Unit 1: Deposit Products and Services

Question 1

In essence, what is the purpose of deposit and saving account products?

Answer 1

They allow deposits and withdrawals of money, and potentially a payment of interest.

Question 2

What is the difference between a transaction and savings account?

Answer 2

Transaction account offers immediate access to funds, while offering little or no interest payments.

(Savings accounts generally offer higher interest in return for some restrictions on access to funds)

Question 3

What is a deeming account?

Answer 3

Every day transaction accounts designed to provide pensions or retired people over 55 years of ae an account which reflects the Federal Governments deeming rules.

Question 4

What are some types of deposit products?

Answer 4

1. Transaction account
2. Saving account
3. Basic bank account (everyday transaction account designed for low income or disadvantaged customers)
4. Deeming accounts
5. Youth and student accounts (low or zero cost)
6. Farm management deposit account

Question 5

What are some uses of transaction (current) accounts?

Answer 5

• Everyday spending
• Receive wage, salary and/or benefits
• Receive money from savings accounts

Question 6

What are some uses for savings accounts?

Answer 6

• Holding medium to long term surpluses of funds
• Accumulate interest

Question 7

What is a term deposit?

Answer 7

Fixed term investment account based on a single amount being deposited for a specific term.

Question 8

What affects term deposit rates?

Answer 8

• Generally, longer term = higher rate, but premium rates may be offered on shorter term loans when banks seek funding.
• Higher deposited amounts attract higher rates

Question 9

What happens if someone withdraws term deposit fund prior to the selected term (aka maturity date)?

Answer 9

Generally will incur a penalty or reduction in overall interest payable

Question 10

Briefly explain retirement savings accounts (RSAs)?

Answer 10

• Capital guaranteed accounts offered mainly by banks.
• Do not operate under trusts like other super accounts, but are subject to same laws and restrictions.
• Benefit from concessional tax treatment

Question 11

Why were retirement savings accounts (RSAs) introduced?

Answer 11

To be a simple way for employers and employees to make small or irregular superannuation contributions.

Question 12

What are investment returns for retirement savings accounts (RSAs) generally like?

Answer 12

Generally very low, so they tend to have smaller account balances.

Question 13

Do retirement savings accounts (RSAs) offer benefits on retirement?

Answer 13

Yes, as with a a standard superannuation fund, an RSA provides benefits on retirement to the
account holder, or to their dependants in the event of their death.

Question 14

What are some things for consumers to consider when looking for a deposit product?

Answer 14

1. Features offered (interest rates, fees, minimum balances).
2. Services available (digital banking, direct debit, overdraft, overseas transactions).
3. Bank offerings (convenience of branch locations, hours of operation, fraud protection, complaint handling, additional services to assist with money management).