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Credit Unions More Consumer Friendly Than Banks, Credit Power Index Shows

^{Published on 2011-08-23 05:41:09 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--TheStreet (Nasdaq: TST), a leading digital media company, released the July Credit Power Index (TM) that shows credit unions are offering better deposit rates and squeezing consumers considerably less than banks.

"Interest rates havena™t found a bottom yet, but improvements are definitely starting to slow"

The Credit Power Index, produced jointly by TheStreeta™s [ Rate-Watch ] and [ MainStreet ] divisions, measures the asqueezea on consumers in terms of the difference between the interest rates paid on deposits versus the interest rates charged on loans. This spread is 5.5 percentage points lower at credit unions than at banks, which are paying much less in interest on CDs and other savings accounts.

Credit unions, for example, are offering an average rate of 0.73% on 12-month certificates of deposit, more than 55% higher than the national average of rates offered by banks, according to Rate-Watch data used to compile the Credit Power Index. Rate-Watch maintains the worlda™s largest database of rates from more than 90,000 financial locations across the U.S.

The Credit Power Index score for credit unions came in at 17.55 in July, almost 5.5 percentage points lower than the score for banks. The overall index stood at 22.44, a small improvement from 22.51 the preceding month as improvements in the interest rate climate for consumers started to slow.

aInterest rates havena™t found a bottom yet, but improvements are definitely starting to slow,a said Rate-Watch General Manager Rachelle Zorn. aAnyone looking to borrow money will be able to lock in some very low rates right now.a

The Credit Power Index assesses the interest rate climate for consumers by tracking deposit and consumer loan product rates, using the methodology found here [ http://www.mainstreet.com/article/moneyinvesting/credit/debt/how-credit-power-index-works ]. The index measures differences between CD rates at four terms and the rates of four popular loan products at the same terms; the higher the index, the worse things are for consumers. The index peaked at 25.46 in May 2009 and has declined every month in 2011.

Credit unions beat banks on most of the loan rates used in calculating the Credit Power Index, including personal unsecured loans (charging 10.49% to 12.54% at banks), 36-month home equity loans (5.61% at credit unions, 6.75% at banks) and 48-month new auto loans (3.68% at credit unions, 4.72% at banks).

Banks, however, have an advantage when it comes to mortgage rates, charging a 3.32% APR on 60-month adjustable rate mortgages to the credit unionsa™ 3.77%.

NOTE TO EDITORS: The full Credit Power Index database is available at [ www.mainstreet.com/credit-power ]

About Rate-Watch

One of the nation's largest providers of accurate, up-to-date rate information, this web site, [ www.rate-watch.com ], is relied upon by countless banks and credit unions, providing key data so they can set competitive rates.

About MainStreet

MainStreet provides personal finance tips and advice to help consumers grow their wealth and enhance their lives. By combining lifestyle news, commentary and financial resources, MainStreet is an engaging and fun site "where life and money intersect."

About TheStreet

TheStreet, Inc. is a leading digital financial media company that distributes its content through online, social media, tablet and mobile channels. The Company's network of brands include: TheStreet, RealMoney Pro, Stockpickr, Action Alerts PLUS, ChatOnTheStreet, Options Profits, ETF Profits, MainStreet and Rate-Watch. For more information on TheStreet's business, visit [ www.t.st ]. For financial and business news, actionable trading ideas, stock quotes and more, visit [ TheStreet.com ] via your web browser, follow TheStreet on [ Facebook ] and [ Twitter ], visit [ TheStreet.mobi ] from your mobile device and access [ TheStreet app for iPad ] or the browsers on all major tablet platforms.