Who Has the Best Interest Rates in MA?
Wednesday, February 06, 2013
The study, conducted by GoBankingRates.com, was based off the site's database of over 4,000 online, national and local banks and credit unions and ranked the top 10 institutions in the Commonwealth for savings account interest rates and 6-month, 1-year and 2-year certificates of deposit (CDs).
In all four categories, the study found that Massachusetts was above the national average when it came to banking interest rates. Overall, the Bay State had the 19th highest average savings account interest rate with 0.21 percent. The state ranked 8th for its 2-year CD rate of 0.83 percent. Massachusetts ranked 16th for 6-month CDs and 17th for 1-year CDs at 0.35 percent and 0.53 percent respectively.
Credit Unions Have the Edge
The Commonwealth's credit unions dominated the top 10 lists in all four categories, including several institutions located in Central Mass.
"Credit Unions are organized as non-profit entities and are not subject to corporate income taxes," said Victor Matheson, an associate professor of Economics at Holy Cross. "Without having to pay a return to investors and a cut to Uncle Sam, they can pass on their savings in the from of higher rates for savers and lower rates for borrowers."
Workers' Credit Union in Fitchburg offers one of the highest savings account interest rates in the state for its online savings account.
"It's a lower cost account for us, so we can afford to pay a higher rate," said Tim Smith, CFO at Workers' Credit Union.
According to Gordon Wetmore, senior VP of marketing at Workers', the credit union has a little over 70,000 members and 15 branches.
"We have quite strong loan demand," Smith said. "We're willing to pay a little more because we're lending the money out at good rates."
Wetmore said Workers' also benefits from being able to work collaboratively with other credit unions and offer products some of the institutions might not be able to offer on their own.
Closed Membership Keeps Rates High
The Worcester Fire Department Credit Union offers among the highest rates as well, due in large part to the fact that it is a closed credit union, with membership only open to the city's firefighters and their immediate families.
While the credit union only has one branch and just over 1,900 members, Darcy Defusco, who handles online and mobile banking there, said that they often receive calls and inquiries from individuals seeking to join and take advantage of the favorable interest rates.
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