Ask Paul: I have $300k in the bank, but only $250k is guaranteed


Q. My wife and I have an investment property ($420,000 value) with a $380,000 interest-only loan.

We have $300,000 in the offset account, while we figure out where to buy our "forever" home.

I read a snippet in a recent Money magazine about the maximum amount of cash insured in a bank account being $250,000.

paul clitheroe ask paul advice guaranteed

With all of my savings in one pot, is my current situation risky? - Tom

A. I am pleased to say, Tom, you carry about the lowest level of investment risk that I have seen for quite a while.

Your debt is $80,000. You are quite right that your offset account is covered by the Australian government guarantee up to $250,000, providing it is an authorised deposit taking institution (ADI).

Even if it is a non-bank lender, providing your offset account is held with an ADI you are still covered.

So it is worth checking that your offset account is with an ADI (bank, credit union or building society, or held by one).

But for you to really be at risk you would need your property value to collapse, your bank or other ADI to go broke and the Aussie government to also go broke and be unable to pay the guarantee.

So, for my money anyway, you are in a very low-risk position.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
Peter Rowe
April 29, 2018 7.43pm

So is the $250'000 government guarantee limited to 250,000 overall deposits with authorised institutions or if a depositor spreads deposits over a number of authorised institutions is each deposit in each bank guaranteed up to 250'000

April 30, 2018 9.36am

The rule is $250,000 per person per bank, regardless of the number of accounts.

- Money team

Stephen Draper
May 12, 2020 9.41pm

Offset Account Question:

Should we be putting above $250k (gov guarantee) into the offset account? And have the PPOR fully offset with one account?

What's the Money Simple plan of attack in this scenario?

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