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How You Can Use a Debit Card to Access Your Offset Account

Offset accounts can potentially save you thousands in interest over the life of your loan, and can be accessed with a debit card

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If your loan has an offset account attached to it, it may be worth asking your banking institution if there is a debit card you can link to it. People with offset accounts linked to their savings accounts or debit cards could have the ability to withdraw cash.

An offset account consists of any mortgage overpayments, which are in excess of the scheduled repayments and charged interest. If you have an overpayment, it will be transferred to the offset account instead of coming off the mortgage. This will mean that the funds can be withdrawn any time by the borrower. If the borrower does not make a payment in a month, then the funds will be withdrawn from the overpayment account.

Interest is not usually charged on the balance and the mortgage interest will be higher than it is on the savings account. In addition, the interest is also going to be free of any tax obligations because technically the interest on a mortgage has no tax relief.

Overpayment can take place via direct payment into the mortgage account, which can then be withdrawn via redraw privileges. These privileges give the borrower the ability to automatically withdraw overpayments from the mortgage. Unlike the offset account, a borrower who exercises the rights to redraw may incur a fee, which may utterly reduce the advantage of a good interest rate when money is put into the mortgage.

It is worth keeping in mind that some banks and credit unions place a minimum withdrawal amount on an offset account. Make sure to check with your bank first.

About fixed rate home loans with 100% offset accounts

Did you know?

Overpayment is considered a type of savings. However, the funds can be instantly accessed at any time in an offset account.

Transaction account debit card access

One significant and noticeable difference with a transaction account debit card is that it often facilitates overdraft. This means the borrower could take an unapproved overdraft, which accompanies a fee and a high interest rate.

One single transaction on this account may cost the cardholder a high fee and triggered penalties because it will appear as if the user has reached the overdraft limit. Offset account holders don't have to experience this since there are no overdraft facilities. If the cardholder runs out of funds, the debit card transaction is turned down.

Offset accounts can be added to your variable rate mortgage loan. It connects to a normal savings account and utilizes your account balance to offset the balance on your mortgage loan. You will pay less interest on your home mortgage loan when you have more funds in your connected savings account.

How offset accounts perform

When you buy a home, the lender will usually charge interest on the entire loan balance. When you add the offset feature to your home loan, it changes this scenario. Rather than having to pay interest on the entire home loan balance, the lender subtracts the interest on the home loan balance from the funds you have in your connected savings account.

Mortgage offset accounts

Read on to find out how Mary and Steve accessed their overpayments to budget for a baby

Case study

Title

Mary and Steve have a home loan balance of $340,000 and have built up a considerable amount of $7,500 in their connected offset savings account. They have been over paying their loan for a few years now and are expecting their first baby in a few months.

Whilst preparing for the arrival of the newborn by fitting out the spare room, they have had the option of spending on their credit card or using their offset account Visa Debit card. They opt to use the debit card and withdrawn from their offset account.

This way they can reduce the amount of interest paid, i.e. 20.24% p.a. on their credit card as opposed to 5.72% p.a. on their home loan balance. Once the room has been fitted, they have spent $3,500, leaving $4,000 left in the offset account.

This now means they are only paying interest on their new loan amount of $336,000.

Compare home loans with offset accounts

Data indicated here is updated regularly
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Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Owner Occupier, P&I)
2.39%
2.41%
$0
$0 p.a.
90%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
Bankwest Complete Home Loan Package Variable - $200k to <$750k LVR ≤80% (Owner Occupier, P&I)
2.73%
3.18%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
Yard Variable Home Loan - LVR 80% Special (Owner Occupier, P&I)
2.39%
2.42%
$0
$0 p.a.
80%
A very low variable rate loan for home buyers with an optional offset account ($10 monthly fee). 20% deposit required.
ING Orange Advantage Loan - $500k to $1M (LVR ≤ 80% Owner Occupier, P&I)
2.54%
2.89%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
AMP Bank Professional Package Variable Rate Home Loan - $100,000 and above, LVR ≤ 80% incl. LMI (Owner Occupier, P&I)
2.59%
3.00%
$0
$349 p.a.
80%
Get a sharp rate with no application or settlement fee, a redraw facility and 100% offset account. Other fees and charges apply.
Macquarie Bank Offset Home Loan Package - LVR ≤ 80% (Owner Occupier, P&I)
2.64%
2.91%
$0
$248 p.a.
80%
Has a 100% offset account which helps you save on the amount of interest you pay on your mortgage.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, P&I)
2.29%
2.31%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
CUA Achieve Variable Home Loan - $500k+ (Owner Occupier, P&I)
2.55%
2.60%
$600
$0 p.a.
95%
Home buyers can get a competitive, low-fee variable rate plus a 100% offset account. Low deposit option available. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs. Eligible refinancers can get a $2,000 pre-paid credit card when they switch to CUA.
ING Orange Advantage Loan - $150k to $500k (LVR ≤ 80% Investor, P&I)
2.74%
3.08%
$0
$299 p.a.
80%
Investors can enjoy a 100% offset account, a redraw facility and flexible repayments.
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer Discount 1 ($150k+ Owner Occupier, P&I)
2.94%
3.34%
$0
$395 p.a.
95%
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
G&C Mutual Bank Momentum Home Loan - LVR <50% (Owner Occupier, P&I)
2.55%
2.57%
$0
$0 p.a.
A variable rate loan for owner-occupiers looking to refinance. This loan has low fees and a 100% offset account.
ING Orange Advantage Loan - $150,000 to $500,000 (LVR ≤ 80% Owner Occupier, P&I)
2.54%
2.89%
$0
$299 p.a.
80%
Get a 100% offset account and a competitive, variable interest rate, plus no application fee.
Greater Bank Ultimate Home Loan - Construction Loan (Owner Occupier, P&I)
3.46%
3.88%
$0
$395 p.a.
90%
Build your new home with a variable interest rate and enjoy a 100% offset account. 10% deposit option available.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Investment, P&I)
2.54%
2.56%
$0
$0 p.a.
80%
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.
Newcastle Permanent Building Society Premium Plus Package Home Loan - Tier 1: below $500k (Owner Occupier, P&I)
3.77%
4.15%
$0
$395 p.a.
95%
$2,000 refinance cashback
No application fee and 100% offset account. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
ING Orange Advantage Loan - $150k to $500k (LVR 80% ≤ 90% Owner Occupier, P&I)
2.64%
2.98%
$0
$299 p.a.
90%
An offset account and free ATM access in Australia when you have both a home loan and everyday bank account with ING DIRECT
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Compare up to 4 providers

By utilising a debit card transaction account in conjunction with your offset account, you can get access to your funds when you need them. Basically you are paying interest on the total outstanding minus the amount you have in savings. The incentive is to save more.

More guides on Finder

Home Loan Offers

Important Information*
Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

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