# Will CU release shares (loan outstanding)?



## limelawn (12 Dec 2011)

Hi All,
I have shares of about 5500 in the CU, but also have a loan of which there's about 5700 outstanding.  My plan was the use the shares to clear the loan - I currently pay about 200 a month into the loan account and shares.

I initially took out a loan of about 4K and topped it up by 1K shortly afterwards. I was told that the loan would have to be cleared in full before I'd be intitled to any other top-up or release of my shares.

With Christmas coming, I'm a bit tight for this month. I was thinking of approaching them and asking them to consider releasing 600/800 to me out of my shares.  Do I have any chance?

Failing that, in the new year I'd prefer to clear my loan altogether and start afresh, using the 200 a month I currently pay to build up some savings.  Are they usually disposed to allowing you to do this?

Advice please!


----------



## Slim (12 Dec 2011)

limelawn said:


> Hi All,
> I have shares of about 5500 in the CU, but also have a loan of which there's about 5700 outstanding. My plan was the use the shares to clear the loan - I currently pay about 200 a month into the loan account and shares.
> 
> I initially took out a loan of about 4K and topped it up by 1K shortly afterwards. I was told that the loan would have to be cleared in full before I'd be intitled to any other top-up or release of my shares.
> ...


 
This is well covered in this key post: http://www.askaboutmoney.com/showthread.php?t=155464

Basically, yes you can! You should be allowed to reduce your savings by a maximum of €4,075, on written application to the CU. The only problem would be getting the letter in and having a bopard meeting before Christmas. Talk to your CU manager.


----------



## CU Manager (12 Dec 2011)

Slim said:


> This is well covered in this key post: http://www.askaboutmoney.com/showthread.php?t=155464
> 
> Basically, yes you can! You should be allowed to reduce your savings by a maximum of €4,075, on written application to the CU. The only problem would be getting the letter in and having a bopard meeting before Christmas. Talk to your CU manager.


While it is legally possible for a CU to release attached savings to a member, the CU is not legally obligated to do so. Contractually, your savings are pledged against the loan.
While many CU's would look favourably on a request for 600-800 I dont think many would look at allowing €4K to be released!
Talk nice to the CU - just remind yourself that its a discretionary power - not an obligation (so dont go on demanding that it be done - better result likely)


----------



## Brendan Burgess (15 Dec 2011)

CU Manager said:


> Talk nice to the CU - just remind yourself that its a discretionary power - not an obligation (so dont go on demanding that it be done - better result likely)



While it is always a good idea to speak nicely to people, don't forget that you own the credit union.

The first post shows what is so wrong with the CU movement in Ireland. 



loan|5700
shares|5500
Net loan| 200

Interest paid - 6% of 5700|342
interest received - 2% of 5500|110
Net interest|230
True rate of interest|100%This really is crazy. The CU should have been offset 5500 against your loan on their own initiative a long time ago - leaving you with a net loan of €200.

Similar things happen with the banks where people have a term loan of 5,700 while they have money on deposit of €5,500 and that too is crazy. But the CU is supposedly run for the benefit of the members and they should be routinely checking their figures and alerting their members whose share accounts are way in excess of 25% of the loan balance.


----------



## CU Manager (16 Dec 2011)

Brendan
This supposes that a credit union is there only for loans and that people only ever want to have a net loan or net savings. In reality Members use their credit unions for 2 main purposes
1. To save
2. To borrow

To encourage long term savings in the CU there are incentives such as free LP/lS insurance.
To generalise that a CU should be encouraging their members to net their savings against their loan is simply wrong. While I agree that for some members this would be the best course of action nevertheless as with all advice it should be specific and relevant to each individuals needs.
The value of free life insurance must be considered as well as the access to future credit that a solid savings history allows for in a CU


----------



## Brendan Burgess (16 Dec 2011)

> To generalise that a CU should be encouraging their members to net their  savings against their loan is simply wrong. While I agree that for some  members this would be the best course of action nevertheless as with  all advice it should be specific and relevant to each individuals needs.



It's very hard to think of a situation where it is right for someone to have savings and borrowings at the same time when the interest rate on the borrowings is much higher than the interest rate received on the savings.

The only situation I can think of is when you know for sure that you will need to borrow again and there is a risk that the CU won't give you the loan. But even in that case, it doesn't make sense. 

You could argue that due to the artificial rules of some credit unions, that will only lend you four times your shares, it is better to keep your shares while borrowing. But the solution here is to change the rule.


----------

