Things you didn’t know about the $250,000 bank guarantee

Article published 28 April 2023

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Things you didn’t know about the $250,000 bank guarantee

Check if you’re really covered by the Financial Claims Scheme


EVERYBODY knows that bank accounts in Australia are covered up to $250,000 in case a bank goes bust. But, like most things, it’s a little bit more complicated than it looks.

A reader emailed us an inquiry about the $250,000 bank guarantee, asking if the joint account she had with her husband was covered for a maximum of $250,000 or for double, $500,000?

We at CPSA thought we knew the answer: one account, one guarantee of $250,000, but lucky we checked.

How the bank guarantee works

For joint accounts, the $250,000 guarantee is for each account holder. For example, if you as a couple have $300,000 in a joint account, each partner would receive $150,000 in case the bank went bust. If the partners each had another account with, say, $50,000 in it, each would receive $200,000.

The official name of the government-backed $250,000 guarantee is the Financial Claims Scheme (FCS). Apart from bank accounts, it also covers insurance policies (generally up to $5,000 a claim).

The $250,000 guarantee covers banks, building societies and credit unions.

It’s important to realise that the guarantee is for the maximum amount you have in all your accounts at a single bank. This also covers term deposits, which you might not think of as an account.

An account holder doesn’t need to be a life-and-blood person. It can also be an entity, such as a company or a self-managed superannuation fund. Incidentally, the $250,000 guarantee does not apply to each trustee or member individually, as it does in a joint bank account held by people.

Also very important to realise is that it’s not actually accounts you hold with an individual bank which qualify you for the $250,000 guarantee. It’s the banking licence that counts.

For example, the Commonwealth Bank owns BankWest under a single banking licence, and Westpac does the same with St George Bank. So, if you hold accounts with two banks which operate under a single licence, you are not covered up to a maximum of $500,000, but just $250,000.

The Financial Claims Scheme also applies to insurance (but not life insurance or private health insurance) written by an insurer on APRA’s list of insurers.

These are some of the details of the $250,000 bank guarantee that stood out. There is more information on the regulator’s website. Check it out to make sure you are really covered by the $250,000 bank guarantee.



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