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Australian Government Bank Guarantee: Which banks are included?
Your deposit up to $250,000 in a licensed Australian bank is protected by the Australian government. Here's how the bank deposit guarantee works, including when your money isn't covered under the scheme.
The Australian Government guarantees deposits up to $250,000 in Authorised Deposit-Taking Institutions (ADIs) such as banks (including online and digital banks), building societies or credit unions. This means that if something happens to the bank or the bank goes bankrupt, this money is guaranteed by the government and financial regulator APRA to be paid back to you. This is one reason why deposit products like bank accounts and savings accounts are one of the safest places to keep your cash.
There are a few things you need to know about this scheme, which we'll go through in this guide.
How does the Australian Government Guarantee work?
The Australian bank Government Guarantee protects your deposit up to the value of $250,000. This cap applies per person and per Authorised Deposit-taking Institution (ADI). If you have separate bank accounts with different banks with $250,000 or less in each of them, you will be covered for both accounts. If you have more than $250,000 in a single bank account (or term deposit, or savings account), you won't be covered for the amount over $250,000 (this doesn't mean you'll automatically lose your deposit over this amount, though).
What types of accounts does the guarantee cover?
The government guarantee covers most deposit accounts, including:
Finder survey: What term deposit features do Australians value most?
Response
Competitive interest rate
66.82%
Low or no fees
10%
The term duration
6.82%
Australian Government Bank Deposit Guarantee
6.36%
Online access
5%
Auto renewal option
3.18%
Other
1.82%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
What types of accounts aren't included in the guarantee?
Share trading accounts (only the money you have sitting in a cash management account is covered)
Debt and credit products
Super fund accounts
SMSF investments (unless you have money in cash with an ADI)
Personal loan accounts
Money on prepaid cards or gift cards
Is it possible your bank will go bankrupt?
It's very unlikely that an Australian bank will go bankrupt. Banks in Australia are highly regulated, and need to go through very strict application processes with the industry regulators to ensure they've got enough capital to manage a potential fall in the economy.
If a large majority of a banks mortgage, credit card and personal loan customers were suddenly unable to meet their interest repayments, the bank would use the capital from deposits to get them by for a while as a safety net. However, if all the deposit customers also suddenly want to withdraw their money, this is when the bank would find itself in trouble. This is one reason why the government promises to guarantee deposits up to $250,000 per customer: so deposit holders don't feel the need to run to the bank and withdraw their money all at once.
Remember, this is very unlikely to happen and is a 'worse-case' scenario. But it's good to know that if it were to happen, your deposit would be safe.
What if I have multiple accounts with different banks?
The scheme is applied per person per ADI. If you have several accounts with different ADIs, for example if you had one account with Westpac and another with CommBank each with $250,000, both would be covered in the scheme. But if you had two separate accounts with Westpac each with $250,000, you'd only be covered for the first $250,000.
It's important to understand that the government guarantee covers the underlying ADI, and not different brands. Some ADIs offer multiple accounts under different brand names. For example Bank SA, St.George and Bank or Melbourne are all part of Westpac and covered under the one ADI. If you have multiple accounts under different brand names but all under one ADI, the guarantee only applies to the one ADI and not the different brands.
Another example is ubank. Ubank is protected under the Government Guarantee Scheme, but ubank is owned by NAB. This means that if you have $250,000 in an account with ubank, and $250,000 in an account with NAB, you'll only have $250,000 guaranteed as both banks operate under the same ADI licence.
What happens with joint accounts?
For joint accounts, each person is entitled to an individual guarantee. For example, for a joint account holding two people, the account is covered up to $500,000.
Does the Australian Government Guarantee Scheme include non-residents?
Yes, its does. The residency status of the account holder is irrelevant. If you're eligible and able to open an account and deposit money with a licensed ADI in Australia, then your deposit up to $250,000 is protected by the scheme.
Is my SMSF bank deposit covered under the government guarantee?
Yes, money held in an Australian ADI by an SMSF or trust is included in the scheme. The SMSF is considered to be one account holder, regardless of how many individual members or trustees are listed on the account. This means that if your SMSF has four members and there's a total of $500,000 in the bank account, it's treated as one account holder and only $250,000 is protected under the scheme.
Because an SMSF is considered to be its own account holder, if you have a personal account in your name and also an SMSF cash account with the same ADI, both would be protected (up to $250,000 each).
Are mortgages included in the government guarantee?
Your mortgage is a loan from the bank, so it's not covered in the government guarantee. If in the unlikely event that your bank did fail, deposit holders would be covered by the government and mortgages will likely be transferred to a partner bank or lender.
Are digital neobanks covered by the Australian Government Guarantee Scheme?
Rest assured, Digital banks need to go through a strict regulatory approval process to be granted an ADI license. If they're granted a full ADI license then yes they are included in the Government Guarantee Scheme and your deposit up to $250,000 is protected.
Some of these banks haven't got their own ADI license but instead are using the ADI license of an existing bank. Up Bank is using the license from Adelaide and Bendigo Bank, therefore your deposit up to $250,000 with Up Bank is protected under the scheme as well. This is the same case for 86 400, which is now owned by NAB and using NAB's ADI license.
NOTE: Xinja has officially closed its bank accounts and handed its banking license back. Because it was included in the government guarantee scheme, if you were a Xinja customer your deposit up to $250,000 will be protected.
Can the government take my money to help bail out the bank?
If you're still a bit concerned about your money being used to help bail out a bank in trouble, you have little reason to be. The 'bail out' legislation says that the government can use other financial products, like debt products and securities (shares), to help bail out a struggling bank. However, for the purpose of this legislation a deposit product (like a bank account) isn't considered to be a financial product.
Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds.
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Is Judo protected by the Australian Government
Yes under the Financial Claims Scheme, deposits are protected up to a limit of $250,000 for each account holder at Judo Bank.
Is Income Direct government guaranteed up to $250000 ?
No, Income Direct is not a deposit-taking institution and therefore is not covered by a Government guarantee.
Is the Bendigo Bank government guaranteed up to @250.000
Yes, Bendigo Bank is covered by the bank guarantee.
The guarantee extends to joint accounts, but does the guarantee include joint accounts with more than two joint account holders?
Thanks.
Hi Ross, yes it does. The guarantee is applied per person per ADI, not per account.
I’ve got a mortgage offset account managed by Origin MMS. Does it fall under ANZ ADI?
Hi,
We’d suggest you get in touch with your lender directly to ask about this, just to be sure.
Thanks,
Alison