His answer: the economy.
His credit union, and many others like it, has great loan demand as businesses expand and residents seek out mortgages. That loan demand drives deposit demand and results in higher rates in a competitive market.
Now new research shows a relationship between a state’s economy and interest rates.
Market Rates Insight, a California-based pricing consultant to financial institutions, found that the average unemployment rate is 2.2% lower in the five states with the highest interest rates when compared with the five states with the lowest rates.
“Lower state unemployment means that banks and credit unions are competing for liquidity to fund higher demand for loans due to increased economic activity,” said Dan Geller, executive vice president at Market Rates Insight, reflecting what the credit union CEO told us.
The top states for deposits — Iowa, Louisiana, Nebraska, Texas and Virginia — have an average unemployment rate of 5.2%. The bottom states for deposits — Indiana, Michigan, New Hampshire, Ohio and West Virginia — have an average unemployment rate of 7.4%.
So look to your state’s health as one way to measure whether you’ll be able to find top CD rates nearby.
This week we added two deals to our list of the highest CD rates from credit unions and local banks:
- One Source Federal Credit Union (www.onesourcefcu.coop) in Texas pays 2.27% APY on 60-month CDs and 1.76% APY on 36-month CDs with a $1,000 minimum deposit. Credit union membership is open to those who live, work, worship or attend school in Texas’ El Paso County. Additionally, savers in the Las Cruces, N.M., area can check with the credit union to see if they’re eligible, and members’ family members can join, too.
- Quabbin Online Credit Union (www.quabbinocu.com) in Massachusetts pays 1.25% AP on 12-month CDs and 1.75% APY on 24-month CDs with a $5,000 minimum deposit. Credit Union membership is open to those who live, work and attend school in specific towns of Franklin, Hampshire and Worcester counties listed on the website as well as their direct relatives.
We have no rate cuts to report this week, but we do have one big rate boost.
TEXAR Federal Credit Union (www.gotexar.com), which we added to our list last week, boosted its 24-month online rate to 2.12% APY. That beats the top nationally available 5-year deal on our CD Rates Leaderboard. If you walk into a TEXAR branch, you’ll earn 2.02% APY for that same CD.
You’ll find all the top-paying deals clearly marked on our highest CD rates page, showing where they are available, with a quick link back to the original post, which includes more information on the institution and its requirements.
We’ll update this page weekly, so you’ll always know what great deals are out there from credit unions and local banks.
Follow Mike Cetera on Google Plus.