https://www.smh.com.au/business/banking-and-finance/despicab…
https://old.reddit.com/r/AusFinance/comments/gbse46/a_remind…
The debate about redraw vs offset is now dead and buried. Anyone holding significant funds in redraw is now at risk of losing access to that money.
+1 on that PSA, I find that an under emphasised difference when folks are choosing HL options.
They should have sent notification to allow people to make a decision, however they haven't done anything illegal here. There is a fine print in contract that allows them to say that the extra repayment you made won't be returned.
These people should have got offset account which guarantees that bank can't touch your savings unless you are defaulted.
I guess that's the same 'fine print' that allows them to turn your deposits into 'convertible instruments' without notice? wink wink
100 percent
The Australian Government tightly regulates the banking sector despite dribbling crap for the morons that voted for them on about the free market being better for everything.
As America has shown the banking sector operating in a free market is incapable of proper operation.
Bill Clinton removed regulation to preventing the banking sector from crashing the economy in 1998 and then ten years later down goes the banking sector. This had never happened previously after 1929 because of those regulations that Clinton removed.
Correct me if i'm wrong, but i'm only seeing anecdotal evidence that CBA is doing this. A reddit thread that doesn't explain specific circumstances isn't really evidence.
As far as CBA redraw is concerned,they changed the rules some time ago to draw down on your redraw so that your loan balance would be zero at the end of the loan term because "that's what customers asked for".. (BS). But you can avoid them doing that by paying anything above the minimum. However, because they have reduced payment amounts to the minimum without permission, they have essentially given themselves permission to draw down on redraws.
So if you have redraw, what's important is that you adjust your monthly repayment back above the minimum ASAP.
If i'm wrong and they take even one cent of my redraw, I will refinance faster than they can say "maybe we shouldn't have done that".
Prey on those that lost their job
No they are not, the banks are legally entitled to do this. Those people just didn't read the terms and conditions.
When you refinance, make sure you get an offset account instead of a re-draw facility.
The banks are allowed to do this when you have a redraw facility. Read the terms and conditions.
Generally speaking, accounts with offset accounts have a higher interest rate and are not available in all types of home loans while nearly all home loans have a redraw facility. You just need to weigh up the pros and cons. Banks cannot do the same thing with an offset account, but they are perfectly entitled to absorb those extra funds in your redraw facility to pay down the loan.
The banks are legally allowed to do this. The main difference between a redraw facility and an offset account is that in a redraw facility, its the bank's money and its up to their discretion whether they let you redraw or not, while an offset account is like a transaction account, the bank cannot touch that to repay your loan.
People need to be more financially aware. It even says so on the CBA website, which says if you intend to use the money in your redraw facility, then an offset account may be more suitable for you.
Seems so wrong. Should have given you notice and the option of being able to move it elsewhere.
But redraw and offset are different. From the first reddit comment
PSA offset account is your money for which you receive offset credits, redraw is the bank’s money that you repay early. Most people don’t know the difference from experience.