I just received a letter from the bank today notifying me of a rollover of my term deposit. There was a pamphlet included that said that there were new terms and conditions to be applied to term deposits created from August 1st. One of them reads: "In response to new regulations designed to maintain the strength of Australian banks" we have decided that you will need to provide 31 days notice to us if you want to access your funds in a (name of bank) Term Deposit. This is clearly an anti-bank run device. People tend to keep larger sums in term deposits so they are making it impossible to withdraw your own money for a month even of you are prepared to forgo the interest. Not a good sign.
Oh dear ... time to canvass another bank ? Im not sure i like that arrangement . I would be doing the rounds to find one that doesnt have that .
This may be industry wide from January 1st 2015. I've seen it with a number of banks. Maybe there is a new regulatory requirement?
It's a term deposit remember? People shouldn't even be able to withdraw it within the term. At least not without a cost. Why do banks allow this at all? Because they want to falsely suggest their customers that the money is available at any time. If that wasn't obvious. So consider that regulation as a reminder for those that started to find this suggestion normal business.
It could be all of them since it appears to be due to some sort of regulatory change related to Basel III as pointed out by Bullion Baron above. I've definitely seen it noted by Westpac but I don't know if it is restricted to certain term deposits: A quick google found a huge amount of confusing information. .. Ok, found this very recent document by the RBA (7th Aug 2014) which appears to be directly related:
The bank is St George. I have decided not to roll the term deposit over and to simply move the funds into whichever account they have that has the best interest. Really having savings in a bank is a mugs game now if you have any other way to use that money. Personally I would prefer to remove it, buy extra stock for my business and sell that specific stock at too good to refuse prices and thus make many times the return of the interest rate at the bank.
You might want to look at the UBank Ultra savings account as an alternative to term deposits. Currently pays 4.17% p.a. providing you deposit $200 per month (or more). Read the fine print, DYODD, etc. https://www.ubank.com.au/transaction-accounts
If prices are too good to refuse then that means that there is some change to come. Depending on whether that change arrives before or after, outlooks may be hauled over. A loss of -2 is better than a loss of -3. Despite both being loss. Expectations!
Yep. I can remember most TV ads from the 1980s. Pitty I can't remember all the math formulae too. [youtube]http://www.youtube.com/watch?v=oYQaYJxCltY[/youtube]
Screen shot of "Terms" - 31 Day Notice. http://www.westpac.com.au/personal-banking/bank-accounts/term-deposit/?from=leftnav
"Which Bank?" you ask. All Australian banks. Why? Because if there is a collapse, a run on term deposits is one less thing to worry about. This is a move to help save the banks. The next step will be the bail in as opposed to bail out. Depositors' money will be converted to shares in order to reduce the run on the bank. This will occur during the bank holiday that may stretch for a couple of weeks. There may may be some ATM funds made available to depositors. This is why we should stack cash, food and fuel. Why, because the banks are stacking contingencies, so should we. Finally, before you accuse the Banks of duplicity, bear in mind that we are the banks. Everyone with managed super funds has shares in the banks amongst other corporations. It is the competition amongst super companies that drives the banks, Woolies, Coles et al to provide greater profit. We are "they", the corporations and the government we vote for. The solution? Start a SMSF, and vote for ratbags who'll stick it up the government.
I got the same notice from ING. I'll have to check to see if my Credit Union has the same conditions?
Can anyone tell me why you'd put money into these term deposits when you can get a better rate with instant access Am I missing something ??