Aaron argues that conventional savings accounts waste money for homeowners with mortgages. Offset accounts let you reduce interest on your loan instead, which beats the tiny rates banks pay on savings. He shows how to split them by goal.
Hey, has it come to that time that a savings account is really pointless? Hey, it's Aaron from Diagnostics and Finance. Savings accounts, are they pointless now? Now that the interest rate is that the Reserve bank says 1% is a savings account pointless? Well, I just want to talk about the comparisons between savings accounts and offset accounts. So, hey, to everyone that has a home loan, have you utilized either Redraw or an offset account to its full potential? We all love to be able to split our money up into whether it's the annual bills, quarterly together through to our everyday spending weekly grocery shop. Have we thought about utilizing offset accounts a little bit more? If you've had savings accounts in the past with all these things, split holidays, annual bills, all these things, and you have a home loan, you're probably leaving money on the table. So if you were able to have those accounts now sitting as offset accounts, all that money that is sitting in those accounts right now would be able to offset your mortgage. So instead of earning, say 1%, 1.5%, 2%, you're actually going to be saving 3, 4% off that balance that you have in there. So instead of earning interest that has to go on your tax return, you're actually saving interest. So if you haven't utilized your redraw offset accounts or you just want more offset accounts without having the added expense because some banks will charge you for greater than one offset account, I have access to lenders that will give you multiple offset accounts, multiple splits so that you can have your annual bills, your holiday account, any savings that you want, anything at all sitting in these accounts to be able to offset the interest on your mortgage and be able to save your money at the same time. Plus, you're not chasing sort of those ones to twos to a little bit more promotional interest rate that you get on these online savers or other bank accounts. So look at the offset accounts. Look at whether we can reorientate our budget from earning interest to saving interest. Hey, it's Aaron from Diagnostics and Finance. Have a great day.
