More than $250k in the offset?

Certainly would never have more then 250K in an offset, when I did once I quickly moved it to other institutions and shares. I keep offset down around 100K. Money over "guarantee" would not be applied to reduce any debt, the money would be lost.

There wouldn't be much notice, maybe only few days while the bank and government say everything is fine... nothing to see here. Banks go under fast when people get a whiff of the trouble and a run starts, too many people trying to transfer cash out of offsets would quickly be restricted.

 

i would just do a home loan split it into half so you can use the funds to borrow. i have more than 250K in offset however it is now split 3 ways.

 

Well, that's the thing, right ? If things went that way and a systemic failure was in full swing, who knows what will go on, we can try and guess, but they could do anything.

LOL.....yeah.....Gold and Silver, you will need the 12g to protect your stash and food most likely.

 

If a bank collapse you could lose you money in savings accounts. Any debt owning coul be assigned or sold to someone else by the bank. You would then be an unsecured creditor.

I wonder is s553C Corporations Act could save you
CORPORATIONS ACT 2001 - SECT 553C Insolvent companies--mutual credit and set-off

 

Surely if an Australian bank collapsing whilst you have over 250k in your bank is a concern you need a holiday.

 

The guarantee is only per institution not accounts so splitting it doesn't help.

Also would not rely on the offset being used to pay off associated debt, the loan book and deposits could be treated or sold off separately.

 

Pages - Financial Claims Scheme

 

In Europe during the depression that started in 2008 bank busts were pretty common, some huge banks. People are much more wary these days and wouldn't dare leave too much cash in one institution. Its a risk anywhere to be aware of and mitigate. "Bail-ins", haircuts, confiscation are all very real possibilities. I was surprised in Spain to discover that the government can just dip into your bank account and take the money if they think you owe them something, or just freeze your account until you pay them. Meanwhile all other bills go unpaid.

List of banks acquired or bankrupted during the Great Recession - Wikipedia, the free encyclopedia

 

So, if you have an offset account in 2 names (ie joint account) does the guarantee increase to $500,000?

 

no

 

no

 

This happens in Australia too. Mate of mine had a Centrelink and Spur debt, up around 80k in total. He quite recently got a TPD payout from 3 seperate Super companies totalling 600k plus all up. Accounts got frozen 4 days after initial payout so Centrelink and Spur could take out their debts. Just what you want a week before Xmas. Still frozen now.

 

That's not a normal morning?

Last year, some jerk predicted that the Australian property market would crash and take down one of the big 4 banks.

As risk mitigation, I don't have any loans with any of the big 4.

I do have more than the guarantee with the same ADI but I am not too concerned about it

 

I think I read, more than once, it is a guarantee for account/s. Not holders.

 

I doubt there would be many investors on here with more than $250k cash for any length of time.

It's an investment forum, not a savings forum.

Perhaps $250k is a cash buffer, a years worth of living/investing expenses?

surely investors who need a buffer larger than this would have lending with more than one adi...

 

No.

But it is per person per ADI.

Simply split the joint account into two accounts in individual names. If offset has to be in joint names decide which aspect is more important to you - offset or guarantee. Or leave $250K in the offset and deposit the rest with another bank.
Marg

 

Hi

At that stage you would go and kidnap the youngest child of your banks CEO, I bet your money will be returned within minutes PLUS INTEREST...."Simples!"

Regards,

alicudi

 

So if I can have 2 offset accounts under 2 different names for the loan/s, then that would take it to $500,000?

 

Could be saving for a PPoR. Have the funds ready, buy a block and build a house, set the loan to IO, park the saved funds in an offset account and pay no or low interest while living there. Later move out and turn it into an IP. I have been trying to do this for a couple of years but I keep buying IPs.