Banks included in the Australian Government Guarantee Scheme
Do you know how safe your money is in an Australian bank? Here's how the $250,000 deposit guarantee scheme works and what to look out for.
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Concerned about the safety of your money at the moment? You're not alone.
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.
There are a few things you need to know about this scheme, which we'll go through in this guide. You can also compare a range of savings accounts, bank accounts and term deposits offered by banks that are included in the scheme, which you can open online in minutes to ensure your money is in a safe place.
- Maximum rate: 3% p.a.
- Standard variable rate: 0.2% p.a.
- Monthly fees: $0
Bank accounts protected by the Australian Government Guarantee Scheme
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:
Savings account offer: Westpac Life (18-29 year olds only)If you’re between 18-29, you can earn a 3% p.a. variable rate each month you grow your balance (excl. interest) and make 5+ settled debit card purchases from your linked Westpac Choice account, up to a balance of $30,000.
What types of accounts aren't included in the guarantee?
- Share trading accounts
- Debt and credit products
- Super fund accounts
- 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?
You might have heard about digital mobile banks like Xinja, Volt Bank, Up Bank and 86 400, and are wondering if they're safe. Rest assured, these banks need to go through a strict regulatory approval process to be granted an ADI license. If they're granted a full ADI license (which Xinja, Volt and 86 400 have been), then yes they are included in the Government Guarantee Scheme and your deposit up to $250,000 is protected.
Some of these banks, for example Up Bank, 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.
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.
- AMP Bank Ltd
- Australia and New Zealand Banking Group Limited
- Australian Military Bank Ltd
- Australian Unity
- Auswide Bank Ltd
- Bank of Queensland Ltd
- Bank of Sydney
- Bank of Melbourne
- Bendigo and Adelaide Bank Limited
- Commonwealth Bank of Australia
- Community CPS Australia Limited (trading as Beyond Bank Australia)
- Defence Bank Limited
- Heritage Bank Limited
- Hume Bank Limited
IMB Limited (trading as IMB Bank)
- Macquarie Bank Limited
- Mecu Limited (Trading as Bank Australia)
- Members Equity Bank Limited (ME Bank)
- Judo Bank
- MyState Bank Limited
- National Australia Bank Limited
- Newcastle Permanent
- Police Bank Ltd
- Police Financial Services Limited (trading as BankVic)
- Police & Nurses Limited (trading as P&N Bank)
- RACQ Bank
- Rural Bank Limited (a subsidiary of Bendigo and Adelaide Bank Limited)
- SGE Mutual Limited (trading as G&C Mutual Bank)
- Teachers Mutual Bank Limited
- Victoria Teachers Limited (trading as Bank First)
- Westpac Banking Corporation
- Up Bank (owned by Bendigo & Adelaide Bank)
- 86 400
Foreign subsidiary banks
- Arab Bank of Australia Limited
- Bank of China (Australia) Limited
- Bank of Sydney Ltd
- Citigroup Pty Limited
- HSBC Bank Australia Limited
- ING Bank (Australia) Limited (trading as ING)
- Rabobank Australia Limited
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