Great interest rates in IMO, never heard of the bank myself but they are ASX listed.
Min. deposit is $1000
| Term | @Maturity | Paid Annually | Paid Monthly |
|---|---|---|---|
| 3 Months | 1.25% p.a. | 1.25% p.a. | 1.15% p.a. |
| 6 Months | 2.10% p.a. | 2.10% p.a. | 2.00% p.a. |
| 9 Months | 2.45% p.a. | 2.45% p.a. | 2.35% p.a. |
| 1 Year | 2.70% p.a. | 2.70% p.a. | 2.60% p.a. |
| 2 Years | 3.50% p.a. | 3.45% p.a. | 3.40% p.a. |
| 3 Years | 3.80% p.a. | 3.75% p.a. | 3.70% p.a. |
| 4 Years | 3.85% p.a. | 3.80% p.a. | 3.75% p.a. |
| 5 Years | 4.05% p.a. | 4.00% p.a. | 3.95% p.a. |
Apparently its a cheap way to get enough funds (liquidity) to start lending money (stuff like home loans etc). The rates may seem spectacular to laypeople, but so cheap since banks are allowed to loan out 10-20x of the money they "have".
More like 0.8x of the money they have due to something called the Basel Accord
Could you please provide a citation? I'm guessing you mean Basel 3, but which part of it?
You're wrong about the multiplier being <1
Google "monetary multiplier effect" . They introduce this concept in highschool economics.
Its closer to 10x.
more like 12.5x (100/8%) for a technical maximum but realistically closer to 9.0x (100/11%) - source: work in capital at one of the Big 4 (refer to CET1 ratios, big 4 around 11% and APRA minimum is 8%)
@Chrisn26 - correct BASEL III and APS110 which is Capital Adequacy standard for Oz Banks mandated by APRA.
You're a bit confused there between different ways of defining 'have'.
If you give them money (as a deposit), they have your money. And they can lend it out once only.
If the person who borrows it pays someone (i.e. a builder) who then deposits the money again, it can be lent out again. Still, only once per deposit.
To have some control over how often money can get multiplied across the economy the Basel accord came into play. A bank has to actually own a percentage of the funds they want to lend out. They are limited to lend only a certain factor of their own capital. Capital paid in by shareholders, and retained from profits they made in the past.
Look up 'fractional reserve banking', biggest ponzi scheme ever.
If you give them money (as a deposit), they have your money. And they can lend it out once only.
A zero fractional reserve means that the lender can lend out the whole deposit.
It's a legal Ponzi scheme backstopped by taxpayers up to $250,000 per account.
Well said!
Another layman way of seeing “banks has to actually own a percentage of the funds they want to lend out” is that banks are required to be giving out over-collateralized loans.
I think the simpler answer is less in the multipliers and more in the business.. Judo bank was founded to provide business loans. Business loans in general are charged at higher interest rates (though of course riskier). Its likely a large portion of their portfolio are these kinds of loans, thus they are also able to offer higher interest to borrow funds (which they then lend out).
I've checked and their deposits are insured by the government, so you shouldn't have to worry about the specifics/risk:
Under the Financial Claims Scheme, deposits are protected up to a limit of $250,000 for each account holder at Judo Bank, for more information please visit www.fcs.gov.au.
They're wagering (with high confidence) that the interest rate will be higher than 4% in less than 5 years.
More like with full 100% confidence since they are offering this now lol
Not just will be higher than 4% in fewer than 5 years but that the average over the next 5 years will be higher than 4%
The 1% rate that get boomers wet, is peanuts compared to wholesale rate they pay. Be it via securitisation or the bonds market. (I don't believe they have raised debt yet, I think mostly funded by their equity and securitisation if memory serves me correctly). Plus deposit is classified as "sticky" money for the purpose of APRA capital's calculation for the purpose of their liquidity holdings (MLH).
Boomers enjoyed rates of 18-20% once upon a time. That's why they are all so much richer than you :p
Boomers enjoyed rates of 18-20% once upon a time. That's why they are all so much richer than you :p
There's no free lunches here, 20% return also means the borrowing costs were 20%+ Is this want you want?
Tip: you do not want that…
@1st-Amendment: It was a joke. Hence the :p and it wasn't me who negged you. I see you got even with my joke though.
@1st-Amendment: The key term in your observation is "normally" and so not always. Sometimes you can use sarcasm to point out something without it actually being haha funny.
Wow who could have imagined that these rates are now market leading!
This bank has had some great traction over the last few years and so hope they can come through with this. Could be the next ING(before they went rogue) I suppose.
ING went rogue?
New rules added all the time. Now the balance has to grow in savings to make the highest rate. That makes sense but wish I knew. I had to take out money for something. So I got 0.05% interest on my balance last month.
Ah yes, I really dislike that.
You are more forgiving than me if you think having to grow your account each month before you get the bonus interest - especially as that was a randomly added requirement, is ok and makes sense. I think it's total BS.
For some reason even though I took ALL my money out 2 months ago, I still received the bonus interest at the end of the month.
Never pulled money out quicker after seeing it come through haha.
With inflation where it's at we are going back to 2000s rates of 5%+ on interest accounts. Wait a bit longer. Don't lock yourself in just yet. Especially not for five years.
Stagflation. Who knows what will hapen with interest rates.. cooling the housing market will take a while. Hopefully they'll go back up to 5-6% or better still do a Keating & Jack them up to 17%!
Yeah the issue is inability to attract workers. The way many were kicked out during the pandemic it hurt many of them. Others who remained got little or no assistance. So wages are going up faster than predicted and that spells trouble. Rising interest rates, falling unemployment, rising wages and inflation mainly due to energy costs are a bad combination. The governments were emboldened by their response during the GFC and went bigger, harder, and wayyyyyyy too early during the pandemic. We are going to pay for it.
@polol: Millions were on jobkeeper during that period in the graph. That data won't reflect the reality of the market. Read the RBA minutes released today.
@polol: Mate, I want to explain this since it might clear it for others too. Everybody says that real wages are not rising. They have been slow for many years and so under normal circumstances it's a good discussion to have. But that is not something you can use in the current circumstances. You have to look at wages not real wages or real income. Because that is calculated based on the current level of inflation, which is the highest it's been in forty years. So of course it's going to show real wages are going down because inflation is so high. But wages are rising fast and that's a sign of stagflation around the world. Rising interest rates, lower employment and rising wages.
Real Wage = (Old Wage * New CPI) / Old CPI
Seems like the penalty for cancelling early is pretty minor.
What is it?
how much ?
I misread it. They clawback a significant % of your interest earned:
Illustrative example: You have a $10,000 Term Deposit invested for 1 year (365 days) at 2% per annum (p.a.) with interest to be paid at maturity and you request to withdraw it after 200 days. The accrued interest is: $10,000 x 2% p.a. x 200 / 365 = $109.59.
To determine the Prepayment Adjustment, we divide the elapsed term of 200 days by the full term of 365 days to get an elapsed term percentage figure of 54.79%. In accordance with the table above, as the term elapsed is between 40-60%, we will apply a 60% reduction to the accrued interest
Accordingly, the Prepayment Adjustment is: $109.59 x 60% = $65.75 and this amount is subtracted from the original interest owed: $109.59 - $65.75 = $43.84, meaning that $43.84 is paid to you on early withdrawal
% Elapsed: 0% to less than 20%; Prepayment Adjustment: 90%
% Elapsed: 20% to less than 40%; Prepayment Adjustment: 80%
% Elapsed: 40% to less than 60%; Prepayment Adjustment: 60%
% Elapsed: 60% to less than 80%; Prepayment Adjustment: 40%
% Elapsed: 80% to less than 100%; Prepayment Adjustment: 20%
I'm cracking on hard in saving a house deposit over the next 18 months. Wonder if it's worth chucking that in one of these accounts..
Don't take this as advice. Just my opinion. You have two potential outcomes.
You put your money into the term deposit for two years and prices crash over the next 12 months so you see your money is now sufficient to buy a property for a good price. You break the term and lose more than half of the interest.
Prices continue to fall and you continue to wait and you get your interest in time for when you are ready to buy.
I have never personally used a term deposit because it's good business practice, when you have cash, that's it's ready to be used. So instead wait until July (I think there will likely be three rate rises in a row) and then find a high interest savings account, which should pay around 2-2.5% by then and use that. It's less but you don't get penalised for withdrawing your money when you need it.
Why all the negs? Worth knowing if the business looking after your funds is losing investor confidence.
Australian Government Guarantee - Under the Financial Claims Scheme, deposits are protected up to a limit of $250,000 for each account holder at Judo Bank
Just to add to your post:
Internationally, the protection of deposits is known as deposit insurance, and the protection of policyholders as an insurance guarantee scheme. They are both common features of the financial system in many countries. APRA is a member of both the International Association of Deposit Insurers and the International Forum of Insurance Guarantee Schemes.
Sooo… guaranteed bailouts?
how many customers does judo bank have
google said: 650
Are they family and friends?
A fiat 💵 Ponzi starts with ✌️.
They lend to SME (Small and medium sized businesses, they don't lend to individuals that much yet, they may eventually), great solid outfit taking a huge market share away from banks.
And for that reason… I'm out!
Google would have no idea. Their loan book at March 31 was $5.34bn, they don’t publish their customer numbers in these releases.
Can I access the money prior to maturity (losing the interest of course)
Yes what happens if you want your money back early?
If you withdraw (i.e. break) your Term Deposit prior to maturity, you will be required to provide us with at least 31 calendar days’ notice
Ah yes, I see that you know your judo well.
Get your hand off my fiat!
Are you waiting to receive my limp fiat
Does this come with complimentary judo classes?
The loan packages are named after the throws?
Great deal, but keep in mind the inflation is 5%.
;)
No worries, mate. I had a go, hot a better paying job, me parents gave money for a house and just bought myself a farm so I don't worry about food prices. Just ave a go, mate, and don't be poor.
But inflation is a lagging indicator though, no?
CPI is a lagging indicator.
The effect of inflation is in real-time.
Only 3.7% underlying though.
Sounds like the business model of Xinja (not in a good way)
Not really, Judo isn't a consumer bank - only on the deposits side. They have a loan book already and are publically listed, so doing a lot better than Xinja
How are they like Xinja? Xinja didn’t have a lending product so they didn’t earn any income. Judo lends to SME
Judo specialises in the commercial space.
They aren't the cheapest bank going around but can personally say they are far easier to deal with than the big 4.
Do you mean commercial clients when you say space?
Correct
Ta
QT this year and you know it back to QE next year.
Wouldn't we be better off staking Stablecoins for much higher APY?
A little more riskier than a deposit backed by govt guarantees?
May not happen with a good stablecoin but they could lose their peg. Having said this, I have a little staked atm and planning to put more.
Losing peg is only one risk even if small.
The other is if you are using an exchange or CeFi, to earn interest, they might go bust. They hold the keys to your coins so you could lose it all if they fold. Spreading risk by using multiple providers is the way too go. Use Celsius as a cheap way to transfer to other providers (no withdrawal fee).
DeFi (and CeFi) has had a few notable hacks in recent times as well.
FWIW, I do earn passive income from USDC
Yes true. I was keeping anchor protocol in mind when I said that.
Have a little in crypto.com too. Just realised how much influx the banks have lost due to crypto stables offering better returns.
No government guarantees so it's not like for like. You depend on the exchange holding your coins to not go bust (I had crypto.com TUAD for a while): https://blog.crypto.com/crypto-com-lists-truegbp-tgbp-trueau…
So did you stop the TAUD stake or moved to something else?
I stopped. I'm too scared of non-banks holding my money
that shows you where interest rates are heading in the next 5 years…ouch
This is a legitimate company. Have gotten clients a 1M term deposit in the last month. Their rates smashes the big four. There is also a reinvestment bonus rate (albeit Judo is not obliged to give at the time of maturity).
It’s all done online and only people can apply (not other entities like estates or trusts or companies). That may change later this year.
250k is fine to get GG but you really are being negligent if you are advising anyone to invest in Judo just on rate it self. You need to add a risk premium for this trash BBB- rated bank vs AA- rated majors and Suncorp, BBB+ rated BoQ or Bendigo, and even BBB rated AMP.
https://www.amicusadvisory.com.au/caution-with-judo-bank-sti…
Client had $1M in the bank and wanted specifically TD that was over 1.00%pa. They understood the risks and licensee approved Judo. Sure there are other investments that offers a coupon of 1.00% or more but that’s not what the client asked for. Client is a wholesale investor.
From memory, Macquarie and AMP have comparable rates and conditions?
Yup, it’s not that high, maybe 0.2% better than elsewhere.
Anyone know if these rates are different post rate hike?
I think it already takes today's rate hike, and multiple future hikes, into consideration.
If the RBA was not too concerned and thought multiple hikes are not necessary then it would have waiting till June. Given it acted I'd say expect 3-4 hikes in a row.
Yes. I was looking at their site just last Friday and the 12 month rate was 2.3% then, and now it's 2.7%
Is it possible that I am after the interest while Judo is after the principal?
You cracked the banks’ big secret, they offer interest to entice people to deposit funds they can lend out…
Just stake TAUD
Did the downvoter look at the chart? Not only has it gone from $0.07 to $7.81, just in the last 7 days it dropped from $0.614 to $0.534 overnight and hasn't recovered (currently $0.523)
Not exactly what I'd consider stable.
tether used to be like this it was hilarious, a moment of silence for the people that panic sold because it was no longer 1:1
waiting for KARATE bank to beat this !
Which will be beaten by Kungfu bank
Sorry @ChiMot, KUNGFU bank is next on the line :-)
what have you got against KENDO ?!!
kendo uses weapon… not fair !
How are they able to offer such high rates compared to everyone else?