TheStreet (Nasdaq: TST ( TheStreet)), a leading digital financial media company, announced today that according to the monthly Credit Power Index™ produced by its RateWatch division, consumers are getting squeezed less by banks than they were a month ago, with deposit rates holding steady and loan rates dropping slightly.

The combined index at the end of January was 23.62, a small drop from the 23.74 mark in December. The decline is encouraging after three straight months of rising index figures threatened to reverse last year’s positive trend. Year-over-year, the index has improved by nearly 130 basis points.

The Credit Power Index gauges the rate climate by measuring the gap between the interest rates that banks charge consumers and the deposit rates they give to consumers. Certificate of deposit rates at four terms – 12, 36, 48 and 60 months – are compared with loan rates on unsecured personal loans, home equity loans, new auto loans and adjustable-rate mortgages at the same terms. The higher the combined index number, the more consumers are getting squeezed by the interest rate climate. (See our graphic for a full explanation of the methodology.)

While the current index is a significant improvement from its peak of 25.46 in May 2009, consumers are still significantly worse off than they were before the recession. The past four years have seen a net rise of 5 percentage points in the Credit Power Index. The single biggest factor in consumers’ declining credit power has been plummeting deposit rates: A 12-month CD, which provided a 4% return in January 2007, now returns just 0.55%.

If there’s a silver lining to that dismal number, it’s that it has held steady for two months – the first time since fall 2008 that a month has passed without the 12-month rate declining. (Indeed, combined deposit rates actually climbed a basis point in January.) It will remain to be seen whether deposit rates have truly hit bottom, and if we can expect a significant improvement in the foreseeable future.

With deposit rates holding steady, much of the improvement came on the loan side of the equation.

“The net improvement in the national Credit Power Index this month of 12 basis points was made possible primarily by a reduction in the loan component of 11 basis points,” says Bob Quinn, chief operating officer at RateWatch. “However, while the loan component in total showed a decline in the aggregate, there were inconsistencies within the individual components.”

Home equity loans, for instance, climbed in January after declining steadily throughout 2010 and bottoming out at 6.57% to end the year. The rise to 6.80% on a 36-month loan may not be good news for consumers, but it does suggest that Americans are getting confident enough to borrow against the equity in their homes.

Meanwhile, rates on 60-month adjustable-rate mortgages dipped slightly in January to 3.77%. Save for a few spikes, interest rates on ARMs have declined fairly steadily since fall 2008.

The national average rate on 48-month new car loans also continued to fall last month, with the rate dipping below 5%. That’s a drop of nearly 2.5 percentage points since January 2007, meaning consumers are still getting a great deal on these loan products, and there’s no sign of things turning around anytime soon.

The improvement in the national Credit Power Index in January would have been far more significant had it not been for a considerable spike in the index in the South. The South’s regional average climbed nearly 50 basis points in January, driven by a huge month-to-month jump in home equity loan rates. Still, it’s too soon to attribute any regional volatility to the Southern states – the Credit Power Index has stayed fairly stable in the region despite last month’s volatility.

NOTE TO EDITORS: The full Credit Power Index database is available at .

About RateWatch

One of the nation's largest providers of accurate, up-to-date rate information, this web site 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, 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 Silver, Stockpickr, Action Alerts PLUS, Options Profits, ETF Profits, MainStreet and Rate-Watch. For more information on TheStreet’s business, visit For financial and business news, actionable trading ideas, stock quotes and more, visit via your web browser, follow TheStreet on Facebook and Twitter, visit from your mobile device and access TheStreet through all major tablet platforms.

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