If CU have too much deposits, and not enough loans, then why do my local CUs still charge in the range 6.9% - 8.9%?
If they want to compete with PCP, and make more profit than getting 0% putting savings into banks, then lend at 2.9% / 3.9% / 4.9%.
while the CU are coming in around 7%
an anorak for consumer issues
Hi Pinoy
They are misleading you. Most credit unions require you to have shares.
So let's say you have
€10k @ 7% = €700
€3k shares@0%
Net €7k
Effective interest rate: 10%
And after a few years, you have reduced the €10k to €5k but still have €3k in shares, so you are pay €350 interest on €2k of net borrowing or 17.5%
Brendan
It makes no sense to a financially responsible , financially secure person.You should never borrow money when you have money on deposit.
If you borrow €8k @7%, you will be paying €560 interest while having a net €2,000 on deposit!
No wonder the credit unions are so profitable if they can sell this idea.
Brendan
Ultimately this this ratio means unless CU profitability is 10% of additional assets each year, the ratio will ipso facto trend downwards to 10% and under.
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