Customers to wait 31 days to access term deposit funds
As part of the "Basel III" reform measures, most banks are now required to implement a 31 day waiting period, on new term deposits taken out after 1 January 2015.
This means customers holding term deposits with a 31 day notice period are no longer able to withdraw term deposit funds early by paying a penalty of the interest rate or/and an admin fee, instead they will have to wait a full month to access their term deposit balance.
The reason for this change is to ensure banks have more liquid assets available when they enter times of financial stress. However, there is an exception to the new 31 day waiting period for cases of financial hardship and death.
The news comes in an already tough time for savers looking to reap returns from a term deposit account, with the Reserve Bank of Australia keeping the official cash rate at a record low 2.5%, resulting in term deposit accounts sitting around the 3% mark.
Mozo’s Kirsty Lamont told news.com.au that many Australians who held term deposit accounts would be unaware of the changes. “The banks have been phasing in 31-day notice periods on term deposit investments.”
“It’s definitely something investors should consider and they could potentially split their funds by putting some cash in a term deposit and some in an “at-call” savings account.”