California cities are leading the nation in paying down household debt, with the top three spots — and seven of the top ten — going to Golden State communities, according to a new analysis by WalletHub.
The report assessed 182 cities using consumer financial data from TransUnion and the Federal Reserve, tracking changes in household debt from the fourth quarter of 2025 to the first quarter of 2026.
Nationally, total household debt stands at approximately $18.79 trillion, with mortgages making up the bulk, alongside student loans, auto loans, credit cards and personal loans. In California, mortgages are an even heavier factor: according to the Center for Microeconomic Data, mortgage debt accounted for roughly 79.2 percent of all household debt in the state in 2024 — a reflection of California's persistently high housing costs and the long repayment timelines that come with them.
For the first quarter of 2026, WalletHub reported a $339 billion inflation-adjusted decline in household debt nationwide — a trend reflected across all 182 cities in the study.
Santa Clarita claimed the top spot, with the average household carrying $495,675 in debt and reducing that balance by $9,237 in a single quarter. Fremont ranked second, with households shedding an average of $7,314, followed by San Jose at $6,230.
"When it comes to Santa Clarita, Fremont, and San Jose, residents are fairly wealthy and responsible with credit, so their large debt decreases aren't too surprising," said Chip Lupo, a WalletHub analyst.
Bay Area cities performed especially well. San Francisco ranked No. 11 nationally, with households paying down an average of $5,105, while Oakland came in No. 19 with a $4,432 reduction. Santa Rosa ranked No. 26 at $4,212.
Southern California also showed strong results, with Irvine (No. 5), Rancho Cucamonga (No. 6), Huntington Beach (No. 7), and Chula Vista (No. 8) all cracking the national top ten.
But the ability to pay down debt is far from uniform across the state. According to the U.S. Federal Reserve, San Benito County carried the highest debt-to-income ratio in California in 2024 at 5.06 — meaning the average resident owed more than five dollars for every dollar of income earned. San Francisco County sat at the opposite end of the spectrum, with residents owing just $0.58 per dollar of income, the lowest ratio in the state.
At the other end of the WalletHub rankings, California's larger inland cities trailed their coastal counterparts. Los Angeles was No. 51 nationally, with households paying down an average of $3,500. Stockton ranked No. 62, Sacramento No. 66 and Fresno No. 78.
"A large decrease in the average resident's debt in a city is a great sign — it shows that people are not only keeping up with their payments but also cutting back on borrowing," Lupo said.
(City: Household Debt | Household Debt Increase)
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