How Safe Are Credit Union Deposits?

I keep a thousand or two in my local Credit Union savings account. I called in today and asked to withdraw €600 and I was asked did I want a loan of this money? I am not sure if they are desperate to provide loans and are pushing them or what?
 
SlugBreath said:
I keep a thousand or two in my local Credit Union savings account. I called in today and asked to withdraw €600 and I was asked did I want a loan of this money? I am not sure if they are desperate to provide loans and are pushing them or what?
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They make money by you taking out a loan, they make nothing by you removing savings. On the upside it is probably a novel experience to be offered a loan in the ' current economic climate' !!
 
I'm a member of my local Credit Union. Naturally I'm worried about the safety of my shares/savings.
I remove my few bob then I'll lose the life insurance on savings. (Savings before the age of 55 are doubled). It wouldn't be much but would it would be a help to my lady wife in the event of my death.
It's a tough call. Any suggestions?
 
Paddyman said:
I'm a member of my local Credit Union. Naturally I'm worried about the safety of my shares/savings.
I remove my few bob then I'll lose the life insurance on savings. (Savings before the age of 55 are doubled). It wouldn't be much but would it would be a help to my lady wife in the event of my death.
It's a tough call. Any suggestions?
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Hi Paddyman - that insurance is usualy limited to a doubling of savings up to a max of€13k (i.e. €6,500 x 2). all your savings in CU are state guaranteed up to €100k. Stop worrying. Slim
 
Got the end of year accounts from our local Credit Union today that stated they are paying a 0% dividend for last year. Nice one to tell us this at the end of the year.
 
WaterWater said:
Got the end of year accounts from our local Credit Union today that stated they are paying a 0% dividend for last year. Nice one to tell us this at the end of the year.
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Credit Unions can only decide and declare their proposal to pay a particular dividend at year end and it has to be approved by the AGM.
 
Slim said:
Credit Unions can only decide and declare their proposal to pay a particular dividend at year end and it has to be approved by the AGM.
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And these days, it seems, prior approval of the Registrar of Credit Unions too!
 
Slim said:
Can you be specific here? Do you mean loan defaults? I so, yes it is an industry wide problem.

What happens if CU cheques are not paid by AIB or BOI or whoever?

Slim
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Sorry for not replying, Slim, and for not making myself clear.

Yes, I mean loan defaults. Probably a bigger issue for a local credit union than a bank etc.
 
My Credit Union spent €25k on debt collection costs to get back €38k. They are also paying a 0% dividend and have doubled their provision for bad debts. Because of their poor lending practices the depositors have to suffer. I would imagine that a lot of people will do as I did and reduce their account balance to that of a petty cash status account.
 
Good to see that some people are moving their deposits due to the awful returns on their own money at the CU.
 
Wexford Credit Union unable to pay a dividend

Wexford Credit Union (assets c€154m) cannot pay a dividend due to investment losses on Anglo Irish Bank subordinated bonds and bad debt provisions. see ITimes and [broken link removed]
 
CiaranT said:
Good to see that some people are moving their deposits due to the awful returns on their own money at the CU.
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There are credit unions paying 2-2.5% which I would not consider an 'awful' return.

If we discussed banks operating in Ireland generically there would be many that would be quick to point out the differences. Like credit unions there are many banks I would not keep a lot of my savings in but I do not suggest that people move their deposits out of banks. I would understand the media putting all the credit unions in the same bucket as they never let the facts get in the way of a good story but I have higher expectations of AAM.

The truth is that everyone should look at all of their deposits and have their savings diversified in a manner that reduces the risk, maximises the return and maximises the service. The mix of risk, return and service is an individual choice.
 
I think people misunderstand the premise of CU ethos. This is a hangover frofm the Celtic Tiger days when we were all trying to egt best retuns on deposits. I have been a member of two CUs since the 1980s when nobody would touch me for a loan. I saved a few shares with the purpsoe of borrowing a few bob on the strength of them to get through Xmas and the like. I borrowed to get kids through college. I never looked at dividends. i was grately that they gave me loans when I needed them.
Now, and the CU's policies have helped create this image, CUs are seen as the same as any other financial institution. They are the 'poor relation' with regard to savinsg returns etc but my view is that they wer never meant to be anything but a union of people that helped each other with credit based on the monies deposited locally.
to look at them as being places to save and withdraw at a whim is not my way of looking at it.
 
CiaranT said:
Good to see that some people are moving their deposits due to the awful returns on their own money at the CU.
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I have reduced my balances down to a few hundred from a few thousand. I will still keep a presence there as I can get handy parking outside the door, there is never a queue and I can get cash there easily enough. They have had my money for a year and now announce a nil dividend.
 
ECB is currently paying 1%, in the normal course of things this is the benckmark.

Anyone paying below it is inline with the markets and probably lower risk.

Anyone paying above 1% is paying a risk premium. They have some extra risk attached, whether loan losses risk, investment losses risk or small reserves risk.
 
rossie2010 said:
ECB is currently paying 1%, in the normal course of things this is the benckmark.

Anyone paying below it is inline with the markets and probably lower risk.

Anyone paying above 1% is paying a risk premium. They have some extra risk attached, whether loan losses risk, investment losses risk or small reserves risk.
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Rossie - that is NOT how credit unions calculate their dividend. They take surplus of income overexpenditure, less contribution to Statutory and other reserves, including bad debts, and then decide how much of what's left may be distributed to members as dividend. It is not set at year start to attract funds. Slim
 
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