• Email

The Most Consumer-Friendly Banks

The Credit Power Index

When the Credit Power Index was released Monday, it confirmed what many Americans already knew: Consumers are getting squeezed by their banks. The metric tracks the gap between the interest rate that banks demand on loans and the interest they offer on deposits, with the index increasing as consumers get squeezed even harder by bank rates. (For more information on how the index is calculated, check out our explanation of the methodology.) The national index stands at 23.74, up significantly from 18.49 in January 2007.

That tells us that the interest rate climate has grown significantly less favorable for consumers, in large part because deposit rates have fallen much more sharply than loan rates. But not every bank is putting the screws to its customers, with some continuing to offer reasonable rates on both deposits and loans.

We sifted through the data from RateWatch to find which banks were most favorable to their customers, as measured by the Credit Power Index.

Photo Credit: mangpages

Power to the People

Credit unions tend to offer low loan rates for consumers, which makes it no surprise that they dominated the list of the most consumer-friendly banks. All but one of the top 10 institutions were credit unions. What sets them apart, of course, is that they are member-owned and not-for-profit. So while banks can certainly point to Fed policy as the primary driver of the current interest rate climate, these rankings suggest that rates would still be better for consumers if the banks put a little more emphasis on people and a little less on profits.

That’s not to say that the big banks are all bad for consumers. While it didn’t crack the top 10, CapitalOne (Stock Quote: COF) gets the nod as the best big national bank for consumers, with its 18.335 index helped along by great rates on unsecured loans (8.24%) and better-than-average rates on auto loans (3.39%).

PNC (Stock Quote: PNC) also scores high marks on the loan side, with exceptional rates on adjustable rate mortgages (2.5%) and auto loans (3.75%).

Before we get to the rankings, a final caveat: Banks that do not offer the eight products included in the index calculation do not have an index number, and were thus excluded from the rankings.

Photo Credit: Getty Images

#10: Sharon Credit Union

Credit Power Index: 14.13

State: Massachusetts

Like all the institutions that made the top 10, Sharon Credit Union’s deposit rates beat the national average, and its home equity loans and new auto loans are both around two percentage points lower than the national average. To be eligible for membership, you must live or work in Norfolk, Suffolk, Middlesex, Plymouth, Barnstable or Bristol Counties, which is basically most of Eastern Massachusetts.

Photo Credit: sharoncu.com

#9:Prospera Credit Union

Credit Power Index: 13.889

State: Wisconsin

Putting your money in a 12-month certificate of deposit at Prospera Credit Union will get you a 1.1% rate of return, which is higher than what Bank of America offers on a five-year CD. To become a member, you must live or work in one of the Wisconsin counties listed on the credit union’s website.

Photo Credit: MyProspera.com

#8: American Heritage Federal Credit Union

Credit Power Index: 13.62

State: Pennsylvania

This Philadelphia-based credit union boasts more than 100,000 members who enjoy solid rates across the board – you can even get 4% on a 60-month CD. To become a member, you must meet one of the criteria listed on its site.

Photo Credit: amhfcu.org

#7: Veridian Credit Union

Credit Power Index: 13.515

State: Iowa

The interest that this credit union asks for a four-year auto loan (3.24%) isn’t much higher than what it will give you for a CD at the same term (2.4%), showing that consumers do still have some power. Membership is limited to people living or working in the Iowa counties listed on its site.

Photo Credit: veridiancu.org

#6: Nassau Educators Federal Credit Union

Credit Power Index: 13.42

State: New York

This Long Island-based credit union has one of the best auto loan rates we’ve seen from a banking institution – just 2.89% (the national average is 5.15%). According to the bank website, you just need to live, work or worship in Nassau or Suffolk county – basically, anywhere in Long Island – to be eligible to join.

Photo Credit: mynefcu.org

#5: Seacomm Federal Credit Union

Credit Power Index: 13.37

State: New York

This credit union is based in upstate New York, just minutes from the Canadian border. You can get 1.35% for a 12-month CD here – even better than most online banks. Membership is limited to those in St. Lawrence County and parts of Franklin County.

Photo Credit: seacomm.org

#4: Chessie Federal Credit Union

Credit Power Index: 12.7

State: Maryland, West Virginia

Prepare to be jealous: Members of this credit union can get an astounding 1.71% APY on a 12-month CD. For the record, that’s triple the national average. The membership area includes counties in two states – check out the website for details.

Photo Credit: chessiefcu.org

#3: Barksdale Federal Credit Union

Credit Power Index: 11.545

State: Louisiana

Great deposit rates (2.43% on a 12-month CD) and solid loan rates (3.99% on a 48-month auto loan) help this Louisiana credit union crack the winner’s circle. Initially established for military personnel at the nearby Barksdale Air Force base, civilians in the area can also join up.

Photo Credit: bfcu.org

#2: Central Illinois Bank

Credit Power Index: 10.8

State: Illinois

The only bank to make the top 10, Central Illinois Bank doesn’t blow anyone away with its deposit rates – just 0.3% on a 12-month CD, for instance. But they excel in the loan department, with an extremely low 4.05% APR on personal unsecured loans and better-than-average rates on all other loan products.

Photo Credit: centralillinoisbank.com

The Most Consumer-Friendly Bank in America: First Heritage Federal Credit Union

Credit Power Index: 9.7

States: New York, Pennsylvania

The presence of First Heritage made Elmira, N.Y., one of the best cities to bank in America, and a look at its rates makes it easy to see why. A 12-month CD gets you 1.26%, an unsecured loan will only cost you 5.99% and a 36-month home equity loan charges just 3.99%. To become a member you’ll need to live, work, study or worship in one of the counties listed on the credit union’s website.

Photo Credit: fhfcu.org

Join us on Facebook


Join the MainStreet team and other readers on our lively Facebook page! Discuss our newest stories and get links to breaking content, automatically.

Click here to add us.

Photo Credit: Facebook.com

Read More:   banks
blog comments powered by Disqus

Brokerage Partners