A loan that allows you to decrease your interest charges by combining all your banking transactions with your loan. Your income is deposited into an offset account that is directly linked to your loan. As you need your money, you can withdraw it via EFTPOS, ATM, linked credit card or cheque book.Any balance in the offset account is then 100% ‘offset’ against your loan. This reduces the amount of interest you have to repay, making your money work harder for you.

Advantages:

• Can save you substantial amount of interest if used correctly.
• Operates like a normal transaction account and has a cheque book, ATM card, etc.

Disadvantages:

• May have higher monthly fees.
• May require a minimum balance in the account.
• May be a slightly higher interest rate.
• Requires disciplined borrowers.