Are there any alternatives to an offset account?

Thursday, August 20, 2015

Whist an offset account is a unique product, some of the benefits of an offset account can be mimicked in other products. One of the main features of an offset account is the ability to reduce the interest charged by the bank if you have funds sitting in the offset account. Another option is by placing your extra funds directly into the loan account, and because interest is charged based on the account balance, the interest cost will drop. If you are making principle and interest repayments, your repayment amount will remain the same, but a bigger portion of you repayment will go towards paying the principle balance of the loan. If you are making interest only repayments, you repayments will decrease as those repayments are based on the loan balance (this is similar to a line of credit product also). By using the redraw feature of a loan instead of an offset account, you can also save the ongoing fees which are commonly linked to offset accounts.

Please contact Jonathan Cornish, one of our credit advisers, for more information. Got your own question? Ask us now!