New Purchase/Build - Home Renovations - Gardens - Garages & Sheds.

[Wilko16]

Exactly ! Best way to do it is live off the credit card and just pay the full balance at the end of the month

[camo86T]

^^100% agree

No c.card interest paid + earn points

[k31th]

don't get one (or a home loan, for that matter, I guess...) if you're irresponsible with credit cards, though... you can put yourself into serious financial trouble if you spend too much at the wrong times.

[bossmang]

what?

 

this offset account thing works only with having a credit card? eeekk

 

that sounds risky

[k31th]

exactly

[.Stripes.]

what?
 
this offset account thing works only with having a credit card? eeekk
 
that sounds risky

Nah man, two completely separate things. You can have your offset account as your transaction account and use a debit Mastercard etc. I just use a credit card to do all my normal purchases with coz I get points for free with it.

[k31th]

it's the same effect of having a credit card with a limit that approximates your balance available in the offset account, in terms of "risk of over-spend". It's obviously not the same with regard to calculated offset, as using a credit card allows the funds to not affect the calculations of offset until you specifically pay off the card (if some of that money comes out of the offset account to pay it).

[bossmang]

hmm so I can still do this with my normal visa card type account?

 

what are the benefits of doing this offset account thing though?

 

if beneficial a call to the bank my be in order

[Wilko16]

An offset account is basically a normal bank account, but what ever money is in it "offsets" your home loan

So I'll try explain it really simply with two options

1st Option- without offset
you have a $250,000 home loan at %5 interest rate

And $50,000 in a savings account

You will be paying $1340 a month repayments ($1042 of that is interest)

2ND option- with offset
You have the same $250,000 loan

And you have your $50,000 in an offset account

So now you will only pay interest on $200,000 (as it has offset your loan)

So repayments will still be $1340
But only $830 of that will be interest

this is a very basic summary, with large simple numbers but it shows you can pay less interest and in turn pay your loan off faster by having a offset account

Using a credit card like we have mentioned is so the offset account has as much money as possible in it at all times, reducing home loan interest even more ( using a credit card allows the money to be in the offset account up to 55 days longer)

But yes speak to a bank or financial planner

[Puffwagon]

Sup errbody.

 

Freaky depending on your home loan you can just keep all of your cash in it to offset interest and just withdraw it to your debit card account as you need it. 

 

K31th just described why you would benefit having a specific offset account with a different card than your everyday debit card. 

 

Basically and rewards aside, you can deposit all of your cash to offset interest in your loan and you'll have an interest free card that holds the sum of your home loan deposits as your everyday card. 

 

Obviously this doesn't mean you're rich even if there is a lot of cash you can move around. 

 

You can stand to save anywhere from $50 to several hundred dollars a month interest depending on the size of your loan and the amount of cash you keep tied up.

 

This in turn translates into how many years to pay your loan down. When you do the maths you will be amazed if you haven't done so already. 

 

Slightly on this topic I use excel to do my budget for a year or 2 at a time so even if I look at the bank and think I should buy ten turbos I still have my actual plan and available funds on my pc so I don't get carried away.