Many home owners have been using the forced savings opportunity brought about by COVID-19 to boost their offset accounts. By placing the money they’ve been saving from not travelling or going out as much as they normally would into their account, they’re able to reduce the amount of interest they pay on their home loan.
Not only is this a great way to save for a rainy day, it also helps save money on your mortgage in the long run.
To help you understand the ins and outs of offset accounts, we’ve answered a few of the common questions we get asked.
What is an offset account?
An offset account is a savings account linked to a home loan that reduces the amount of interest payable for the home loan. Every dollar in the account is interest free for the home loan. For example, if you have $5,000 in your offset savings account this will result in $5,000 of your home loan being interest free.
How can I make the most of my offset account?
It’s quite simple – the more you have in your offset account, the more you can reduce your home loan interest. A great way to boost your savings without having to lift a finger is to have your wage automatically deposited into your offset account. If you receive a lump sum payment or mid-year bonus, pop it straight into your offset account to boost the balance.
What else can I do to maximise my offset account benefits?
Using a credit card with an interest free period for your monthly expenses can be a useful tool to help keep money in your offset account longer. By using your credit card to make purchases during the month, your money can keep working for you in your offset account by reducing the interest you pay on your home loan.
TIP: Make sure you choose a no or low fee credit card option and clear the balance on the card once a month by the due date to avoid any interest being charged (cash advances excluded). Check out our article on the how the credit card interest free period works to make sure you don’t get charged interest.
To learn more about P&N Bank’s credit card products, visit our credit cards page.
To find out more about our home loan products, visit our home loans page or talk to one of our friendly team by calling our Contact Centre on 13 25 77.
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