Top 10 Cities That Have Mastered the Art of Avoiding Credit Card Debt

Credit cards can be a handy way to pay for things but they can also land you in a deep debt hole. As of June 2016, the Federal Reserve puts the total credit card bill in the U.S. at a cool $960.8 billion and counting.

Among Credit Sesame members, the numbers on credit card debt vary. On average, our members owe $767 per card, with an average limit of $3,529. The average total credit card debt per member is $5,093 and the average credit utilization is 22%.

We wanted to know which cities fare the best where credit card debt is concerned. Using Credit Sesame data aggregated from a subset of 7 million members, we were able to determine which cities are the least likely to have a problem with credit cards, based on credit utilization ratio (in simple terms, that’s the overall percentage of your available credit you’re using at any given time. Generally, a credit utilization ratio of 30% or less is considered ideal) and average balance per card.

Higher incomes = higher credit lines

The 10 cities listed below rated the best, according to credit card debt and utilization rates. A common theme across the board is that these cities have strong economies, many of which are supported by tech. One of the benefits of that is that household incomes tend to be well above the nationwide median of $53,657, as estimated by the Federal Reserve.

It follows that when you’re earning more money, credit card companies are more likely to offer you higher credit limits. When you don’t need to rely on credit as much because you’ve got a sizable paycheck and you have a higher credit line to boot, that means a better credit utilization ratio.

The cities here have a solid mix of high credit lines and low balances. That suggests that residents aren’t feeling financial pressure that might lead them to use credit more often. Even if they are using their cards, they have the means to pay the balances down faster, which positively impacts credit utilization.

How student loans and mortgage debt factor in

Besides credit card debt, we also broke down the average student loan balance and average mortgage balance for Credit Sesame members in each of these cities. Those are listed in the table below. For comparison’s sake, the average student loan balance among active Credit Sesame members is $37,203. The average mortgage balance is $150,498.

Only three cities—Naperville, Ann Arbor and Bellevue—had an average student loan balance that was higher than the average balance for Credit Sesame members overall.

All 10 cities had average mortgage balances in excess of $150,000.

The rankings

The 10 cities that rated the best for credit use are listed below, starting with the cities that had higher utilization ratios.

10. Naperville, IL

Credit utilization ratio: 12%

Average balance per card: $632

Average card limit: $5,313

Naperville takes the cake where salary size is concerned, with a median household income of over $109,000. Sixty-six percent of the population over 25 holds a bachelor’s degree so residents are an educated bunch.

Credit Sesame members are using a higher percentage of their credit limits and carrying the second-highest average balance per card. They’re not exactly drowning in mortgage debt but they do have the second-highest average student loan balance, which may explains why they’re using credit cards a little more often.

9. San Francisco, CA

Credit utilization ratio: 12%

Average balance per card: $654

Average card limit: $5,518

Out of the 10 cities listed, San Francisco has the highest average balance per card but a higher average card limit helps to keep the utilization ratio relatively low. The average mortgage balance is a staggering $533,976 but surprisingly, student loan debt isn’t out of control.

Fifty-three percent of the population over age 25 holds a bachelor’s degree, and San Francisco is a haven for entrepreneurial-minded techies. The fact that pricey housing isn’t driving people to rack up major credit card bills is encouraging.

8. Fremont, CA

Credit utilization ratio: 11%

Average balance per card: $611

Average card limit: $5,561

Fremont is the largest suburb in the Bay Area and residents earn a healthy $103,000 in median household income. That’s a good thing too, considering that the average mortgage balance rivals that of San Francisco.

The average student loan balance climbs slightly higher but in general, residents aren’t letting high mortgage or student loan payments force them into credit card debt. Tech features heavily in the local economy and Tesla is one of the city’s top employers.

7. Ann Arbor, MI

Credit utilization ratio: 11%

Average balance per card: $552

Average card limit: $5,154

Ann Arbor has an exceptionally diverse economy that revolves primarily around education but tech and manufacturing are also a part of the thriving job force. The median household income is lower here, at close to $57,000, but the average mortgage balance is an affordable $179,872.

The one thing that has the potential to trip residents up? An average student loan balance of $54,848. Seventy-one percent of residents over 25 have a bachelor’s degree and a good chunk of the city’s workers are on the University of Michigan’s payroll.

6. San Mateo, CA

Credit utilization ratio: 11%

Average balance per card: $520

Average card limit: $4,881

Another Silicon Valley city, San Mateo has the third lowest average balance per card among Credit Sesame members who make their homes here. Tech companies factor heavily in the local economy but the financial services and health care sectors also provide plenty of jobs. The average card limit is the lowest of our 10 cities but members aren’t going overboard with their balances.

It helps that the average student loan balance is less than $23,000. Less than half the 25 and up crowd holds a college degree but that doesn’t stop residents from earning a median household income of more than $90,000.

5. Sunnyvale, CA

Credit utilization ratio: 10%

Average balance per card: $578

Average card limit: $5,721

Sunnyvale is a neighbor to Santa Clara and it also shares a tech-driven economy. Apple, Yahoo! and Google are some of the top-shelf companies that employ locals. Residents here take home a median household income of more than $103,000 and based on the average card balance, Credit Sesame members seem to be less reliant on credit as a result. That’s pretty extraordinary when you factor in an average mortgage balance of $573,553.

4. Bellevue, WA

Credit utilization ratio: 10%

Average balance per card: $631

Average card limit: $6,621

Bellevue is one of Washington’s wealthiest communities and this Seattle suburb is a haven for tech companies like Microsoft and HTC, both of which have branches here. It breaks the double-digit mark for credit utilization and the average card balance is at the higher end, at $631. The average card limit is also the highest overall, at $6,621. Sixty-two percent of those aged 25 and older have a bachelor’s degree and at the end of the day, they take home a median income of $92,524.

3. Cambridge, MA

Credit utilization ratio: 9%

Average balance per card: $466

Average card limit: $4,990

Along with hosting campuses for major tech players like Google and IBM, Cambridge is also home to two of the world’s most renowned seats of higher learning: Harvard University and M.I.T. Residents are highly educated and just under 75% have a bachelor’s degree or higher. It ranks third on our list overall but it takes first place for having the lowest average balance per card. Income-wise, the median household pay approaches $76,000 annually.

2. Santa Clara, CA

Credit utilization ratio: 9%

Average balance per card: $498

Average card limit: $5,441

Tech is also big in Santa Clara, which is part of the Silicon Valley area. Intel and Texas Instruments both provide a decent share of the city’s jobs. The average credit card balance is the second-lowest in our rankings, which isn’t surprising considering that the median household income is right around $93,000 annually. The average student loan balance is the lowest of all 10 cities, coming in at $20,380. Around 54% of residents 25 and older have at least a bachelor’s degree.

1. Redmond, WA

Credit utilization ratio: 9%

Average balance per card: $592

Average card limit: $6,547

Redmond happens to be the home of Microsoft and Nintendo’s American headquarters and it has one of the lowest credit utilization ratios in our rankings. That’s because as far as average card limit goes, it ranks second overall with an average of $6,547. It lands in roughly the middle of the pack for average card balance. Residents earn a median household income of just under $100,000 besides tech companies, Boeing is another major employer.

Methodology

Data on the total U.S. credit card debt and nationwide median household income was obtained from the Federal Reserve. Median household income information for each city came from the U.S. Census Bureau.

We drew from our database of Credit Sesame’s more than 7 million members to collect the credit data for our study. We focused exclusively on cities that had 1,000 or more credit card accounts collectively among member residents.

To compile the final rankings, we looked at two specific things: credit utilization ratio and average credit card balance. The credit utilization ratio for each city included in our study reflects the total combined balance owed by Credit Sesame members versus their total combined credit limits. The average balance listed for each city is per card, not per person.