The Government Deposit Guarantee (formally known as the Financial Claims Scheme), as you’ll be aware, is a guarantee on bank deposits of up to $250,000 per customer and per institution. It applies to deposits held with approved deposit institutions (ADIs) incorporated in Australia, which includes Australian banks, building societies and credit unions as well as foreign subsidiary banks.
So why the confusion? Simply, many attendees were not aware that the deposit guarantee applies to all ADIs, including small mutual banks, building societies and credit unions.
“You mean I could have by term deposit in my local credit union, and it is guaranteed in the same way as if it were held in one of the Big 4?” was a typical question I received.
The answer, of course, is yes.
My interest was piqued by this experience and examination of Canstar’s readership database revealed that this confusion is most likely widespread. More than 75,000 visitors to the Canstar website have specifically sought out articles relating to term deposits so far this year. And our Australian Government Deposit Guarantee Guide is the most popular article.
So if you are one of the substantial number of people unsure about the ins and outs of the Deposit Guarantee, make sure you get your facts and compare term deposit interest rates that are available. You could just be getting a better return on your money.