Hi all, I've heard many people advocate the use of a Credit Union to store money instead of a bank. What are the advantages/disadvantages of doing so, as opposed to using one of the big banks? Also, are there any recommended credit unions to use in Australia? Cheers.
Dont know any advavtages. disadvantages i have are it takes 2 days for transfers to show up and my nearest branch is 600 km away
If you are inclined there are a few ASX listed Credit Unions still around .They pay steady divs at about 6-8 % usually fully franked. I did really well out of one over the last 12 months as a result of a takover by bigger company.Nearly 50% return in 2 months ( it was total luck). They also tend to be extremely conservatively geared which makes them safe to a certain extent however because of their regional nature their lending book is directly related to local influences which can be good and bad. They tend to pay above market % return for cash deposits. I actually like them.
Have a look at Wide Bay based in Bundaberg Qld. http://www.widebayaust.com.au/corporate_information/about_wide_bay_australia/
The only real disadvantage is if you need over-the-counter banking facilities AND your credit union doesn't have a branch close to where you live/work. (Obvious solution: pick one with a branch close to where you live/work). They're all covered by the same deposit guarantees as the big banks and the credit unions' RediTeller ATM network has a no-fee deal with NAB so you can use NAB machines at no cost. They're basically just the same as banks except they don't have to keep making record profits to appease the shareholders - the credit unions' members are the shareholders so all the services are provided "at cost". TBH, they're all pretty similar in terms of what they offer. Banking isn't very sexy. This is a list of all the Authorised Deposit Taking Institutions in Australia: http://www.apra.gov.au/adi/pages/adilist.aspx Just go to the Credit Unions section and start googling the names until you've found some you like the look of and then start sussing them out in more detail.
Advantages: MUCH lower fees or NO fees. Better service. Easier to get things done / problems sorted. Disadvantages: As previously mentioned, lack of physical branch network in many cases. Safety is the same while the govt keeps the deposit guarantee, but if that is dropped, your money is safer in one of the 'four pillars'. A little credit union can be allowed to go under but not one of the big four.
Of course you're right, but just the fact that the deposit guarantee is there means it is a lot less likely to ever be needed. The credit unions aren't as desperate for business as the big banks are either, so they're less likely to make risky loans in the first place and more likely to just merge with another credit union if they start doing it tough and make savings through combined efficiencies.
St. Geroge Bank, now part of Westpac, was at one stage a Building Society. Its not hard to imagine the top management at more than a few credit unions aspire to become full-fledged banks, eyeing 'performance' bonuses or simply a Big Payday.
Or the Bigger Banks just taking them over. Have alook at MyState who amalgamated with the Rock Building Socity ( Rockhamptons based). They are the biggest financial provider in Tasmania http://www.mystatelimited.com.au/ If you were in Rock about a month before the announcement you would have made 50% capital gain. Keep an eye on these type of stocks. I think Wide Bay ( posted above) will get taken over soon.
