City taxpayers can be assured that their money is in good hands, as Standard & Poor's Corporation announced Friday that it has raised its rating of Cambridge's finances to the AAA-level, the highest evaluation a city can receive.

The award will have a substantial effect on the city's finances, saving millions of dollars in reduced interest costs over the next 10 years because of the top-grade credit rating, said James D. Maloney, the city's finance director.

"This rating increase will be applicable right off the bat to $20 million in debt issued today," he said.

Continued economic diversification, tax base expansion, strong financial operations, a modest debt burden and a strong management team played important roles in the rating upgrade, according to a Standard & Poor's CreditWire report.

Cambridge has been awarded AAA status by the two other major U.S. financial rating agencies this year, Moody's Investor Services and Fitch IBCA. It now joins cities such as Indianapolis, Minneapolis and Winston-Salem, N.C., in the top tier of six municipalities in the U.S. that have received AAA ratings from the three major agencies.

On Friday, Standard & Poor's assigned both Cambridge's $27.94 general obligation (GO) bonds and its $105.6 million outstanding GO debt its AAA rating, an upgrade from the city's previous AA+ GO debt rating.

Maloney said the AAA rating is the result of the City Council and the city manager working together.

"The city manager has recommended some very sound financial positions, and the City Council has followed those," Maloney said.