Early Withdrawal of Fixed Deposit

Pumpkin_rrr on 20/04/2023 - 11:07

Meant to ask this long time ago, when they first started this "new" rule.
Cant remember which year, all banks decided to impose a 1-month rule if you want to withdraw your FD. 30-days or 1-month notice is required.
What is the logic reasoning behind it?

I looked at some banks' website and found that the only exemption is "hardship".
I would imagine they would want you to jump thru lots of loops and Form is not available online.
CBA asked for you to go to their Branch (https://www.commbank.com.au/support.bank-accounts.withdrawin…) for hardship. How about buying a car or a property?

Hubby called bank twice this week (for other matters) and both time wait time was an hour. So I'm not going to call just for a hypothetical situation. I also dont want to change my maturity instructions (from auto-renewal)

They already charge some fees and adjust the rates, now they need 1-month notice! That's triple-wammy isnt it?

Wonder whether other countries have similar rules….

Financial

Comments

  • Crow K on 20/04/2023 - 11:18
    +3

    Banks probably want better control over their liquidity, customers.

    There's not a lot to think about here, if you want Bank X's rate, follow Bank X's conditions.

    • Pumpkin_rrr on 20/04/2023 - 12:49
      +1

      I know. I am just a bit staggered that for early withdrawals, after they charge us for "Admin fees", dropped the interest rate, they still need 30-days. Triple Whammy :-(

      • Crow K on 20/04/2023 - 12:51
        +1

        I agree, it's a rude shock and I'm sorry to hear it happened to you like this!

      • bluesky on 20/04/2023 - 14:07

        I find term deposits no longer attractive anymore for this reason. Prefer to put in accounts with reasonably high-interest rates but funds on-call. The worst-case scenario is losing bonus interest, but funds are at least accessible immediately.

  • Leanne59 on 20/04/2023 - 11:25
    +4

    I stopped using term deposits years ago as there are high interest savings accounts that don't have the limitations that a term deposit does. I currently receive 4.45% on savings with the only condition being to deposit $200 per month and no withdrawals

  • deme on 20/04/2023 - 11:37
    +1

    Come on! Why did you get a Fixed Deposit if you didn't want this?

    • Pumpkin_rrr on 20/04/2023 - 12:48

      My Fixed Deposits were placed before they have this new "rule".

      • bluesky on 20/04/2023 - 14:00
        +1

        If it was before the new "rule" and the fixed deposit has not matured, you shouldn't be bound by it. Unless it had been renewed since then.

  • bluesky on 20/04/2023 - 12:40
    +1

    To assess your prepayment request due to hardship, you’ll need to provide us with evidence (e.g. invoices, Statutory Declaration, etc.) supporting your reason(s) for needing to withdraw your funds immediately or before the end of the 31-day notice period. Any evidence you provide must satisfy our requirements. If you’re not sure what documents you need, our branch staff can help.

    Sounds like quite a high bar ,,, if you just want to buy something, I doubt they will view this as a hardship. Having said that, if you want to buy a car or property, and take a loan or mortgage with them, they might go to extra lengths to accommodate you.

  • freefall101 on 20/04/2023 - 13:08
    +1

    It's part of liquidity rules from the Basil III changes in 2015 and the idea is to prevent bank runs by having fixed deposits more tied down. The cost of having a fixed term (along with all the fees they sting you for on releasing early).

    Banks use fixed term deposits to fund loans, it's why they can still make money on their fixed rate homeloans that are 3% below current market rate, they have fixed rate TDs that are below market rate too.

  • Malik Nasser on 20/04/2023 - 14:27

    31 days is not very long.
    If you are entering a term deposit, surely you spend at least 2 seconds thinking whether you may need the funds within 31 days.
    If it was ever a concern you should have opted for a high interest savings account.
    The banks have their rules. If you want to use their services you have to accept their rules. Dont like their rules? Go elsewhere…

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