CBA's Transactional Offset

[Jamie M]

I think the MISA still has its place. Some people prefer a non-transactional offset because it can force them (to a degree) to be more disciplined with their money.

Thanks for sharing Brady. It's funny to see all of us finance nerds getting worked up about a bank account

Cheers

Jamie

 

[tobe]

yes, thanks for sharing Brady. Dont mind me rattling your cage, Ive had a fair bit of experience with dyed in the wool cba customers, and many of them, I dont actually want to deal with!! lol

 

[Marty McDonald]

Because customers don't always think logically.

They'll turn their nose up at paying that fee thinking it's outrageous and keep their savings in whatever form they have. They then don't offset their mortgage, therefore it's less interest offset and more interest paid to the bank.

They don't realise that ~2% interest different would probably equate to a lot more than $95.

That's how I see it anyway.

Exactly right. A little birdie told me they would do this and the reason was why should they give up the margin on the piles and piles of everyday funds they have sitting in transaction accounts earning zippo for home loan clients. This is surely the main reason they have resisted for so long.

 

[Blacky]

Brady
Does CBA have an offset acct on any business/commercial loans?

Blacky

 

[Brady]

Brady
Does CBA have an offset acct on any business/commercial loans?

Blacky

The transactional offset account will only be available for personal customers borrowing in personal names.

 

[Brady]

Exactly right. A little birdie told me they would do this and the reason was why should they give up the margin on the piles and piles of everyday funds they have sitting in transaction accounts earning zippo for home loan clients. This is surely the main reason they have resisted for so long.

It's a double effect, lose money on exisitng funds in everyday accounts then also lose money on interest savings.

I believe this would of had a large impact.

I also think that they wanted to offer something else with it, to be more marketable... the multi offset account feature.

 

[Mick C]

- You will be able have have multiple transactional offset accounts linked to the one loan, I believe this is excellent and possibly a market leader.

^ Fantastic!!! Great for investors with equity release...

Quite a few smaller lenders have such

I recall STG and Sun, and some of the BSoc and

Good feature to have for a mainstream 4

Yep most of the small lenders offer multiple offset ( free of charge) ; the only main stream one that comes to mind is NAB ( Not home side)- but you need to give them a reason every time you request for a 2nd,3rd,4th.. offset

Because customers don't always think logically.

They'll turn their nose up at paying that fee thinking it's outrageous and keep their savings in whatever form they have.
That's how I see it anyway.

Unfortunately most ppl will only look at " interest rate" and over look the features that can SAVE them on interest and actually GROW their portfolio in a cleaner tax efficient manner

If it is a transactional offset and you have 55k in it an the loan it is offsetting is 50k will it close the loan? At present with MISA I have been advised to only have 49kin the MISA against a 50k loan becasue if 50/50 they close it.

No it' doesn't close- however sometimes you might not be able to "view" it ...not sure why but i had this argument for my own loan with CBA IT support...But you can simply ring them up and have it added back to your online view if you can't see it online.

Overall, always good to see some change

Regards

 

[MC1]

$95 set up fee for an offset is a joke

 

[neK]

$95 set up fee for an offset is a joke

I think post sums it nicely. Quite smart on CBA's behalf the way i see it.

Because customers don't always think logically.

They'll turn their nose up at paying that fee thinking it's outrageous and keep their savings in whatever form they have. They then don't offset their mortgage, therefore it's less interest offset and more interest paid to the bank.

They don't realise that ~2% interest different would probably equate to a lot more than $95.

That's how I see it anyway.

 

[MC1]

Fair enough, but I can arrange a loan without a fee for setting up an offset account at many other lenders.

CBA are years behind in bringing to the table an offset that is actually worth considering and they want to charge a fee to set it up on top of the package fee. Bit arrogant me thinks and there are a lot of alternatives

 

[Risky Business]

Thanks for the update Brady.

I have some CBA loans and a wealth package. Does this mean that I can now link 2 MISAs and 3 everyday accounts to the one PPOR loan? I have some separate accounts for different purposes. Will I only be charged one $95 fee as all the accounts will be offsetting the one PPOR loan? What triggers the $95 fee?

Thanks mate.

 

[Brady]

Thanks for the update Brady.

I have some CBA loans and a wealth package. Does this mean that I can now link 2 MISAs and 3 everyday accounts to the one PPOR loan? I have some separate accounts for different purposes. Will I only be charged one $95 fee as all the accounts will be offsetting the one PPOR loan? What triggers the $95 fee?

Thanks mate.

MISA will stay the same, no change.

From my understanding if you're a existing CBA customer with wealth package (>$150k borrowings) that you can pay $95 per arrangement (loan) and link multiple everyday accounts which can offset against your PPOR.

As mentioned above MC1 CBA was slow to bring out the transactional offset and although I don't agree with the fee. The savings for someone like you Risky Business by having 5 accounts offsetting the one loan is well worth the $95 over the life of the loan.

MC1 I disagree this is a very very good product that I'm sure just about every single new CBA customer will like, it will bring in a lot of business I believe.

As for the existing although I don't agree with the $95 for existing customers, for those like risky business who have need I'm sure they will more then happily pay the $95... And for those who don't see the need for the multiple accounts and transactional they will just continue on with the MISA.

 

[Risky Business]

Thanks for your time Brady.

I've casually asked CBA for that feature for years. If I'm only paying $95 for the one loan it's money well spent. Otherwise I would have just wasted it on Maccas' 30c cones.

 

[Brady]

Thanks for your time Brady.

I've casually asked CBA for that feature for years. If I'm only paying $95 for the one loan it's money well spent. Otherwise I would have just wasted it on Maccas' 30c cones.

Lol I asked the CEO each time he was in town

Agreed. $95 for life of the loan with multiple offsetting accounts is good value. Now fingers crossed they actually release on the correct date

 

[Risky Business]

Another question Brady.

My PPOR loan with the attached MISA is on a variable rate primarily due to the non 100% offset feature when on a fixed rate loan.

Will the new transactional offset account offer a 100% offset on a fixed rate loan?

If so, this is getting better.

Cheers mate.

 

[Brady]

Another question Brady.

My PPOR loan with the attached MISA is on a variable rate primarily due to the non 100% offset feature when on a fixed rate loan.

Will the new transactional offset account offer a 100% offset on a fixed rate loan?

If so, this is getting better.

Cheers mate.

Would be nice but no transactional offset for fixed.

Just personal name SVR

 

[maloriopolium]

Originally Posted by Brady

- You will be able have have multiple transactional offset accounts linked to the one loan, I believe this is excellent and possibly a market leader.

^ Fantastic!!! Great for investors with equity release...

Regards

Can you elaborate on what the benefits are of linking multiple offsets to the one loan? Why would you put funds into separate offset accounts when you can just put it in the one (assuming your interest rate is the same across all your loans)?

 

[Mick C]

Sorry it's multiple offset account linked to the one SECURITY ( which i presume Brady meant as well)

This allows you to have multiple split loan ( for the one security) - for different purpose for tax reason ( ie Investment and purpose)

 

[Peter_Tersteeg]

Can you elaborate on what the benefits are of linking multiple offsets to the one loan? Why would you put funds into separate offset accounts when you can just put it in the one (assuming your interest rate is the same across all your loans)?

You can have one account for your day to day needs, another for your longer term savings.

I know people who budget very tightly using multiple accounts. There's one for weekly bills such as groceries, another for quarterly such as utilities, another for annual such as rates and insurance. For them it's an easier way to make ends meet.

 

[D_One]

$95 for an offset account after paying the annual wealth package fee is a rip-off while the other banks are providing as part of the annual package fees. Absolute ripoff. More ways for CBA to land record profits I guess.

I'll be staying with my MISA till they make the transactional offset free. I worked a system with my MISA, separate streamline account and scheduled transfers anyways.