What you need to know about the new JobKeeper and JobSeeker

What you need to know about the new JobKeeper and JobSeeker

Major economic lifelines from the government, including JobKeeper and the coronavirus-boosted JobSeeker, will be extended and revamped beyond September.

The JobKeeper wage subsidy will be extended for another six months until March 28, while those on the COVID-19 supplement benefit may continue to receive it until the end of the year.

JobKeeper and the increased JobSeeker was originally due to finish on September 27 and September 24 respectively.

JobKeeper 2.0

There will be major differences between the existing JobKeeper and the new scheme, starting on September 28:

  • JobKeeper payments will be tapered, from the current fortnightly payment of $1500 to $1,200 in the December quarter, and then $1,000 in the March quarter for full-time workers.
  • Employees who work for less than 20 hours on average per fortnight could receive $750 in the December quarter and $650 in the March quarter.
  • Businesses may only be eligible if its turnover remains below the threshold in the December and March quarters.

JobKeeper will remain open for eligible organisations that have not received the subsidy in its current form.

JobKeeper 2.0 is expected to cost an additional $16.6 billion.

JobSeeker and the coronavirus supplement

The fortnightly coronavirus supplement will be reduced from $550 to $250. For the typical unemployed person receiving the supplement, this brings the payment from $1,100 a fortnight down to about $800 a fortnight.

The pre-pandemic unemployment benefit, formerly Newstart, was about $560 per fortnight.

Those already receiving the COVID-19 supplement as well as new applicants may be eligible for the revamped benefit boost after the current measures end on September 24.

How you can protect your finances

The news of government support being extended follows the announcement in early July that some banks may consider continuing mortgage repayment deferrals by up to four months, or until March, for those struggling financially.

Pauses in home loan repayments won’t be extended automatically across the board, and may only apply to mortgage holders who are in ongoing financial hardship and can’t restructure their home loans.

Also concerning is the increasing proportion of people without jobs, with the unemployment rate hiking consistently from 5.2 per cent in March to 7.4 per cent in June, according to the Australian Bureau of Statistics. Factoring in the JobKeeper extension, this is still expected to rise to 8.4 per cent in the 2020-21 financial year, IBISWorld senior industry analyst Matthew Barry predicts.

Australians now have up to another six months to prepare for a potential worst-case scenario. With the extra time bought by the government, there are three things you can do until then to plan ahead and help protect your finances. Consider consulting a financial expert for advice specific to your situation.

1. Clear high-interest debts

One of the first things you should do while you still have some form of income is to consider paying off your short to medium-term debts. If you have more than one debt, it might be difficult to clear everything you owe. The general advice in this situation is to pay off your debt with the highest interest rate. This could be a credit card debt or a personal or car loan, as the debt with the highest rate will incur the most interest costs. 

If you have a credit card debt, you might consider switching to a balance transfer credit card. By doing this, you could transfer an outstanding balance to a new card with a set interest-free period, allowing yourself some time to pay off existing credit card debt.

If you have a personal or car loan, you could consider refinancing to a lower-interest option. If you have more than one debt, consolidating your debt into one personal loan could be something worth considering to simplify your repayments. 

2. Check in with your mortgage lender

If you’ve deferred your home loan repayments, you might want to check in with your lender to see where you stand and what your options are. If you’re struggling financially, the lender may consider restructuring your home loan or potentially extending your repayment deferral. Another option is to negotiate a lower interest rate with your lender ahead of time to potentially help you manage your monthly repayments. Many home loan interest rates start with a two, especially for owner-occupiers, so it could be worth asking for a rate reduction.

3. Set up an emergency fund

In times of uncertainty, it may make sense for concerned Australians to strengthen their financial safety net. While there are many ways to do this, one relatively straight-forward option is to set up an emergency fund. Aiming for $2,000 in your emergency fund may potentially be a good place to start. However, different households may have different needs, so you should always consider your own financial situation when thinking about emergency funds. 

To get a clear idea of how your emergency fund should look like, it could be worth your time to budget your family’s expenses and income. For those who already have an emergency fund, you could consider topping it up for a more secure financial safety net if you’re in a position to do so. What’s more, you might even want to sell any unused household items on eBay or Gumtree for some extra cash.

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Fact Checked -

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

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Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

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Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

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Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

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Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

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Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.