Side by side
Savings account vs offset account
Savings interest is income, taxed at your marginal rate. Money in an offset account saves the home loan's interest on it, and that saving isn't taxed. Pick a savings account and put in your home loan's rate to see both at your tax rate.
vs
Offset accountYour home loan’s interest rate
Pick a savings account and put in your home loan’s rate.
Tax on the interest (your marginal rate, with the Medicare levy)Taxable income $45,001 – $135,000
Your balance: pick one, drag, or type any amount
How they differ
- Savings interest is income: it's added to your taxable income and taxed at your marginal rate. Money in an offset earns nothing; it lowers the balance the loan charges interest on, and interest not charged isn't income.
- An offset saves at the loan's rate only while the loan owes at least as much as the offset holds, and only for as long as the loan runs. A savings account pays whether or not you have a loan.
- An offset account's own fee, where the lender charges one, is paid whether money sits in it or not, so it isn't counted against the offset here.
- Both rates are variable. A savings rate with a bonus pays it only in months its conditions are met; the figures here assume they are.
- A separate offset account is a deposit, covered by the Financial Claims Scheme like a savings account, up to $250,000 per person at each bank, shared at one bank (APRA). An offset built into the loan rather than held as an account isn't.
Savers · savings accounts
Borrowers · home loans