Too much money in Credit Union?

Bangdiggy

Hi everyone,

My Credit Union called me today to let me know I can only have a maximum of 20k in my account. Anything over that will be returned.

Is this normal for other credit unions?
I’m trying to save as much as I can since lockdown makes it easier?

I prefer credit union for savings because it’s harder to get the money out than a current account but I can withdraw money out whenever.

Thanks in advance.

manlad

Yes unfortunately, the figure may vary depending on the size of your credit union. The central bank issues capital requirements to credit unions i.e. the more money saved by them, the more they must provide in capital to the central bank. Something like €10 per every €100 saved.

dobman88

Bangdiggy wrote: »

Hi everyone,

My Credit Union called me today to let me know I can only have a maximum of 20k in my account. Anything over that will be returned.

Is this normal for other credit unions?
I’m trying to save as much as I can since lockdown makes it easier?

I prefer credit union for savings because it’s harder to get the money out than a current account but I can withdraw money out whenever.

Thanks in advance.

Yes, been like that for a while now afaik. My credit union has a limit of 30k, the one where I'm from has a limit of 20k. So seems to be dependent on each different one

manlad

Bangdiggy wrote: »

Hi everyone,

My Credit Union called me today to let me know I can only have a maximum of 20k in my account. Anything over that will be returned.

Is this normal for other credit unions?
I’m trying to save as much as I can since lockdown makes it easier?

I prefer credit union for savings because it’s harder to get the money out than a current account but I can withdraw money out whenever.

Thanks in advance.

Also, if you have alot more that you want to save it might be worth looking at other outlets that might get you a better return. Bank and Credit unions are good places to store money but you could also be earning better interest in says bonds or other low risk investments.

Bangdiggy

manlad wrote: »

Also, if you have alot more that you want to save it might be worth looking at other outlets that might get you a better return. Bank and Credit unions are good places to store money but you could also be earning better interest in says bonds or other low risk investments.

Thanks:)

I’m thinking about doing that but I know I have to do some research first. Also I just wanted somewhere temporary cause I’ll defined be using the money once lockdown/covid is in the past.

Atlantic Dawn

I also read recently that some of the banks will be rolling out negative interest shortly.

lawred2

Bangdiggy wrote: »

Hi everyone,

My Credit Union called me today to let me know I can only have a maximum of 20k in my account. Anything over that will be returned.

Is this normal for other credit unions?
I’m trying to save as much as I can since lockdown makes it easier?

I prefer credit union for savings because it’s harder to get the money out than a current account but I can withdraw money out whenever.

Thanks in advance.

Just reduced to 10k where we are. Too much money on deposit apparently.

Also monthly deposit limit reduced to 1k

1874

My CU deposit limit is 30k, not that I have anything near that, and 2k monthly deposit limit I believe,
Is there some reason for the upper limit? Id hazard a guess at money laundering for the monthly deposit amount but if its possible to confirm where the money comes from, why?


So negative deposit rates? and chances of reduce deposit rates in CU? and if so why?

BorneTobyWilde

50k limit in CU where I am. It was 75k .

2Mad2BeMad

30k Where I am,
Capital Credit union, I believe they have several branchs and opening up more accross the southside of Dublin.

Don't think I will hit the 30k for at least another 5-10years but would of liked it to be higher. Like the OP its handy to put money in and forget about it as its not so easy to access

An Ri rua

manlad wrote: »

Also, if you have alot more that you want to save it might be worth looking at other outlets that might get you a better return. Bank and Credit unions are good places to store money but you could also be earning better interest in says bonds or other low risk investments.

Prizebonds, yes.

Bonds are not low risk. Certainly not now.

1874

is it allowable to be in more than one credit union, not just to gwt past the limit, and what is the purpose of limiting people saving where they want to? ie in the credit union with all their money if they see fit.

phildub

Bangdiggy wrote: »

Hi everyone,

My Credit Union called me today to let me know I can only have a maximum of 20k in my account. Anything over that will be returned.

Is this normal for other credit unions?
I’m trying to save as much as I can since lockdown makes it easier?

I prefer credit union for savings because it’s harder to get the money out than a current account but I can withdraw money out whenever.

Thanks in advance.

Do you own a house? If not you could set up a mortgage savers account with the bank? Or like another poster said look into investment opportunities.

micar

It's €15k in my CU.

phormium

1874 wrote: »

is it allowable to be in more than one credit union, not just to gwt past the limit, and what is the purpose of limiting people saving where they want to? ie in the credit union with all their money if they see fit.

You can be in more than one credit union if you come within their Common Bond, so for example you can live in Thurles just to pick on somewhere and have a CU account there as you live there so in the CB and work in Limerick so you can be a member of Limerick CU as you are also within their CB. Sometimes if there is a work related one you can join that too, think the Gardai have or did have one, several employers would have.

As to why there is a limit on savings it's because at this stage it's costing the CUs money to mind your money, they can't lend out enough to get rid of it so they have to store it and while years ago they earned good money in the banks on those funds these days they are getting nothing and will be first in line for negative rates and charges if they have not already been charged. Add to that the Central Bank guidelines and they just don't want surplus money hanging around that they can't use to lend or earn money on.

An Ri rua

1874 wrote: »

is it allowable to be in more than one credit union, not just to gwt past the limit, and what is the purpose of limiting people saving where they want to? ie in the credit union with all their money if they see fit.

Yes, you can be in more than one, as said, once you fall within the common bond. E.g. 1. Geographical, 2. Occupational. Etc etc.

Because it's not a one-way street based on individualism!! It's a credit union, with limits set from on high by the regulator, and so they distribute that limit across their membership, for the collective good of all.

Carb

1874 wrote: »

is it allowable to be in more than one credit union, not just to gwt past the limit, and what is the purpose of limiting people saving where they want to? ie in the credit union with all their money if they see fit.

Regarding the limits, the CU needs to maintain a statutory reserve of 10% of deposits. This reserve has to be funded from annual surpluses. The more deposits they take, the more surplus is needed to fund the reserve. With little to no investment return, and low demand for loans, a lot of CUs are just about breaking even.

L-M

Surely if the offered better APRs on unsecured loans they would be able to get the money out there. Obviously properly underwritten not the “John and Mary are lovely people” underwriting of the past

Carb

L-M wrote: »

Surely if the offered better APRs on unsecured loans they would be able to get the money out there. Obviously properly underwritten not the “John and Mary are lovely people” underwriting of the past

Can only speak for my local one which I was on the board of, but it's very difficult. They don't get to price risk in the same way a bank does, so aside from different product categories they have to charge all borrowers the same and any change in rates brings down the return on existing loans. The regulator puts a lot of focus on any reduction in the average interest rate.

I think one of the biggest impacts is the proliferation of low rate PCPs and HP deals that they cannot compete with, coupled with some aggressive competition from the banks at times. We would have had loans applicants that went to the bank for statements and ended up borrowing from the bank.

Its hard to see how they turn it around.

silver2020

L-M wrote: »

Surely if the offered better APRs on unsecured loans they would be able to get the money out there. Obviously properly underwritten not the “John and Mary are lovely people” underwriting of the past

That was always their issue. They never had serious underwriting oversight. I'm surprised more did not go belly up, but the savers effectively paid for the poor decision by getting miserable returns for the past 10 years and see the reserves fall.

I was surprised that the "Life loan" that is now back available by seniors money was never considered especially as many of those who'd look at such loan would be life members of their unions.

Heebie

You could take the excess and put it into longer term investments such as 6 months or a year or two, that'll post higher interest. Maybe take 5 grand from the credit union account and invest it, then pay monthly or whatever into the credit union.. repeat when you near that 20k cap again.
Then you can plan large expenses to be shortly after the end of the longer terms. If you can put 5 or 10 grand away for 2-3 years, and keep adding to your credit union account, you should do well.

L-M

Carb wrote: »

Can only speak for my local one which I was on the board of, but it's very difficult. They don't get to price risk in the same way a bank does, so aside from different product categories they have to charge all borrowers the same and any change in rates brings down the return on existing loans. The regulator puts a lot of focus on any reduction in the average interest rate.

I think one of the biggest impacts is the proliferation of low rate PCPs and HP deals that they cannot compete with, coupled with some aggressive competition from the banks at times. We would have had loans applicants that went to the bank for statements and ended up borrowing from the bank.

Its hard to see how they turn it around.

I’ve sold PCPs on behalf of one of the Banks at 0 percent and 1.9 for years. Asking the bank rep how they are able to offer it and being told because the bank has so much money on demand it was cheaper to have it out at 0 percent then keep it in the bank.

I think the lure of the credit union for years was the variable interest, the ability to top up an existing loan and the difficultly in accessing money (ie. physically having to get there to withdraw). That seems to be now gone along with the “John and Mary are lovely” attitude, it’s hard to see their purpose.

phormium

While the lending attitude is different now it's still not as strict as the average bank, as each CU is their own Head Office as such you can get a hearing at least if you have had difficulties in the past, it's not straight to 'computer says no' that is so prevalent in the rest of banking. I think this is a good thing, there are many people who had difficulties especially back in the bust who just need to be able to get a hand up again, a lot of those difficulties were outside the control of people and shouldn't be penalised for life for them.

Also now whether or not people on social welfare should be borrowing or not is another story but CU is the only place likely to lend them anything, sometimes the need is there be it for funeral costs/medical or any number of good reasons. Better than using moneylenders!

ShatterResistant

If you’re not fussed about interest return on the money and want the same passbook-only withdrawals, there’s still the option of an An Post deposit account - up to €250,000, no fees and same book only access.

https://www.statesavings.ie/our-products/book-based-deposit-account

beachhead

Bangdiggy wrote: »

Thanks:)

I’m thinking about doing that but I know I have to do some research first. Also I just wanted somewhere temporary cause I’ll defined be using the money once lockdown/covid is in the past.

You could open a current account with your Credit Union if they have one-move the money there.Or buy into state savings schemes if you need quick access to your money

Mundo7976

Are ye married? You can open a joint account and have up to another 20k in there too.

Bangdiggy

Definetely not hahah. I'm only 22. I started doing some research last night on buying stocks. Felt overwhelmed cause I understood virtually nothing.

billyhead

State Savings give the best and safest returns at present OP. The longer you leave them invested the more you get back

Heebie

Bangdiggy wrote:

Definetely not hahah. I'm only 22. I started doing some research last night on buying stocks. Felt overwhelmed cause I understood virtually nothing.

Something to keep in mind about stocks is that you could buy 20 grand of them today, and have them worth nothing tomorrow. Be sure you know why you're buying any stocks you buy. Are they stable? Is it new and expected to go up quickly? 8 bazillion other potential questions.
A financial adviser might help you find some funds you can buy into that'll help you hedge your bets.

Jim2007

Bangdiggy wrote: »

Definetely not hahah. I'm only 22. I started doing some research last night on buying stocks. Felt overwhelmed cause I understood virtually nothing.

You need to start by defining your savings objectives, time lines and how you will measure your progress. Only then will you be able evaluate which financial products are best for you.

“I want to save as much as I can”, is an aspiration, not an objective.

“I need to have an emergency fund of 20k to cover 6 months living. It needs to be guaranteed, easily acceptable, a reasonable return has a low priority”, that is an objective that you can measure financial products against.