Bank branch closures mean customers get it in the neck
More than 130 bank branches have shut their doors since the bank bailout of September 2008 -- and hundreds more are to follow.
Earlier this month, AIB said it would have to close some of its branches. National Irish Bank (NIB) is closing all of its 27 branches. Permanent TSB is to close about 25 branches. Ulster Bank and EBS are also expected to close branches.
This means that many of us will lose our local bank branch -- if indeed, we haven't already.
"Branch closures will cause difficulty for people in rural areas," said Dermott Jewell, chief executive of the Consumers' Association of Ireland (CAI). "In a lot of rural areas, people simply don't have an internet signal to do their banking online. It will cost them money to get to another bank branch. It will also be harder for people to get loans and mortgages -- they'll have to go to an area where it's unlikely they'll be known by the manager."
So if your local bank has closed its doors, how will you manage your money?
"As bank branches close, more people will go to credit unions and post offices," said Ray Kinsella, professor of banking and financial services with UCD. "One of the things that savers in particular want to see is a human face. However, credit unions fall short in wealth management products."
Another area where credit unions fall short is mortgages -- credit unions don't offer mortgages as they specialise in small loans, according to a spokeswoman for the Irish League of Credit Unions. However, a small number of credit unions are approved to provide mortgages. The Credit Union Bill, which was published last month, may give more credit unions scope to offer mortgages in the future.
You could lose out with your savings if you move them to your credit union. The dividend -- the credit union equivalent of interest -- paid on credit union savings can be paltry. Some banks pay as much as four per cent interest -- this is more than five times the interest paid by some credit unions.
The local credit union in Gweedore, Donegal, Comhar Creidmheasa Ghaoth Dobhair, for example, only paid a dividend of 0.75 per cent last year. Even St Raphael's Garda Credit Union in Dublin, which is one of the largest industrial credit unions in the country, only paid a dividend of 1.25 per cent last year.
Some credit unions have not even been able to pay a dividend in recent years. Mallow Credit Union in Cork, for example, was not in a position to pay a dividend last year.
Many credit unions, however, offer cheaper loans than the banks. Mallow Credit Union charges four per cent interest on its educational loan and 6.95 per cent interest on its home improvement loan. St Raphael's Garda Credit Union charges 4.25 per cent interest on its home improvement loan and 4.95 per cent on its one-year loan. Comhar Creidmheasa Ghaoth Dobhair charges 6.98 per cent on car loans. Many of the banks charge 10 per cent interest or more on car or personal loans.
The standard loans available from credit unions can, however, be expensive. Mallow Credit Union charges nine per cent interest on its standard loans -- and some credit unions charge 10.5 per cent or more.
As well as offering savings and investments, An Post has a BillPay service which allows you to pay for phone, electricity and other bills.
An Post, however, doesn't provide mortgages or loans.
If you're with AIB or NIB and your local branch closes, you can still bank at your local post office -- depending on exactly what you need to do.
AIB customers can lodge and withdraw cash from their bank account at any post office.
If you're an NIB customer, you can lodge cash to your bank account through any post office. You can lodge cheques into your account -- but only at the 206 post offices that accept cheque lodgements. You can also withdraw money from your NIB account through the post office -- by using the 'cash back' facility on your debit card.
Even if you can bank at your post office, you could still have a bit of a journey to get to it. "It can take a great deal of travel to get to a post office in some rural areas," said Jewell. "Many post offices are ill-equipped to handle a lot of customers -- not to mention the fact that a lot close for lunch."
About 900 post offices close for lunch -- while about 250 remain open. Some post offices close for a half day on Wednesday.
"Unlike the banks, most post offices open on Saturdays," said a spokesman for An Post. "There are peak periods in post offices, such as the days that social protection payments are made. But we are well geared to handle the business we have -- and any extra business."
MONEY IN THE SAFE
The inconvenience of travelling distances to do your banking will encourage people to keep cash at home, says Jewell.
"The potential for people to have more cash at home could lead to security problems around the country," said Jewell. "Even if someone doesn't have cash at home, if their local bank has closed, the perception will be that there is money at home."
If you're planning to keep cash at home, you can buy a fire-proof safe for as little as €150. It would be unwise to keep too much money at home though -- particularly if you live in a remote rural area where you are more vulnerable to a break-in.
Remember, even if your local bank closes, you can still withdraw money through an ATM. You can also get 'cash back' on your debit card when shopping -- though there is usually a cashback limit of €100.
If you can use internet banking, it is convenient and it's available 24-7.
With online banking, you can usually check the balance on your current account, savings accounts, credit card and mortgage. You can pay bills, and move money between accounts. You can also usually set up, change or cancel standing orders -- and get bank account and credit card statements.
Online banking gets tricky when it comes to loans and mortgages. Even if you can apply for a loan or mortgage online, you must provide documentation to support your application -- and as banks don't accept scanned documents by email, you will either have to post the documents or give the documents in person.
AIB, Bank of Ireland and EBS allow you to apply for personal loans online. You can apply for a loan over the phone with NIB. If you live in the North you can apply for loans online with Ulster Bank -- but you cannot do so if you live in the Republic. You cannot apply for loans online with Permanent TSB.
You can apply for a KBC mortgage online. KBC Bank has five branches in Ireland -- in Dublin, Galway, Cork, Limerick and Belfast -- and is considering "growing this number", according to a spokesman.
It can also be tricky to open a current account online. You cannot open a current account with AIB online -- although this is currently under review, according to the bank. You can open a current account online with EBS, NIB and Ulster Bank -- but again, you must provide documents to prove your identity and address and you can only do this by post or in person.
Sunday Indo Business