Term Deposit Government Guarantee

Many Australians opt for a term deposit investment because of the security which is afforded to them; your investment is locked away where it can’t be spent, but you know it is earning the interest rate you negotiated with the bank at the beginning of the term, every single day. However, in the wake of the Global Financial Crisis many investors shied away from investing with banks and other financial institutions after seeing bank after bank around the world struggle and finally fall. That is why the Australian Government introduced the Deposit Scheme to protect Australians’ savings, but what does that mean for your term deposits?

Featured Term Deposit Account

UBank Term Deposit Account

With a UBank Term Deposit Account you have the chance to invest what you thought was an insignificant amount and turn it into the beginnings of a blossoming investment portfolio.

• Maximum Rate: 5.41%
• Standard Variable Rate: 3.36%
• Bonus Rate: 2.05%
• Monthly Account Fees: $0
• Minimum Balance:
• Minimum Deposit: $1000

Read the UBank Term Deposit terms and conditions

Featured Term Deposit Rates

Term Deposit	1 Month	3 Month	4 Month	6 Month	12 Month	24 Month	36 Month	60 Month	Min Deposit
UBank Term Deposit	3.36%	5.61%	5.71%	5.91%	5.41%				$1000
St.George Term Deposit	2.55%	3.25%	5.45%	5.20%	5.30%	5.40%	5.70%	6.05%	$5000

Guarantees With Any Term Deposit

Before and after the GFC, and into the future, term deposits have been able to guarantee investors security and reliability and the guarantees you should expect from your term deposit no matter what, include:

An unwavering interest rate every day of your term. When you open a term deposit account, you are guaranteed that your investment will earn the same interest rate for the entire term. Whether the term deposit provider puts their interest rates down and if the Reserve Bank of Australia slashes their official cash rate, the interest rate you’ll earn on your term deposit has been locked in.
You won’t be able to spend your savings. A term deposit account does not give you any access to your investment for the entire term. Instead your savings are locked away in your term deposit and all they are doing is earning you interest so they can grow, rather than giving you access to them as with an ordinary savings account where you can easily spend them.
Free to open and use. Since a term deposit account requires little interaction from the bank and even less from you, the bank saves time and money on staffing and managing your account and these are savings they can pass onto you. Therefore, you should be guaranteed to open a term deposit account for free and not be charged any fees to check your balance or interest, or transfer your investment and returns at the end of the term.

Australian Government Guarantees on Term Deposits

The government’s Deposit Scheme extends to all savings and deposits in all Australian financial institutions, and your term deposit would be covered under the Scheme which includes:

All deposits up to $1 million are guaranteed by the Australian Government.
The Deposit Scheme will guarantee all eligible deposits until October 2011.
Deposits in all eligible Australian banks, credit unions and financial institutions will be covered, and there will be no cap.
Deposits over $1 million can also be guaranteed for a fee.
The Deposit Scheme will be reviewed in 2011 and may be extended or adjusted.

Term Deposits Invested Until After 2011

It is impossible to know what decision the Australian Government will make with regards to their Deposit Scheme after October 2011, so what if you are investing in a long-term term deposit which will see your funds still locked away after the government guarantee has ended.

Investing in term deposits after 2011:

Check the credit rating of the bank. Before you choose a provider to invest with past 2011, check their credit rating. This information should be listed on their website and if not you can call the bank and find out their rating, this might also tell you why they failed to mention their rating on their website. Most Australian banks are rated at AA which is considered very secure while you may want to think twice about investing with a bank below a B rating.
Find out about the provider’s guarantee extension. Some providers are offering to extend the government guarantee on deposits over $1 million for free because they fell so secure in their financial position so find out what guarantees they are offering for investors with term deposits which expire after 2011.
Stay up to date with financial news. The financial market in Australia appears to be recovering well and while the Australian Government introduced the Deposit Scheme to restore the faith in our banks to avoid a mass-exodus, they may not feel that Australian banking customers are in the same state of mind in 2011 so it will pay for you to keep up to date with news from Canberra regarding your investments.

Term deposits are a secure and high yield option for long term investing and while you are covered by the Deposit Scheme until 2011, if you make the right choices in your investments and your provider then you can feel secure that your term deposit will keep growing. For more information about the term deposits available which are currently eligible for the government guarantee, use our comparison tables here.