The Worst Cities to Bank

The Credit Power Index

Every deposit or loan that takes place at a bank can be boiled down to a simple transaction: One party takes temporary custody of the other party’s money, and pays interest for the privilege. On the deposit side, consumers leave their money in the bank for a period of time and receive an agreed-upon amount of interest in exchange. On the loan side, banks lend consumers money for a period of time, and in exchange the consumers pay interest until they’ve returned the original amount. Unfortunately, the balance of power in these transactions doesn’t favor the consumer, and the new Credit Power Index quantifies the wide gap between the interest that banks demand on loans and what they offer on deposits. The index is calculated by comparing the differences between a predetermined set of deposit and loan products; the higher the index, the more consumers are getting squeezed by their bank. The national average for the index currently stands at 23.74, a significant increase from four years ago, which suggests that the interest rate climate for consumers has become significantly worse during the past few years. To see where consumers have fared particularly poorly, we’ve rounded up the worst cities to bank. One caveat: Banks that don’t offer every product included in the index – personal unsecured loans, home equity loans, new auto loans, adjustable-rate mortgages and 12-, 36-, 48-, and 60-month certificates of deposit – are excluded from the final list. As a result, the calculation of a city’s Credit Power Index may exclude data from some of its banks. Photo Credit: stuartpilbrow