Paying your mortgage off quicker by using an offset account and a credit card

February 25, 2015
Leah Boyce

How does this work and how does it benefit you?

The first step is you need to have a 100% offset savings account linked to your loan. Every dollar sitting in your offset account “offsets” your loan by the same amount. This reduces the interest you pay on your loan. You have your salary paid into your offset account and by using your credit card for everyday purchases, you are keeping as much of your own money as possible in the offset account.

The real advantage of using a credit card with this strategy is that most credit cards will provide you with 55 days interest free on purchases.

For example, let’s say you spend $2,000 / month on everyday purchases. Putting the $2,000 worth of purchases on your credit card rather than spending from your savings, you keep the $2,000 cash in your 100% offset account. This then reduces your mortgage balance by $2,000 for that 55 day interest free period.

You then pay the $2,000 credit card bill on the 55th day, and not pay any interest on the credit card debt. You just need to ensure that when your credit card is due, you use the money in your linked offset account to pay the closing balance to avoid paying any interest.

As interest on a loan is calculated daily, it makes sense to try to keep as much money as possible in your offset account for as long as you can. When you multiply this effect over 15-30 years, there is a significant interest saving on your mortgage.

If you want to know more or want change your current mortgage to use this strategy, contact Stephen Zamykal at 03 8602 6777 or via email at

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