Which is safer: BIG4 saving account or small bank offset account

Discussion in 'Investment Strategy' started by Karlos1234, 14th Mar, 2020.

Join Australia's most dynamic and respected property investment community
  1. Karlos1234

    Karlos1234 Active Member

    Joined:
    14th Mar, 2017
    Posts:
    42
    Location:
    Australia
    If economy goes into recession which place is safer to keep money in? an offset account in a small bank or a BIG4 bank saving account? Small bank claims my offset account is protected by Australian government deposit guarantee but I think it may take ages to receive the lost money. What do you think?
     
  2. mikey7

    mikey7 Well-Known Member

    Joined:
    30th Mar, 2016
    Posts:
    1,159
    Location:
    Sydney, Brisbane
    If you're genuinely worried about cash in a bank - withdraw it all now and store it in a bloody good safe.

    Otherwise, distribute it amongst all banks that have the guarantee. The guarantee is only good for $250k per person, per bank.

    Me personally, I'm not worried about cash in a bank.
     
    Terry_w and Karlos1234 like this.
  3. Karlos1234

    Karlos1234 Active Member

    Joined:
    14th Mar, 2017
    Posts:
    42
    Location:
    Australia
    No difference between big4 and others?
     
  4. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    5,987
    Location:
    Australia
    Same government is providing the guarantee.
     
  5. Tyler Durden

    Tyler Durden Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    350
    Location:
    Australia
    Depends on your definition of others, other ADI's? No guarantee for cash sitting in offset with a non-ADI like Pepper.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,807
    Location:
    Australia wide
    what use is a govt guarantee on an offset account? If you have a loan then you owe the bank money, if you have cash in the offset the bank owes you money.
     
    Karlos1234 likes this.
  7. timetoact

    timetoact Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    420
    Location:
    Sydney
    So, let's say you have a loan with a non bank lender that is an ADI and therefore covered by the government guarantee.

    Let's use round numbers.
    Loan = $1m
    Offset = $500k.
    2 owners

    Lender goes bankrupt overnight.

    When the pieces get picked up and the loan is sold on to another lender.
    Would it be for $500k or $1m?

    If $1m, would each of the owners be covered for $250k each by the government guarantee?
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,807
    Location:
    Australia wide
    I haven't looked into this legally, but what they owe you should offset what you owe them.
     
  9. Karlos1234

    Karlos1234 Active Member

    Joined:
    14th Mar, 2017
    Posts:
    42
    Location:
    Australia
    Good point thank you
     
  10. timetoact

    timetoact Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    420
    Location:
    Sydney
    You'd think so right...
    Thanks for your reply
     
    Terry_w likes this.
  11. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    5,987
    Location:
    Australia
    Whats an example of a non bank lender that is an ADI? Thought the problem with 'offsets' for non bank lenders is that they arent true offsets.
     
  12. timetoact

    timetoact Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    420
    Location:
    Sydney
    Google it. There are several.
    ING for example is an ADI and has full offset.
     
  13. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    5,987
    Location:
    Australia
    Since when is ING a non bank?
     
    Terry_w likes this.
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,522
    Location:
    Gold Coast
    Oxymoron.

    Ubank goes close, but its not really a non bank per se.

    Advantedge provides the loans fulfilment and U bank can take term deposits . Both are owned by parent = NAB.

    Nab provides warehouse funding to Advantedge, and a bunch of mortgage managers white labels.

    NAB also uses Advatedge to move its warehouse money directly via its aggegrator products, Choicelend, Planlend and Fastlend via the 3 aggs it own.

    None of the loan products have an offset due to a legacy Systems issue.

    ta
    rolf
     
  15. Omnidragon

    Omnidragon Well-Known Member

    Joined:
    17th Oct, 2015
    Posts:
    1,693
    Location:
    Victoria
    If super safe probably swap it to USD or Yen and store overseas. AUD will tank in a recession to maybe 50c
     
    Revolution2020 likes this.