The Credit Power Index

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While most economists agree that the recession is behind us, many Americans are still feeling the sting of tough economic times… especially the 10% of the country that is still standing in the unemployment line. But you don’t need to be unemployed to see that the hard times aren’t quite  behind us – all you need to do is visit your local bank.
MainStreet unveiled the Credit Power Index on Monday, a new metric that tracks consumers’ banking power as measured by the difference between deposit and loan rates.

When the index is high, it means the arrangement is more favorable to banks, as consumers pay considerably more in interest on loans than they receive on deposits. (For the full methodology, see our explanatory graphic.) Since January 2007 the index has climbed by a total of five points to the current national average of 23.74, fueled by rock-bottom deposit rates that have fallen much further than loan rates.
In other words, consumers are getting the short end of the stick in their dealings with banks. But the pain isn’t felt equally across the country, and the rates you get on your certificates of deposit and home loans differ depending on where you live. We’ve pored through the data to determine which cities offer their residents the best rates.

By Matt Brownell

The Best City to Bank
Credit Power Index: 16.878
At the top of the list for the best banking environment in the U.S., Houston got it done with a balanced performance across the board. None of the banks surveyed had eye-popping rates, though Advancial Federal Credit Union contributed to a strong showing for the city with solid CD rates, and CapitalOne once again surfaced with great loan rates. With cities like Houston leading the way, it’s no surprise that the Southern states boasted the best regional index in America.

The Worst Cities for Banking

Credit Power Index: 17.125
Want to get away from the big city? Come to small-town Tupelo, Miss. where very favorable rates on personal unsecured loans (5.75%) at the locally owned BancorpSouth Bank push Tupelo to the #2 spot.

Credit Power Index: 18.335
Rounding out the New York area’s dominance of the Credit Power Index is the New York borough of the Bronx, where great rates on personal unsecured loans meet average or above-average rates on other loan products.

Credit Power Index: 18.444
Again in the New York area with New York City proper, the high cost of living is offset by surprisingly favorable interest rates, especially for those seeking an unsecured loan – the rate is just 8.24%, well below the national average of 12.75%.

Credit Power Index: 18.592
What do you get when you cross Texas and Arkansas? The twin cities of Texarkana, Texas, and Texarkana, Ark. Technically, this entry includes banks in two different states, but it’s essentially one city so it gets a pass. Residents of the area get great rates from banks big (CapitalOne, 18.01) and small (Red River Employees Federal Credit Union, 18.73).

Credit Power Index: 18.83
It’s been a while since Detroit made a positive top 10 list, sadly. If there’s one upside to the city’s economic downturn, it’s that residents can now get very favorable rates on real estate loans, with great rates on home equity loans and adjustable-rate mortgages.

Credit Power Index: 18.996
We stay in the New York metro area with the New York City borough of Brooklyn. East Coast cities had a strong showing in the Credit Power Index, as they stayed relatively stable throughout the recession.

Credit Power Index: 19.015
While many small cities are bolstered by the presence of small credit unions with friendly rates, this mid-sized city outside New York made the top 10 due to the presence of two of the more consumer-friendly big banks in the country - PNC (Stock Quote: PNC) and Capital One (Stock Quote: COF). Though the banks’ deposit rates are more or less in line with national averages, their reasonable loan rates make this one of the more consumer-friendly cities in the nation.

Credit Power Index: 19.162
The third-largest city in Louisiana, Shreveport earns a place in the top 10 thanks to exceptional rates on personal unsecured loans and home equity loans. Its banks all beat the national average in the index, which comes as no surprise – Louisiana’s average Credit Power Index in the most recent month surveyed would rank it 7th best for consumers.

Credit Power Index: 19.29
A small city near the Pennsylvania border with a population of about 40,000, Elmira sneaks in at #10 on the list thanks to solid rates at two of its small local banks – the Elmira Savings Bank and First Heritage Federal Credit Union. The latter has impressive CD rates that are twice the national average, which comes as no surprise – credit unions tend to offer better deposit rates than banks.