What is an Offset Account?
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RBA to hold: have home loan rates hit the bottom?
The Reserve Bank is expected to keep the cash rate on hold at 0.25 per cent when it meets today, but the rate cuts keep coming from the banks for new home loan customers.
An offset account is a savings or transaction account linked to a loan. Any money you pay into the offset account is included when your lender calculates the interest owing on your loan. For example, if you have a $50,000 loan, and pay back $20,000, you’ll be charged interest on the $30,000 you still owe. But if you also pay $5,000 into an offset account, your lender will instead calculate your interest as if you only owed $25,000.