Comments on: Update on the Guarantee of Australian Banks

By: stubbornmule

stubbornmule — Thu, 29 Jan 2009 04:41:43 +0000

@Mrs V Fisher: my understanding is that “retail balances” of under $1 million dollars are guaranteed regardless of the interest rate paid on the account. For accounts of over $1 million, it is necessary to pay a fee of 0.7% to have the benefit of the guarantee. Again, this is the case regardless of the interest that the account earns, although you can think of the fee as a reduction in the interest rate. So if you had over $1 million in a cheque account that earned no interest (probably not a good idea!), if you wanted to have the money guaranteed by the Government, you would effectively be earning a negative interest rate of 0.70%. Note also that the $1 million applies to the total across all your accounts with a given bank, so you can’t get around it by opening up a number of accounts with the same back. You could, of course, split it across a number of banks.

Hope that all makes sense. The upshot is that it doesn’t make any difference whether the money is in a cheque account or a savings account.

By: Mrs V Fisher

Mrs V Fisher — Thu, 29 Jan 2009 03:38:24 +0000

Could I ask a question please about the Government guarantee on bank accounts in Australian owned Bank? If one had a cheque account (no interest earned) then the Government guarantee protects the money in that account. If one had a savings account that earns interest I understand now that the money earning interest is subject to a reduction in interest rate (.7%) if one elects to keep the Governement guarantee on funds earning interest. One can elect to earn .7% more interest but those funds are not Government guaranteed. Any clarification would be much appreciated. Thanks Val

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By: AJ

AJ — Fri, 24 Oct 2008 02:34:13 +0000

Henry looked ready to headbutt that prize furball Coonan into tomorrow didn’t he? Aussies cannot be very deserving if this is our political representation. Further, Turnball picked the wrong battle at the wrong time. Nuff said.

By: Kwoff.com

Kwoff.com — Wed, 22 Oct 2008 10:43:04 +0000

Update on the Guarantee of Australian Banks | A Stubborn Mule’s Perspective…

Ken Henry gave an impressive performance before the Senate Estimates Committee, but uncertainties remain as to the details of the Government guarantee of Australian banks….