Getting the most from an offset account

Hi there
I don't know where this thread belongs, exactly, so my apologies in advance if this is the wrong place for it.
My question has to do with the best way to use the offset account. We all know to pay everything we can by credit card and so leave the balance as high as possible to offset monthly interest charges on the loan, but what about when companies charge transaction fees for paying by card?
The fees are generally quite low and to my inexperienced mind it seems better to pay the 0.7% (or whatever it is) fee than to pay by cash and lose hundreds of dollars from my offset account, dollars that could be used to offset the 5.7% the bank is charging me.
Sorry, am I making any sense?
Oh, and the bills I'm asking about are not related to the IP. These are personal bills, like for electricity and water.
Thanks very much
 
Quick observation: I hope you're paying off the credit card every month in full, otherwise you'll be paying large interest bills which will cost you far more than you save in the offset account.

My quick calculations indicate that a 0.7% fee is higher than interest saved in the offset account on the same amount across a month. If it's a $100 purchase:

Fee on credit card:
$100 x 0.7% = 70 cents.

Interest saved in offset accout:
$100 x 5.7% / 12 = 47.5 cents

You should be paying off your credit card monthly or risk paying interest on it, but if they're charging you extra for credit transactions (and most don't as far as I'm aware), you're probably better off paying cash.
 
Quick observation: I hope you're paying off the credit card every month in full, otherwise you'll be paying large interest bills which will cost you far more than you save in the offset account.

My quick calculations indicate that a 0.7% fee is higher than interest saved in the offset account on the same amount across a month. If it's a $100 purchase:

Fee on credit card:
$100 x 0.7% = 70 cents.

Interest saved in offset accout:
$100 x 5.7% / 12 = 47.5 cents

You should be paying off your credit card monthly or risk paying interest on it, but if they're charging you extra for credit transactions (and most don't as far as I'm aware), you're probably better off paying cash.

Hi there...yes I pay it off every month. Oh, I see what you mean. Hmmm. it's a toughie because that means my balance in the offset account dips and that would mean I'm paying interest on a higher amount of loan. Sorry, am just not very good with this kind of calculations. Would really appreciate your thoughts! Thank you
 
The offset account, credit card, annual package fee "professional package", is a scam.
Banks know most people dont pay off their credit card every month, that most people are likely to spend more with a credit card than with cash, and that most people cant leave enough of a balance in their offset account for long enough to cover the $400 annual fee for the package. (first law of finace, people spend what the earn).

Yes, for some canny people (and the nature of financial/economic psychology means everyone thinks they are one of these 'smart' people) they can resist temptation and be better off with an offset account and make their normal purchases with the credit card. But for most, its just a sales tool the bank uses to get sticky clients with all of their financial business with the one provider.
 
Sorry, am just not very good with this kind of calculations. Would really appreciate your thoughts! Thank you

Essentially if you're currently paying 5.7% on the loan, you're better off to use money in the offset account than by using the credit card, if the fees on the credit card exceed 0.47%.

If the fees on the credit card are lower than 0.47% of the transaction amount, use the credit card.

Realistically though, you're likely stressing about less than $10 per month either way.
 
Hi there
I don't know where this thread belongs, exactly, so my apologies in advance if this is the wrong place for it.
My question has to do with the best way to use the offset account. We all know to pay everything we can by credit card and so leave the balance as high as possible to offset monthly interest charges on the loan, but what about when companies charge transaction fees for paying by card?
The fees are generally quite low and to my inexperienced mind it seems better to pay the 0.7% (or whatever it is) fee than to pay by cash and lose hundreds of dollars from my offset account, dollars that could be used to offset the 5.7% the bank is charging me.
Sorry, am I making any sense?
Oh, and the bills I'm asking about are not related to the IP. These are personal bills, like for electricity and water.
Thanks very much

Is your offset for your PPOR or your IP? I would be hesitant to be mixing the 2 together if you are - it gets messy at tax time.

I have an offset for our IP which has a credit card but as the credit card is strictly for IP purchases/spending only it gets very little use - in fact hasn't been used yet as most bills are paid by our PM.
 
Is your offset for your PPOR or your IP? I would be hesitant to be mixing the 2 together if you are - it gets messy at tax time.

I have an offset for our IP which has a credit card but as the credit card is strictly for IP purchases/spending only it gets very little use - in fact hasn't been used yet as most bills are paid by our PM.

It shouldn't make a difference as an offset account is just a savings account and there is no interest.

Same with the credit card, if you are paying it off each month there would be no reason I can think of why you couldn't mix private expenses and business.

Except, just thought of 1, if you were buying business items on credit card and then borrowing from a LOC (or other) to refinance this credit card debt.
 
Quick observation: I hope you're paying off the credit card every month in full, otherwise you'll be paying large interest bills which will cost you far more than you save in the offset account.

My quick calculations indicate that a 0.7% fee is higher than interest saved in the offset account on the same amount across a month. If it's a $100 purchase:

Fee on credit card:
$100 x 0.7% = 70 cents.

Interest saved in offset accout:
$100 x 5.7% / 12 = 47.5 cents

You should be paying off your credit card monthly or risk paying interest on it, but if they're charging you extra for credit transactions (and most don't as far as I'm aware), you're probably better off paying cash.

However, if you have a gold or platinum card provided free with your loan, taking into consideration with extra purchase insurance and/or frequent flyer points worth up to 150pts. At a value of 1 pt = 0.5-1c, it may be better off paying by card.
 
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