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Are my savings better off in a savings account or in an offset account?
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I was just wondering as i have extra savings in an account with another financial instituition collecting interest, would i be better of putting most of that into loan repayment account and redrawing sort of like an offset acount as i would pay less interet and not pay tax on as much interest as it the majority of the savings would be against the loan.
1 Answer
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Hi Treesy,
I'm going to assume that the interest rate on your home loan is higher than the interest rate you are receiving for your savings.
If that is the case (which I'm 99% sure it would be) then yes you would be getting more for you money by either putting it into an offset account or, onto your loan if you have a redraw facility.
As you pointed out, not only will you be earning less interest than you would save by offsetting your home loan, you will also be taxed on the interest earned.
Hope that helps!
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