Why Save with Credit Union?

JonG

Registered User
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38
I've been trying to figure this out from looking at past CU posts, but why would I save with a credit union rather than with a bank?

Thanks
 
Historically, you were not obliged to provide details of CU loans to mortgage providers etc - don't know if this is still the case.

Also, CUs are I think popular in low income areas - regular savers (even if the amount saved is small) tend to be looked upon favourably should loans be requested.

...this was my understanding anyway but I'm open to correction(!)
 
www.creditunion.ie and your local CU's website will give you their marketing blurb on why they think you should save with them.
Historically, you were not obliged to provide details of CU loans to mortgage providers etc - don't know if this is still the case.
Some CUs now pass details onto the ICB. See [broken link removed].

Also - in the past most or all CU savings were not visible to Revenue and dividends/interest earned were subject to self assessment with few people dealt with preferring to evade tax. This has changed somewhat in recent years:

[broken link removed]
 
I think CU loans are more accessible for people with low/irregular income. They were not considered a savings mechanism ever, really, putting money in was to show you could be trusted to get a loan and pay it back!
 
Historically, you were not obliged to provide details of CU loans to mortgage providers etc - don't know if this is still the case.

This was definitely the case in the past - dont know if it still is? Id be interested to find out if anyone knows the answer.
 
Was it not the case at one stage that dividends and/or interest paid by the CU was better than that available from other financial institutions? Not the case now when you compare CU dividend/interest returns with high rate deposit rates on offer from the banks etc.

Don't they double the savings of a deceased member and pay it to the next of kin or something like that?
 
Was it not the case at one state that dividends and/or interest paid by the CU was better than that available from other financial institutions? Not the case now when you compare CU dividend/interest returns with high rate deposit rates on offer from the banks etc.

Don't they double the savings of a deceased member and pay it to the next of kin or something like that?


Yeah, something on those lines...or write off the outstanding loan if you died?
 
CM. Think there is an age restriction on when a member dies and their loan is cancelled and their savings doubled. think if kicks in around 65 and maybe the savings end isn't doubled anymore after that age.
 
Don't they double the savings of a deceased member and pay it to the next of kin or something like that?

Clubman, I think you have hit on the main reason why those older citizens keep a few quid in the CU account.

I know that when my late Dad passed on, the CU did indeed double his shares, and passed these onto my Mum.

However, there have recently been some problems with this aspect, whereby elderly CU customers have "nominated" people other than next-of-kin to receive the pay-out on their death.

The Ombudsman decided to refer the CU system of Nomination to the Financial Regulator.

See Page 10 of report [broken link removed] (pdf file req Foxit or Adobe reader).

However, in the light of these two complaints the Ombudsman took the view that the circumstances of these cases raised wider questions of public policy in that the Nomination system may be unfair to people, such as surviving spouses. In effect the system could be used to deprive a surviving spouse of his/her statutory rights under the provisions of the Succession Act 1965.
In these circumstances the Ombudsman decided to refer the issue to the Registrar of Credit Unions (the Financial Regulator) so that full consideration could be given to the public policy issues raised arising from the circumstances disclosed by these complaints.
 
Was it not the case at one stage that dividends and/or interest paid by the CU was better than that available from other financial institutions? Not the case now when you compare CU dividend/interest returns with high rate deposit rates on offer from the banks etc.

Don't they double the savings of a deceased member and pay it to the next of kin or something like that?

This did happen when my parents died - loan written off, shares doubled and paid out to myself and sibling. I think different CUs have different rules on it.
 
Lets go back to the original question '' why should one save in the Credit Union rather than the Bank.'' It depends - are you saving for everyday needs? If so the simple answer is money is available on demand over the counter at a better rate of interest from the Credit Union. If you are saving larger amounts not for everyday needs then it would be silly to save in the Credit Union - other financial institutions far more attractive.
 
If so the simple answer is money is available on demand over the counter at a better rate of interest from the Credit Union.
I don't believe that this is necessarily or actually the case. Many CUs have been paying dividends of c. 3% in recent years. Many banks offer better than this even on demand deposits.
 
There is probably no reason to pick them over a bank now if the rate is the only criteria you are interested in.

A couple of reasons I can think of why people did or still do:

They are usually community based (near home) and open in the evenings.

Smaller queues.

It is easier to get a loan from them than a bank.

Mine was a work one so payroll deducted my savings from every pay packet. No temptation!

They were better than most banks for interest (still are better than most ordinary current accounts). Although mine screwed up big time this year - dodgy investments saw them write off 10 million and the proposed 4% interest turned into 2% after the financial reg. intervened. Needless to say I moved the majority of my money shortly after they announced it.

They allow any size withdrawls without notice. Granted it's not cash but when I needed a cheque for the deposit on my house I had no trouble. My bank only allows me to move 5000 online every day, probably less if I went in looking for cash.

In general I think most people who bank with a credit union are not rate tarts. It's a convenience thing or they come from a backround of getting loans from them. As times got better people stayed with them and saved instead of borrowed. Banks in this country are new to giving decent interest rates and fighting for peoples custom. Credit unions were accessible to all, very informal (ran by neighbours etc) and much more lenient on loans. If I remember correctly the interest on savings was DIRT exempt at one point or at least a portion of it was.
 
They were better than most banks for interest (still are better than most ordinary current accounts).
Comparing a CU account to a current account is not a fair comparison. Most CUs don't offer current account facilities (e.g. ATM withdrawals, Laser/debit cards, chequebook, DDs/SOs, online access, call centre assistance etc.). A fairer comparison would be with a bank savings account and there are many of these that offer much better rates than most CUs. And there are even some current accounts now that offer a better rate of interest on limited cleared balances than the CU!
They allow any size withdrawls without notice. Granted it's not cash but when I needed a cheque for the deposit on my house I had no trouble. My bank only allows me to move 5000 online every day, probably less if I went in looking for cash.
Surely if you wanted to empty (but not close) your bank account you bank would issue a cheque so it would be the same as the CU on that score?
If I remember correctly the interest on savings was DIRT exempt at one point or at least a portion of it was.
No - just that most people ignored the tax issues and evaded tax. Only in recent years has partial tax exemption on special term accounts (offered by the CUs and other financial institutions) with access restrictions been introduced.
 
I don't believe that this is necessarily or actually the case. Many CUs have been paying dividends of c. 3% in recent years. Many banks offer better than this even on demand deposits.
I only got 2% this year in my CU...so I`m outta there next week.No real reason to save with CU now unless you`re planning to pop your clogs soon!
 
Just checked my own CU's annual report (I still have about €50 with them) and they also paid about 2.5% in dividends for the past couple of years. Part of the report also seems to push normal deposit accounts in favour of share accounts. Not sure why...
 
A good reason to save with the credit union is to enable you to borrow from the credit union. You would borrow from a credit union because:

- it may gives you the best rate. Personal lending rates in credit unions vary from 4.5% - over 12%, so it depends a lot on what credit union you are a member of and the characteristics of the loan that you are applying for.

- the credit union loan may be provided to you when personal circumstances are not ideal e.g. loss of employment. In these cases a loan request may not be entertained by other financial institutions. If anyone is looking for an appropriate comparison for this, it would be the sub-prime lenders.

- the flexibility regarding opening hours, location, speed of loan disbursement or varying the repayment amount without penalty would not be available from many of the other institutions.

This does not mean that credit unions are the right place to maximise your annual interest on savings, there are plenty of threads on FA, Rabo etc. for that but I hope that it does at least give a plausable reason for putting a tenner a month in the credit union.
 
dundalk cu now charge 6.95% interest which compares favourably with a lot of banks especially for the likes of a car loan. they also have an atm with their own card if required.
 
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