# Currently saving with the Credit Union: Am i mad??



## NOONEB (29 Jun 2009)

Hi

Apologies if this topic has been covered in previous threads but I need advice on Savings.

I started saving with the CU in February of this year(1000 euro a month) for the purpose of a mortgage deposit. Can anyone advise me am I better to stay with them for the next year or so or is there anywhere that may pay off better in the long run??


Any help would be gratefully appreciated


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## alaskaonline (29 Jun 2009)

I am with them, saved with them and am happy with them. Saved up my mortgage deposit with them, too. I have also a saving account with BOI but I am getting a higher interest back from CU than with BOI.


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## oldtimer (29 Jun 2009)

How do you know you are getting a higher rate from your credit union? You couldn't know. Credit unions decide their interest rate at the AGM which is usually held in November/December. Your credit union may not pay any interest (dividend) this year. Credit unions are not a wise place to save money.


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## Sue Ellen (29 Jun 2009)

This thread may be worth a read.


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## Lightning (29 Jun 2009)

NOONEB said:


> Currently saving with the Credit Union: Am i mad??



The rate of return with a lot of CU's is zero. Most other CU's are giving very low returns. 

Have you checked out the best buys thread? You will almost certainly get a better rate of return elsewhere.


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## mac2 (29 Jun 2009)

Your savings in the credit union are guaranteed up to €100,00 and many of them will pay a higher rate than BOI. Mine pays 2.5% for 12 month deposit account. And they're about the only ones giving loans.


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## oldtimer (29 Jun 2009)

Could you tell me the name of your credit union paying 2.5% on a deposit account? There is no way any credit union can guarantee you 2.5% now. People keep making this mistake of thinking they know what interest their credit union is paying. Go into any credit union and ask them their current rate of interest on deposit accounts and the answer you should get is 'I don't know.' The interest rate to be paid cannot be decided until the end of the financial year on 30th September and a dividend is then recommended which must be passed by the members at the AGM.


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## kaplan (29 Jun 2009)

Are you mad? Depends on your credit union. Ask them if they will make enough of a surplus (profit) be able to pay a dividend this year. Don't be put off by fuzzy answers - its nearly July and their year end is September - the will know by now if they will be paying any dividend. Ask them if they intend using reserves to fund their dividends - it could make for an interesting answer. 

If the say no ...then you might be mad saving at a zero rate. It's up to you. The Irish League of Credit Unions thinks its ok for credit unions not to pay a dividend it seems as the say the "average" savings balance is €4000 and the amount will be so small in any event etc....

Check best buys on this site. You might be better off saving with a bank or the EBS: They might offer you mortgage finance and you will have established a relationship with them. 

Are credit unions lending? Well some are lending as normal and others are not - The ones that aren't have been told to curtail lending by the regulator as they have liquidity problems (not generating enough positive cash which is the difference between money saved - money withdrawn + loan repayments)


@mac2 
Oldtimer's question is important : Which credit union is paying 2.5% for a deposit account and what are the terms etc? You never know it may rank as a best buy...but only for people who qualify to join. 


Kaplan


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## Lightning (29 Jun 2009)

Agreed that there is almost no chance that you will get 2.5%.



mac2 said:


> and many of them will pay a higher rate than BOI. .



BOI pay very low rates anyway. Many of BOI's on-demand accounts pay as little as 0.01%. 

Compare your CU rate to the best buys rates, which in the case of an on-demand account is Anglo at 3.60%. It is almost beyond doubt that Anglo's rate is higher than any local CU.


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## mac2 (29 Jun 2009)

Coolock Artane - and it is 2.5% - and I don't have to wait until their AGM to know this because it's a deposit account. And they offered me 1.5% on a bog standard deposit account, about 1.499999% better than BOI!


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## kaplan (29 Jun 2009)

@mac2
Is this the one you are writing of ?

_Fixed Term Account - 2.5% Interest _
_The Credit Union has recently launched a new 1 year 2.5% fixed term account. To open this account, Members must lodge a minimum balance of €10,000 and a maximum of €100,000. The member must ensure that their money remains in their account for a 1 year term and withdrawals are not allowed (any withdrawals on the term deposit are are subject to penalty). (Coolock Artane Website)_


Collock Artane residents might refer to the best buys section for a comparison with other providers.


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## so-crates (30 Jun 2009)

You aren't mad, it isn't an unreasonable place to start saving. I did use the CU for saving for a deposit as it was simply convenient at the time to up an existing SO. Besides the amount I would have earned on interest was pretty paltry from anywhere else and the dividend I was being paid was reasonable in comparison (note that CUs generally do both share accounts (dividend, vote at AGM) and deposit accounts (interest)). If I was doing so today, I would probably not put it there since the return is currently pretty low. (Having said that the return to be achieved even at the best rates won't make a massive difference to your final total) Shop around, have a look at the best buys and see what banks will give you. Chances are you are going to be saving for a year or two so you can look at more restrictive fixed term accounts, I think Anglo give 5.5% on a monthly deposit up to €1000 as long as you don't touch it for six months. If you are worried about the safety, move the funds after that period and build again.


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