Re: ...
The CU will not allow you to withdraw that €3000 if you have a loan with them. They may allow you to take out a portion of it. So, psychological issues aside, you effectively won't have that €3000 cushion if you borrow from teh CU.
So, your options are.
1. Borrow €7000 from the CU wile leaving €3000 in savings.
Pay interest on €7000, earn a lot less interest on €3000
Probably not be able to withdraw all of your €3000 in an emergency.
2. Borrow €7000 from the Bank while leaving €3000 in CU savings. Pay slightly more Interest on €7000, while earning
interest on €3000, but you'll be able to get at the €3000 any
time you want.
3. Take the €3000 out of the CU. Borrow €4000 from the bank. Only pay interest on €4000. You won't have access to your €3000 any more, but you will probably be able to top up your PTSB loan if the need arises.
If the need doesn't arise you only have to pay back €4000 +Interest, not €7000 +interest. You'll have saved up the €3000 again as quickly as if you'd never withdrawn it.
I think option 3 is the way to go. Option 1 is a definite NO, NO. Option 2 Is a bad idea.
Keep in mind that you thought the CU wasthe way to go on the basis of a 1% lower APR. BUT, you have the option of paying interest on €7000 or €4000. In this situation a 1% difference in rate is not the important factor. The amount of borrowing is what's important.
Also keep in mind that the psychological thing you refer to is very common in CU members. Because the CU instills it in it's members. I and others have argued that the CU is doing it's members no favours in this regard.
-Rd