Credit Union savings

junii

Hi,
Is there any reson to save in the credit union other than for personal loans or car loans?

I mean, is it not better to put it all into the bank to build up a good record for when you need a mortgage?

jtiernan

junii wrote:

Hi,
Is there any reson to save in the credit union other than for personal loans or car loans?

I mean, is it not better to put it all into the bank to build up a good record for when you need a mortgage?

A lot of credit unions are being regestered with the ICB these days so you can still earn credit while enjoying their friendly interest rates

MortgageBrbr

People used to save and then take out loans with Credit Unions as they did not show up on the Irish Credit Bureau... as result it was easier to hide loans....

Only 95% of Credit Unions are on the ICB at the moment...so if your planning on taking out a mortgage or re-mortgaging but also need to take out a small persona loan you should consider taking it out with the Credit Union... (Ask them if they are on the ICB before doing so)

Otherwise there is no advantage as banks are offering competitive loan and saving rates at the moment.

RainyDay

MortgageBrbr wrote:

Only 95% of Credit Unions are on the ICB at the moment...

Are you sure the percentage is this high? What is your source for this information? I understood that it was a relatively small number of CUs that were on the ICB.Oasis lists 6 CUs as members of the ICB.

liamo

junii wrote:

Hi,
Is there any reson to save in the credit union other than for personal loans or car loans?

Credit Unions give out dividends at the end of the year. As Credit Unions are non-profit, they must distribute their profits to their members according to their rules which vary slightly from CU to CU. Depending on how profitable the CU is, and how much you have in savings, this can be a nice little lump sum. Bearing in mind that interest rates have been so low for a number of years now, the dividend is likely to be better than any interest you'll earn on your savings in the bank.

Additionally (although you've specifically asked about savings) some Credit Unions also give out an Interest Rebate. That is, some of their profits are distrinuted back to members who have contributed to this year's profits by way of interest on their loans. The amount also varies from CU to CU.

I mean, is it not better to put it all into the bank to build up a good record for when you need a mortgage?

If you can demonstrate to the bank that you have the ability (that is, earning capacity) to repay the mortgage that you're applying for, then you'll generaly get the loan. Remember, the house is being put up as collateral against the loan so they're not taking that big a gamble.

On the other hand, if you've built up a good Credit Rating with your CU, you'll get a loan far quicker and easier. Indeed, building up a good savings and repayment record is far more important when applying for a loan with a Credit Union than it is for a bank.

Finally, why not ask your Credit Union if they do mortgages? Some do.

Regards,

Liam

RainyDay

liamo wrote:

Credit Unions give out dividends at the end of the year. As Credit Unions are non-profit, they must distribute their profits to their members according to their rules which vary slightly from CU to CU. Depending on how profitable the CU is, and how much you have in savings, this can be a nice little lump sum. Bearing in mind that interest rates have been so low for a number of years now, the dividend is likely to be better than any interest you'll earn on your savings in the bank.

This certainly is NOT the case with my CU in Dundrum where the dividends of 2% or 2.5% have been below the kind of rates commonly available from Rabobank or Northern Rock. What CUs have been beating Rabobank on dividends?

The other problem with CU savings is that you don't know the dividend rate up front, so it is a bit of a gamble. You have to hope/trust that rate at the end of the year will beat the bank.

liamo wrote:

Finally, why not ask your Credit Union if they do mortgages? Some do.

No CU 'does' mortgages. To do so would be breaking the law. Some CUs (like Bishopstown act as agents for mortgages from other institutions, but you're definitely not borrowing from the CU for a mortgage.

liamo

RainyDay wrote:

This certainly is NOT the case with my CU in Dundrum where the dividends of 2% or 2.5% have been below the kind of rates commonly available from Rabobank or Northern Rock. What CUs have been beating Rabobank on dividends?

"I don't know" is the simple answer. Although I do work quitely closely with Credit Unions I haven't done any comparitive research in this area. I was merely suggesting a reason, as requested by the OP, to save with Credit Unions. Perhaps I should have qualified my response more.

The other problem with CU savings is that you don't know the dividend rate up front, so it is a bit of a gamble. You have to hope/trust that rate at the end of the year will beat the bank.

Very true.

No CU 'does' mortgages. To do so would be breaking the law. Some CUs (like Bishopstown act as agents for mortgages from other institutions, but you're definitely not borrowing from the CU for a mortgage.

I stand corrected. Thank you for the clarification.

halkar

In case of a death, the savings in Credit unions (not sure if all CUs) used to double. I am not sure if they still have this in place though

shoegirl

The main benefit of using a CU depend on your circumstances:

If you've poor credit from a few years ago and might find it difficult to get a regular loan
If you want to keep your savings in an institution where you don't have to bank online or by phone (and they won't try changing your account in two years time, or keep trying to sell you other products)
If you are likely at some time in the future to need credit from a source other than the bank

The benefit I see in the CU is that the banks will drop you like a hot snot if things get tough, but the credit union are more flexible and willing to negotiate in ways that are less harmful to your credit rating.

You have to remember that while things are good now, it won't last forever, and there will be times when its going to get much harder to get credit.

JackieChang

shoegirl wrote: »

You have to remember that while things are good now, it won't last forever, and there will be times when its going to get much harder to get credit.

Shoegirl is the second coming of Christ.