreclosure rate was one in every 12,785 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Morton, Clark, Logan, Kearny, and Bourbon.

44. Rhode Island

The eighth-least populous state placed 44th for highest foreclosure rate in March. A total of 38 homes went into foreclosure out of 483,053 total housing units, making the foreclosure rate for the Ocean State one in every 12,712 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Kent, Bristol, Washington, Providence, and Newport.

43. New Mexico

The 36th most populous state claimed the 43rd spot for highest foreclosure rate this month. Of the Land of Enchantment’s 943,149 homes, 82 went into foreclosure, making for a foreclosure rate of one in every 11,502 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Chaves, Eddy, Socorro, Lincoln, and Sandoval.

42. Mississippi

Ranked 34th in population, the Magnolia State experienced 121 foreclosures out of 1,324,992 total housing units. This puts the foreclosure rate at one in every 10,950 homes and into the 42nd spot this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Grenada, Simpson, Union, Copiah, and Lee.

41. Washington

Sorted as 13th in population, the Evergreen State ranked 41st for its foreclosure rate in March. Of its 3,216,243 housing units, 323 went into foreclosure, making the state’s foreclosure rate one in every 9,957 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Pacific, Lewis, Pierce, Cowlitz, and Grays Harbor.

Recommended: Tips on Buying a Foreclosed Home

40. New Hampshire

The Granite State, and the 41st most populous state in the U.S., ranked 40th for highest foreclosure rate. New Hampshire saw 66 of its 640,335 homes go into foreclosure, making for a foreclosure rate of one in every 9,702 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Belknap, Coos, Sullivan, Merrimack, and Carroll.

39. Wisconsin

With 326 foreclosures out of 2,734,511 total housing units, America’s Dairyland and the 20th most populous state secured the 39th spot with a foreclosure rate of one in every 8,388 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Juneau, Iron, Rusk, Taylor, and Trempealeau.

38. Wyoming

The country’s least populous state claimed the 38th spot for highest foreclosure rate this month. With 273,291 housing units, of which 33 went into foreclosure, the Equality State’s foreclosure rate was one in every 8,282 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Carbon, Sweetwater, Campbell, Sublette, and Big Horn.

37. North Dakota

The Peace Garden State’s foreclosure rate was one in every 8,275 homes. This puts the fourth-least populous state — with 372,376 housing units and 45 foreclosures — into 37th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Pembina, Hettinger, Kidder, Grant, and Bottineau.

36. Missouri

Coming in at 19th in population, the Show-Me State took the 36th spot for highest foreclosure rate this month. Of its 2,795,030 homes, 348 went into foreclosure, making for a foreclosure rate of one in every 8,032 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Caldwell, Mississippi, Laclede, Dunklin, and Barry.

35. Virginia

With 455 homes going into foreclosure, the 12th most populous state ranked 35th for highest foreclosure rate in March. Having 3,625,285 total housing units, the Old Dominion saw a foreclosure rate of one in every 7,968 households. The counties and independent city with the most foreclosures per housing unit were (from highest to lowest): Franklin City, Lexington City, King And Queen, Dickenson, and Halifax.

34. Alaska

The Last Frontier saw 40 foreclosures this month, making the foreclosure rate one in every 7,938 homes. This caused the third-least populous state, with a total of 317,529 housing units, to claim the 34th spot. The boroughs with the most foreclosures per housing unit were (from highest to lowest): Anchorage, Matanuska-Susitna, Kenai Peninsula, Juneau, and Fairbanks North Star.

33. Nebraska

Ranking 37th in population, the Cornhusker State placed 33rd in March with a foreclosure rate of one in every 7,640 homes. With a total of 848,023 housing units, the state had 111 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Garfield, Nemaha, Scotts Bluff, Webster, and Sherman.

32. Hawaii

The Paradise of the Pacific, and the 40th most populous state, came in 32nd for highest foreclosure rate. Of its 560,873 homes, 80 went into foreclosure, making for a foreclosure rate of one in every 7,011 households. Only four of the five counties in the state saw foreclosures. They were (from highest to lowest): Hawaii, Kauai, Honolulu, and Maui.

31. Tennessee

Ranked 16th in population, the Volunteer State endured 442 foreclosures out of its 3,050,850 housing units. This puts the foreclosure rate at one in every 6,902 households and in 31st place for the second month in a row. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Hardeman, Houston, Meigs, and Hardin.

Recommended: What Is a Short Sale?

30. Michigan

Ranked 10th in population, the Wolverine State secured the 30th spot with a foreclosure rate of one in every 6,706 homes. With a total of 4,580,447 housing units, the state had 683 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Clare, Shiawassee, Gratiot, St. Joseph, and Jackson.

29. Kentucky

With a total of 1,999,202 housing units, the Bluegrass State saw 301 homes go into foreclosure, thus landing in 29th place in March. This puts the foreclosure rate for the 29th most populous state at one in every 6,642 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Powell, Greenup, Clinton, Bath, and Jefferson.

28. Idaho

Ranked 38th in population, the Gem State received the 28th spot due to its 119 housing units that went into foreclosure this month. With 758,877 total housing units, the state’s foreclosure rate was one in every 6,377 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Custer, Bingham, Bonneville, Caribou, and Bonner.

27. Minnesota

Ranked 22nd for most populous state, the Land of 10,000 Lakes obtained the 27th spot for highest foreclosure rate in March. It has 2,493,956 housing units, of which 396 went into foreclosure, making the state’s foreclosure rate one in every 6,298 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Mille Lacs, Lac Qui Parle, McLeod, Redwood, and Isanti.

26. Colorado

The 21st most populous state ranked 26th for highest foreclosure rate this month. Of the Centennial State’s 2,500,095 housing units, 401 went into foreclosure, making for a foreclosure rate of one in every 6,235 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Phillips, Logan, Pueblo, Morgan, and Elbert.

25. Oklahoma

The Sooners State landed the 25th spot in March. With housing units totaling 1,751,802, the 28th most populous state saw 285 homes go into foreclosure at a rate of one in every 6,147 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Nowata, Caddo, Garfield, Custer, and Murray.

24. Louisiana

Sorted as 25th in population, the Pelican State placed 24th for highest foreclosure rate this month. Louisiana had a foreclosure rate of one in every 5,747 households, with 362 out of 2,080,371 homes going into foreclosure. The parishes with the most foreclosures per housing unit were (from highest to lowest): Richland, Terrebonne, Plaquemines, Iberville, and West Baton Rouge.

23. North Carolina

The ninth-most populous state claimed 23rd place for highest foreclosure rate. Out of 4,739,881 homes, 863 went into foreclosure. This puts the Tar Heel State’s foreclosure rate at one in every 5,492 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Perquimans, Gates, Anson, Northampton, and Vance.

22. Alabama

Listed as 24th in population, the Yellowhammer State came in 22nd for highest foreclosure rate this month. Of its 2,296,920 homes, 428 went into foreclosure, making for a foreclosure rate of one in every 5,367 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hale, Calhoun, Mobile, Jefferson, and Walker.

21. Arizona

Sorted as 14th in population, the Grand Canyon State withstood 596 foreclosures out of its total 3,097,768 housing units. This puts the foreclosure rate at one in every 5,198 homes and into the 21st spot in March. The counties with the most foreclosures per housing unit were (from highest to lowest): Graham, Navajo, Yuma, Pinal, and La Paz.

Recommended: Are You Ready to Buy a House? — Take The Quiz

20. Arkansas

Listed as the 33rd most populous state, the Land of Opportunity ranked 20th for highest foreclosure rate this month. The state contains 1,371,709 housing units, of which 264 went into foreclosure, making its latest foreclosure rate one in every 5,196 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Prairie, Arkansas, Desha, Hot Spring, and Union.

19. Maine

Ranked 42nd in population, the Pine Tree State placed 19th for highest foreclosure rate in March. With a total of 741,803 housing units, Maine saw 143 foreclosures for a foreclosure rate of one in every 5,187 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Aroostook, Androscoggin, Oxford, Waldo, and Penobscot.

18. Georgia

Ranked eighth in population, the Peach State took the 18th spot for highest foreclosure rate this month. Of its 4,426,780 homes, 910 were foreclosed on. This puts the state’s foreclosure rate at one in every 4,865 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Lanier, Crawford, Henry, Haralson, and Johnson.

17. Utah

The Beehive State placed 17th for highest foreclosure rate in March. Of its 1,162,654 housing units, 245 homes went into foreclosure, making the 17th most populous state’s foreclosure rate one in every 4,746 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Emery, Tooele, Wasatch, Juab, and Washington.

16. Pennsylvania

The Keystone State had the 16th highest foreclosure rate for the second month in a row. The fifth-most populous state saw 1,266 homes out of 5,753,908 total housing units go into foreclosure, making the state’s foreclosure rate one in every 4,545 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Philadelphia, Delaware, Wayne, Fayette, and Bucks.

15. Iowa

The Hawkeye State had the 15th highest foreclosure rate in March. With 325 out of 1,417,064 homes going into foreclosure, the 31st most populous state’s foreclosure rate was one in every 4,360 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Audubon, Keokuk, Monroe, Clinton, and Jasper.

14. Texas

The Lone Star State withstood 2,885 foreclosures this month. With a foreclosure rate of one in every 4,040 households, this puts the second-most populous state in the U.S., with a whopping 11,654,971 housing units, into 14th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Liberty, Madison, Atascosa, Jones, and Kaufman.

13. New York

With 2,144 out of a total 8,494,452 housing units going into foreclosure, the Empire State claimed the 13th spot in March. The fourth-most populous state’s foreclosure rate was one in every 3,962 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Orange, Greene, Suffolk, Nassau, and Rensselaer.

12. Massachusetts

The 15th most populous state ranked 12th for highest foreclosure rate this month. Of the Bay State’s 2,999,314 housing units, 775 went into foreclosure, making for a foreclosure rate of one in every 3,870 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hampden, Plymouth, Worcester, Berkshire, and Essex.

11. California

The country’s most populous state ranked 11th for highest foreclosure rate in March. Of its impressive 14,424,442 housing units, 3,975 went into foreclosure, making the Golden State’s foreclosure rate one in every 3,629 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Mendocino, Madera, Kern, and Shasta.

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10. Nevada

Ranked 32nd in population, the Silver State took the 10th spot for highest foreclosure rate this month. With one in every 3,181 homes going into foreclosure, and a total of 1,288,357 housing units, the state had 405 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Lyon, White Pine, Clark, Lander, and Nye.

9. Ohio

The Buckeye State placed ninth in March with a foreclosure rate of one in every 3,167 homes. With a sum of 5,251,209 housing units, the seventh-most populous state had a total of 1,658 filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Knox, Cuyahoga, Shelby, Preble, and Defiance.

8. Indiana

The 17th largest state by population, the Crossroads of America landed the eighth spot this month with a foreclosure rate of one in every 3,129 homes. Of its 2,931,710 housing units, 937 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Scott, Perry, Clinton, Howard, and Sullivan.

7. Maryland

Ranked 18th for most populous state, America in Miniature took seventh place for highest foreclosure rate in March. With a total of 2,531,075 housing units, of which 815 went into foreclosure, the state’s foreclosure rate was one in every 3,106 households. The counties and independent city with the most foreclosures per housing unit were (from highest to lowest): Kent, Dorchester, Prince George’s County, Baltimore City, and Calvert.

6. Delaware

The sixth-least populous state in the country, the Small Wonder nabbed sixth place this month. With one in every 3,051 homes going into foreclosure and a total of 451,556 housing units, the state saw 148 foreclosures filed. Having only three counties in the state, the most foreclosures per housing unit were (from highest to lowest): Kent, New Castle, and Sussex.

5. South Carolina

The 23rd most populous state had the fifth highest foreclosure rate in March with one in every 2,867 homes going into foreclosure. Of the Palmetto State’s 2,362,253 housing units, 824 were foreclosed on this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Fairfield, Hampton, Dorchester, Darlington, and Spartanburg.

4. Florida

The third-most populous state in the country has a total of 9,915,957 housing units, of which 3,568 went into foreclosure. This puts the Sunshine State’s foreclosure rate at one in every 2,779 homes and into fourth place this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Hernando, Citrus, Wakulla, Osceola, and Charlotte.

3. New Jersey

With a foreclosure rate of one in every 2,638 homes, the Garden State ranked third for highest foreclosure rate this month. The 11th most populous state contains 3,756,340 housing units, of which 1,424 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Cumberland, Warren, Sussex, Salem, and Atlantic.

2. Connecticut

With 587 of its 1,531,332 homes going into foreclosure, the Constitution State had the second highest foreclosure rate at one in every 2,609 households. In this 29th most populous state, the counties that had the most foreclosures per housing unit were (from highest to lowest): Windham, New Haven, New London, Tolland, and Fairfield.

1. Illinois

The Land of Lincoln had the highest foreclosure rate in all 50 states in March. Of its 5,427,357 homes, 2,130 went into foreclosure, making the sixth-most populous state’s foreclosure rate one in every 2,548 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Gallatin, Jasper, Whiteside, Schuyler, and Massac.

The Takeaway

Of all 50 states, California had the most foreclosure filings (3,975), and Vermont had the least (11). As for the states with the highest foreclosure rates, Illinois, Connecticut, and New Jersey took the top three spots, respectively.

Two regions – the Great Lakes and the Mideast – tied for having the largest presence among the 10 states that ranked the highest for foreclosure rates. The states in the Great Lakes region were (from highest to lowest): Illinois, Indiana, and Ohio. The states in the Mideast region were (from highest to lowest): New Jersey, Delaware, and Maryland.

Four regions – the Far West, Southeast, Plains, and New England – tied for having the largest presence among the 10 states that ranked the lowest for foreclosure rates. The states in the Far West region were (from highest to lowest): Washington and Oregon. The states in the Southeast region were (from highest to lowest): Mississippi and West Virginia. The states in the Plains region were (from highest to lowest): Kansas and South Dakota. Finally, the states in the New England region were (from highest to lowest): Rhode Island and Vermont.

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A central counterparty clearing house (CCP), or Central Counterparty, is a financial institution that facilitates trading activities in European equity and derivative markets. Regional banks typically operate CCPs which are an important part of the international financial system.

CCPs maintain stability and efficiency across financial markets and reduce risks including counterparty, default, and market risks. In the United States, CCPs are called Derivatives Clearing Organizations (DCO) and are regulated by the Commodity Futures Trading Commission (CFTC).

Defining Central Counterparty Clearing Houses

The Bank for International Settlements (BIS) defines a CCP as “a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts.” The Eurex is a well known CCP.

Central Counterparty Clearing Houses act as intermediaries between buyers and sellers in financial transactions. They handle clearing and settlements in various types of securities and derivatives transactions to reduce credit risk in the markets. Clearinghouses have existed for more than a century, and act as a way to reduce the risk of OTC derivative transactions.

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How Central Counterparty Clearing Houses Work

Central Counterparty Clearing Houses guarantee trade terms for buyers and sellers. They help reduce risk for investors by taking on credit risk involved in transactions, so even if a buyer or seller defaults on a transaction the other party doesn’t have as much loss as they might have without the CCP.

When buyers and sellers enter into transactions, they each deposit money with the CCP to cover the amount of the transaction. All CCP users must have a margin account.

In a process called “novation,” the CCP enters into two different contracts, one with the buyer and one with the seller. This provides a guarantee to the other party that if one side doesn’t follow through with the agreement the other side will still receive payment. CCPs typically use margin calls to settle trades if one party does not have the funds in their account.

If the trade falls through, the CCP completes the trade at the current market price. CCPs are for-profit businesses that generate revenue from their members and their transactions. They also work with parent exchanges that require them to remain profitable. Just like other types of businesses, CCPs each operate differently and have different business strategies to attract customers and earn revenue.

For instance, there are different types of derivative products that a CCP might choose to offer. One common business model for CCPs is to cross-margin products in a single netting pool. Parent exchanges place obligations on CCPs, so they need to earn enough revenue to meet those.

The specific financial products offered by a CCP, as well as its risk level, fee structure, and other features lead to different types of members, organizational structure, regulations, and rules for margin balances.

CCPs continue to evolve, offer new products, and become more sophisticated over time. Regulations are also evolving for CCPs which may change how they operate in the future.

Uses of a Central Counterparty Clearing House

CCPs maintain the anonymity of investors’ identities to protect their privacy. They also maintain the privacy of trading firms from buyers and sellers by using electronic order books and protect brokerage firms from the risk of buyers and sellers defaulting on their end of options such as calls or puts.

Another use of CCPs is to lower the number of transactions settled in order to move funds efficiently between investors.

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CCP Members

Financial institutions that want to clear trades through a central counterparty can become members of a particular CCP. Membership allows them to reduce credit risk for their customers and themselves. There are CCPs for different types of financial transactions, so financial institutions can choose the appropriate CCP to apply to for their needs.

CCPs want members that have a significant transaction volume, are creditworthy, and have a trading operation that works efficiently with the system run by the CCP. CCPs also want members to contribute funds to their default fund and secure collateral for their transactions. Each CCP has somewhat different criteria and requirements for membership, and membership information is not always publicly available.

Pros and Cons of CCPs

There are benefits and drawbacks to CCPs. Here are a few important ones to understand:

Pros

CCPs benefit investors in the following ways:

•   Reduce counterparty risk

•   Maintain stability in financial markets

•   Increase efficiency of transactions

•   Maintains privacy of customers

Cons

There are also some drawbacks to CCPs for investors, including the following:

•   Participation fees

•   May not be able to process non-standard transactions

•   Some CCPs may not have adequate scale

CCPs and Blockchain

CCPs are now being used with blockchain technology, made popular in cryptocurrency markets, to further reduce risk and costs. An international group of clearing houses launched the Post Trade Distributed Ledger Group launched in 2015. The group studies ways to use blockchain technology for transactions.

Since its formation, the group has expanded to include about 40 global financial institutions collaborating to bring CCPs together with blockchain. The goal of using blockchain technology with CCPs is to reduce margin requirements and risk, reduce operational costs, improve regulatory oversight, and increase the efficiency of trade settlements. Ideally blockchain can help support better settlements, clearing processes, and reporting.

Decentralized exchanges already operate similarly to CCPs as a third party that handles transactions.

The Takeaway

Central counterparty clearing houses help reduce the risk of trading derivatives and securities. They became more popular after the financial crisis as a way for investors to minimize counterparty risk.

While CCPs may help maintain stability in financial markets and increase efficiency, they may also involve participation fees, or may not be able to process non-standard transactions. Understanding the ins and outs of CCPs can be helpful to investors as they learn to navigate the markets.

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For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What is the difference between a clearing house and a central counterparty?

While a CCP acts as a clearing house for transactions, it has an additional step involved before doing so. The two parties involved in a transaction agree upon transaction terms, then the CCP must agree to the terms before they clear the transaction.

What is the CCP margin?

CCPs require customers to make collateral deposits, known as margin deposits, before entering into transactions. This provides them with funds they can use to guarantee trades in the event that one party defaults on an agreement. The initial margin required depends on the customer, the type of financial product, and the particular trade agreement.

Does central clearing reduce counterparty risk?

Central clearing reduces counterparty risk by guaranteeing trades for buyers and sellers. They take on the credit risk involved in transactions by becoming the buyer to every seller and the seller to every buyer.

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