What is an off-set account?
Interest offset accounts have been around for many years. It is where the interest earned on your deposit moneys (savings accounts and the like) are deducted from interest accrued on your loan account. Some lenders will only allow an interest accrued offset with the credit account interest being offset against the debt account interest. That is to say, you may earn 5% on the balance in your deposit account and be charged 8% on your loan account. The net offset effect is 3% less than the interest accrued on your loan account but only to the value of your savings interest, thus producing only a partial offset. A true offset account is where the dollar values, not the interest factors, are being offset against each other.
