# Credit Union Rant



## Metallo (16 Aug 2006)

Hi All
Firstly I hope I have this in the correct forum - if not please move it.

Last week my mother was asked to provide a guarantor for a €3,000 loan she had applied for in her local Credit Union.  This despite having savings of €20,000.  
Before you ask why she wanted to borrow - she and my father had received a small increase in their pension and she felt she would spend rather than save it if she put it in her purse  - her words not mine.

She is 67 years of age, had been a member of that Credit Union for 25 years and had NEVER defaulted or even received a letter from them for late payments.  

I thought it may be due to her age, and they might feel the loan was at risk if anything happened to her.  However it now appears this loan is fully covered in the event of her death by the Credit Unions death benefit scheme.  

She asked to meet the manager as was really upset about having to ask one of her children to go as guarantor - to be honest she is in a better financial situation than we are.  No mortgage, no kids etc.  The manager was to meet her she was 'busy' but one of the tellers advised her to have a chat with the committee who decided on loans.


No joy there either - two committee members stood over their decision.  They feel that she is a 'risk' and will not amend their decision. She was really upset and unable to understand the reasons behind their decision.  When asked what would happen if she had no children to go as guarantor - she was told she could perhaps ask a neighbour.

She has decided to turn down the loan because she's so upset but I'm furious on her behalf - is there anything I can do???

All suggestions welcome


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## The Punter (16 Aug 2006)

Take her 20k as far away from them muppetts as possible. Plenty of other financial inststutions around nowadays who would be only too willing to offer this I would say.


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## demoivre (16 Aug 2006)

Metallo said:


> Hi All
> Firstly I hope I have this in the correct forum - if not please move it.
> 
> Last week my mother was asked to provide a guarantor for a €3,000 loan she had applied for in her local Credit Union.  This despite having savings of €20,000.  ...................All suggestions welcome



I have read the post twice so apologies if I have still missed something but why on earth would she want to borrow 3k when she has more than 6 times that on deposit  - why not  take the 3k from existing savings?


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## Metallo (16 Aug 2006)

Hi Demoivre

They were keeping the money aside as they feel they may need to replace some windows next year and are looking at changing their car. They planned to use the savings,  they don't want to get into too much debt - hence the €3k loan application.


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## GJPC (16 Aug 2006)

maybe the savings are not with the CU and if they are I'd follow punters advice!


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## Metallo (16 Aug 2006)

Savings are definately with the CU, have seen the a/c books  Have advised her to take her money out and put it elsewhere. Hope she listens,


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## ClubMan (16 Aug 2006)

Metallo said:


> Hi Demoivre
> 
> They were keeping the money aside as they feel they may need to replace some windows next year and are looking at changing their car. They planned to use the savings,  they don't want to get into too much debt - hence the €3k loan application.


It's crazy to borrow €3K while one has €20K in readily accessible savings! Use the €3K now and replenish the savings by saving what would otherwise be going on repayments (including interest) going forward.


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## Metallo (16 Aug 2006)

Agreed Clubman - but they are of the old school and HATE borrowing.  I think they felt that if they had the lump sum - then they weren't in effect borrowing as they could clear the debt immediately if they needed to.

Will try to sit down tonight and talk to them though


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## ClubMan (16 Aug 2006)

Such illogical thinking should be challenged. Best way to do this is to point out the pros and significant cons of borrowing while having savings available. Crunching the numbers and showing them the bottom line may help.


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## Guest107 (16 Aug 2006)

many CUs will actively  browbeat you at the counter not to withdraw but to borrow instead. There are complex reasons why this may be  a good thing to some degree. Dividends etc and other good reasons if you are not a long term member. 

If you insist on withdrawing they write out a cheque there and then.

They NEVER send it back to the credit committee who then REFUSE the loan. Thats scary and I would not want to be a member of that Credit Union.


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## ClubMan (16 Aug 2006)

2Pack said:


> If you insist on withdrawing they write out a cheque there and then.


You mean a cheque for the balance of the account or for the loan?


> They NEVER send it back to the credit committee who then REFUSE the loan.


 I don't understand this bit.

Coincidentally I withdrew the balance of my _CU _account (less €5 to retain my membership just in case) recently because it's been sitting there doing nothing for years, dividends have fallen below the highest deposit rates in recent years and the chances of me borrowing from them are slim to none and they did "invite" me in to discuss my requirements and how I might be better served by not withdrawing funds. I made my excuses and declined. And all this in the context of the _CU _sitting on millions that it can't even lend out or use more efficiently and yet bad debts are escalating at some _CUs_...


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## irishpancake (16 Aug 2006)

ClubMan said:


> Such illogical thinking should be challenged. Best way to do this is to point out the pros and significant cons of borrowing while having savings available. Crunching the numbers and showing them the bottom line may help.



It may be illogical, but definitely people who have been active members of CU's for years will be looking at such things as:

1) Free-to-member Loan Insurance (whereby loans are written off on death or permanent disability:

2) Free-to-member Savings Insurance, whereby sums up to €12700 will be matched in the event of members death.

see [broken link removed]

Now I know for certain, from experience, that this is a "selling point" used by CU's in relation to the choice of taking a Loan or Withdrawal.

It is a very dubious practice. but it does happen.

_Edit by IP:

None of the above is meant to be insenitive to the OP (Metallo). Apologies in advance if it is taken as such._


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## ClubMan (16 Aug 2006)

irishpancake said:


> 1) Free-to-member Loan Insurance (whereby loans are written off on death or permanent disability:
> 
> 2) Free-to-member Savings Insurance, whereby sums up to €12700 will be matched in the event of members death.


Some would argue that such insurance cover is far from free and that the cost is footed by the members one way or another (e.g. through lower dividends/interest, higher interest rates on loans, higher costs of other products especially as long as _CUs _were coerced into not being able to shop around for insurance etc. by the _ILCU _etc.).


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## irishpancake (16 Aug 2006)

ClubMan said:


> Some would argue that such insurance cover is far from free and that the cost is footed by the members one way or another (e.g. through lower dividends/interest, higher interest rates on loans, higher costs of other products especially as long as _CUs _were coerced into not being able to shop around for insurance etc. by the _ILCU _etc.).




Fully agree with you on this.

I was using the terminology which the CU's use in their web-site as shown and other publications.


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## sherib (16 Aug 2006)

Hi Metallo,

Maybe if you showed your Mother how much she would be saving in interest charges, she would see the wisdom of withdrawing rather than borrowing. Why not withdraw €3,000 and save the monthly repayments?

Could you ask that CU if it is because of your Mother's age they are in effect forcing her to withdraw rather than obtain a loan? If so that is the direct opposite to the advice normally given to members as pointed out by 2Pack? I wonder if this is the rule applied to older members in other CUs or is it just in that particular one. It would be interesting to find out.


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## ClubMan (16 Aug 2006)

sherib said:


> I wonder if this is the rule applied to older members in other CUs or is it just in that particular one. It would be interesting to find out.


Could be. I know that some or all _CUs _(like many other financial institutions) refuse to offer travel insurance cover above a certain age as my mother in her 70s discovered to her disgust a few years ago.


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## ontour (16 Aug 2006)

CUs would just be reselling the travel insurance so the age limit is a factor of the insurance company that they are linked to... as I went hunting for travel insurance for my parents recently I realised that this is not unusual.

Also important to point out that all credit unions are not the same, they don't all offer the same rates, products or services and they are not all linked to the ILCU.

on point, I agree with taking the 3 grand from the 20 grand and setting up a direct debit to put the amount in to savings every week or month


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## Metallo (16 Aug 2006)

Many thanks to you all for your replies.  
I have just called in to discuss the whole situation with my parents.  They have agreed to withdraw €3k of their own money and forget about the loan.  As you suggested clubman we sat down and did the maths, nothing like a few figures to shatter an illusion.
One of the interesting things that has come to light is that that they are saving themselves quite a bit of money.  The interest repayments on the loan would have been €1.83 per €1,000 borrrowed per week.  As the loan decreased do did the interest due.  However, the dividend paid by this particular CU last year was only 1.5%.

Am hoping to convince them to move the rest of their money ASAP


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## Brendan Burgess (16 Aug 2006)

Metallo

Tell them to leave a tenner in the Credit Union so that they can go to the AGM and kick up hell. They can vote against the people on the committee. They might be reluctant to speak in public, but often people who make a stand find lots of other people follow their lead. 

Brendan


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## Guest107 (16 Aug 2006)

Metallo said:


> Am hoping to convince them to move the rest of their money ASAP


ahh no, leave a symbolic amount for the death benefit and for the right to speak at every AGM and give out.


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## ontour (17 Aug 2006)

what people need to remember is that the people that you are giving out to / kicking up hell etc etc to are volunteers,  I believe that writing to board of directors would be the thing to do as most of them would not know what is going on in the office from day to day and you would not have to wait up to a year for the AGM.

One of the big problems is that there is far too much ranting and kicking up hell which wastes a meeting and not enough constructive input that may actually guide the board towards some constructive change.


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## ClubMan (17 Aug 2006)

ontour said:


> what people need to remember is that the people that you are giving out to / kicking up hell etc etc to are volunteers


Not in all cases. My own _CU _employs several full time staff. Some people would be of the opinion that being a volunteer with the best will in the world doesn't excuse misadvising customers into doing something that is not in their own best interests.


> One of the big problems is that there is far too much ranting and kicking up hell which wastes a meeting and not enough constructive input that may actually guide the board towards some constructive change.


Can you give specific examples of this maybe?


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## therave (17 Aug 2006)

most of the people currently running these CU's are un-qualified and elected by cronies to do their dirty work for them...i am a member of 2 credit unions and i use them for short term loans and keep a few quid in just to keep the account open but if i am refused a loan i always tell them,the manager and the loan officer how unhappy i am with their service,this really gets them,and then i proceed to close the account,that is never allowed to happen.i am far from 65 but all the same ,these people in the CU movement forget that wthout the ordinary people in the community putting theri few quid away each week then they (the board and employees's) would have no place to act out their power trip..i think at every turn these people should be reminded that the CU belongs to the members and not to them and/or their ego's ...
and another thing that really annoys me is the fact they are awash with money so they go and spend it on new buildings..i know in Cork it's like a besting match between CU's as to who has the best office's..
pay more dividends.i don't care if i have to q up in a shed in Siberia.


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## ontour (17 Aug 2006)

Clubman, Most credit unions have paid staff, what the previous posters were referring to was going to the AGM which is where the board of directors, credit committee etc report to the members.  These people are not paid.  The only exception being that it is usual for the Treasurer to get a stipend.

I have been to AGMs of approx 12 different CUs and have been to ILCU agms and have been horrified by the rants that go on and interfere with moving the CU movement forward.  At the AGM of the ILCU it was usual for the many motions not to be discussed or voted on because certain people wanted to speak... they had nothing useful to add but wanted to feel important.  And then the meeting ran out of time..

I know I spend time defending the CUs but I do entirely recognise that there is nothing more dangerous than well intentioned fools and there are plenty of those involved in CUs.  I do also know of lots of people who would have turned a bad situation in to a worse situation if not for the local credit union.

I have to agree with theRave about a shed in Siberia and focus on service, I heard of a CU in Kildare recently that are spending 12 million on a new office !!  and their current office is no barna shed... it even has its own television station !!


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## Riddler (1 Sep 2006)

Just because a person is a volunteer is no excuse for poor governance & oversight. Nor does it excuse lower standards of consumer protection.

But the ILCU would have us believe that because of the volunteerism we should accept lower standards...I am reminded of a recent headline "Credit Union Chief hammers the Regulator" . I have read the Regulators speach (it's on the website) and have to agree with almost everything he had to say. 

R


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