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Written by Matt Kirk Published: May 6 2020 Investments
The Federal Government guarantee on bank deposits applies to term deposits of up to $250,000, making them one of the safest ways to save while earning interest.The Government’s Financial Claims Scheme stands ready to fund term deposits if a bank, building society or credit union becomes insolvent.
Unlikely as it may be, the Global Financial Crisis in 2008 did prove this to be the case for many international banks. While Australian banks were solid, they were affected by the spreading panic. The Government’s Guarantee Scheme stepped in to boost confidence and ensure our banks remained competitive with international banks who offered a similar guarantee.
In 2012, with the crisis over, the Government modified the guarantee and passed legislation to establish the Financial Claims Scheme.
There would be a $250,000 permanent cap, per person per institution, on various types of deposit. If the scheme is ever activated, the banking regulator, the Australian Prudential Regulation Authority (APRA), aims to pay people their money in seven days.
The scheme is of particular comfort to term deposit holders, who are prepared to loan their money to a bank for a longer period of time than other savers.
The scheme doesn’t apply to local branches of foreign banks, foreign branches of Australian banks or to finance companies and others not regulated by APRA.
It helped Australian banks weather the Global Financial Crisis and now it stands ready, if ever needed, to support savers.
Take advantage of this added security, knowing that your funds are safe in a term deposit. You can invest with a range of term deposits from various Australian Financial Institutions via the Cashwerkz online marketplace.
Register now to select, invest and manage your defensive assets.