Are your savings safe?
In times of deep financial crisis, banks are often exposed to higher risks. That is why it is not surprising to ask if the money in your savings accounts would be safe.
Well, you need not worry too much because the Australian banking system has been insulated so far from the global banking meltdown. Australian banks have sound fundamentals and in a strong position against insolvency so your savings accounts would be perfectly safe.
Aside from these, the Australian government has implemented a deposit guarantee scheme which practically secures the savings accounts of Australian depositors. The deposit guarantee scheme has been in place since October 2008 and you can take advantage of it to secure your savings accounts.
So here is a quick look of the Australian deposit guarantee scheme and how such program can shield your savings accounts from banking risks.
The Basics of Australian Deposit Guarantee Scheme
On October 12, 2008, the government of Australia put into place the Deposit Guarantee Scheme initiative. This is a Federal initiative that practically guarantees the safety of savings accounts in Australian banks.
If you are getting queasy about the worsening financial and economic crisis, you can opt to take the guarantee provided by the Australian Deposit Guarantee Scheme. This way, you can ensure that the money in your savings accounts would be safer.
Applicable Fees for the Deposit Guarantee Scheme
You can enjoy free guarantees for deposits of up to A$1 million on any participating Australian banks. So better check your banks if they are participating in the Australian Government Deposit Guarantee Scheme.
If you have more than A$1 million in your savings accounts, then a guarantee fee of 0.7 percent would apply for balances in excess of the first million. For example, if you have A$1.3 million in your savings accounts, then the A$1 million balance would not be charged with a deposit guarantee scheme fee. However, the remaining A$300,000 balance will be covered by the 0.7 percent p.a. guarantee fee.
Types of Accounts Covered by the Deposit Guarantee Scheme
Your individual savings accounts will be covered by the deposit guarantee scheme. As long as your banks are participating in the scheme, then you can you can take away your worries because the government is backing up your money.
Partnership and business accounts are also covered by the official guarantee scheme including deposits made by offshore corporate branches into participating Australian banks. The deposit guarantee scheme is also applicable to trusts and government entity accounts.
How to Opt-in to the Official Guarantee Scheme
If you have an account in any participating bank and your current balance is A$1 million or below, then your account is automatically guaranteed by the scheme. In case your balance exceeds A$1 million, you can nominate the excess balance for a guarantee.
You should formally apply for the deposit guarantee scheme so that your bank can guarantee your nominated deposits. You will receive a phone call from your bank to confirm your application. You will have to pay the guarantee fee on a monthly basis through direct debit.