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San Franciscans aren’t known for their frugal lifestyles. But residents of northern California’s digital mecca carry the lightest credit card debt burden of any major metropolitan area in the nation, an analysis by CreditCards.com found.

The average Bay Area resident had a card balance of $4,393 in 2014, a whisker under the U.S. average of $4,410. But when you consider income, the typical working resident could pay that off in nine months — the quickest payback in the 25 largest U.S. cities. That’s assuming they devote $533 a month — 15 percent of their comfortable earnings — to paying the debt.

“High income means creditworthiness,” Comerica Bank Chief Economist Robert Dye said. “People are going to be comfortable carrying more debt.”

On other end of the spectrum, San Antonio consumers faced the longest time to pay off card debt. Their card balances averaged $4,880, or $470 more than the U.S. average. With an overall lower income, it would take the typical resident 16 months to wipe that out, paying $344 a month. The interest cost during payback would be $448 — almost double the $234 cost in San Francisco.

Our analysis

CreditCards.com looked at the balance on the average person’s credit cards in the 25 largest U.S. metro areas, based on credit report data from credit bureau Experian. The time it takes to pay that balance was calculated using 15 percent of the median earnings for each city, according to Census Bureau figures. Fifteen percent of earnings is a rule of thumb used by some credit counselors to evaluate debt repayment plans.

Cities are ranked by the number of months to pay off the debt. When cities tie for number of months, they are ranked by how much interest would pile up during the payoff period, at a typical 13 percent rate.

Result: The places with light debt loads are not the ones you might think. The parsimonious Midwest boasts a pay-as-you-go discipline that keeps card debt low, while the Southwest is home to some of the nation’s strongest regional economies.

But when you consider their earnings, denizens of big coastal cities — not known for their frugality — carry lower credit card debt burdens than others. Seven of the 10 cities with the shortest payback time were on the coasts; four of them in the East and three on the West Coast.

Then again, big coastal cities have other debts to contend with, notably their outsized housing costs. San Franciscans, for example, face a median home price of $748,300, more than four times that of San Antonio, according to the National Association of Realtors. Now that home prices are rising again, coastal homeowners may view their mortgage payments as a stockpile of value, not just a drain on income.

“Cities with lots of high-income households may have a more sophisticated consumer who has the ability to shift revolving debt — take a home-equity loan and pay off revolving debt when it becomes burdensome,” Dye said.

High income means creditworthiness. People are going to be comfortable carrying more debt. — Robert Dye

Comerica Bank Chief Economist

Income and payback



A look at the Washington, D.C., area underscores the importance of income to a consumer’s debt burden. Capital area residents have the highest average credit card balance, at $5,046. But they can pay that off in 10 months, faster than all but two other cities, using 15 percent of their plump paychecks — which are also the highest of all 25 cities.

Residents “are not afraid to use credit cards for purchases,” says Jim Dinegar, president and CEO of the Greater Washington Board of Trade. Whether for an Uber ride, a gala evening at the Kennedy Center or just for recurring phone bills and toll charges, capital-area residents like to use cards.

“I’ll put it all on my credit card,” Dinegar said, speaking for D.C.-area consumers in general, “but then I’m going to pay it all at the end of the month.” Area residents have among the highest education levels in the U.S., he said, bolstering their income — as well as their ability to pay off their card balances.

Taking longer to pay

Of the 10 cities with the heaviest debt burdens, seven were in the South or Southwest. Texas alone accounted for three, despite the state’s vigorous economy that keeps jobless rolls low. San Antonio’s heavy card debt burden comes despite a 3.6 percent May unemployment rate, well below the U.S. average of 5.3 percent. Houston, with the fifth-heaviest debt, had 4.2 percent unemployment.

Faith in the economy could help drive the debt levels in Texas, Dye said. When you feel your paycheck is secure — and likely to get bigger instead of smaller — you have more confidence to take on unsecured debt. However, that could be changing now, as a slowdown in oil exploration downshifts the regional economy. “Now with lower oil prices, we could see households start to cut back on their debt,” he said.

Across the U.S., the burden of card debt is lighter than it has been in many years. Delinquency rates, which measure cardholders’ ability to keep up with their monthly payments, are hovering near record lows, according to the American Bankers Association.

That doesn’t mean card debt no longer harasses household budgets. In San Antonio, many people come to the nonprofit credit counselor GreenPath Debt Solutions for help — not because they can’t make payments, but because they can only make the minimum, said Emily Reed, a GreenPath counselor. “They’re current, but barely current,” she said.

If you continue down that path, it can take you 25, 30 years [to extinguish debt]. — Emily Reed

GreenPath Debt Solutions

For people making minimum payments on card debt, heavy interest costs absorb income that could be used to get ahead via savings and education — or to fund a more comfortable lifestyle. “If you continue down that path, it can take you 25, 30 years” to extinguish debt, Reed added.

A combination of above-average card balances and below-average income makes San Antonio’s debt burden the highest of the 25 cities. One factor driving that combination may be a high concentration of military service members — the area hosts several bases — who are prone to take on more debt than other consumers. Military members had 7.1 percent more unsecured debt — usually credit card debt — than average, according to a survey by the National Foundation for Credit Counseling and The Ohio State University. What’s more, their financial resources were lower than average, with 16.2 percent less assets than overall participants.

“If you take a look at the lives of these military service members, they’re frequently relocating,” NFCC President Susan Keating said. After a move, “their spouses may or may not be successful in being able to get employment.” Swings in pay can also complicate the budgets of military families, who receive more during deployment and less when deployment ends, Reed said.

Across the nation, the average $4,410 balance in 2014 would take the typical working person 13 months to pay off, costing $327 in interest. But wherever you live, and whatever you earn, the size of your credit card balance can be difficult to interpret.

“I use my personal card for a lot of business expenses,” said James Chessen, chief economist at the American Bankers Association — charges for which he’s reimbursed.

While some cardholders pay off their entire balance monthly, others carry over a balance to meet expenses, racking up interest costs. People in expensive housing markets may carry more total debt than others, but their higher earnings mean they are also more likely to have profited from the bull market in stocks, Chessen said, giving them more financial firepower to pay off debt.

“It’s hard to sort out these things,” he said. “My experience suggests that income is not the best determining factor for balances — it’s usually the individual circumstances.”

Methodology details



Average credit card balances for U.S. metropolitan statistical areas are from Experian’s State of Credit report for 2014, which is drawn from June 2014 credit reports. The U.S. average balance on bank cards was $4,410. Store cards are excluded from the averages.

Median earnings for each metro area are based on the 2013 earnings of individuals age 16 and over who had full- or part-time earnings, according to the Census Bureau’s American Community Survey. The figure excludes income from sources other than work.

The months to pay off the balance, and the associated interest costs, are calculated using CreditCards.com’s debt payoff calculator, assuming 15 percent of median earnings as the monthly payment and the 13 percent average interest rate paid by existing cardholders per the Federal Reserve’s G.19 Consumer Credit report. For each metro area, the final month of the payoff period is a fractional amount necessary to bring the balance to zero.

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