Common questions about how offset accounts work, how the interest is calculated, and what to do if your bank isn't charging you correctly. If you haven't already, try the offset interest calculator to check your own numbers.
An offset account is an everyday transaction account linked to your home loan. Any money sitting in it reduces the loan balance your bank calculates interest on, without you having to make an extra repayment. For example, $50,000 in an offset account against a $400,000 loan means you're only charged interest on $350,000.
Banks work out your "net balance" by subtracting your offset account balance from your loan balance. They then apply your annual interest rate divided by 365 to get a daily rate, multiply that by the net balance to get a daily interest charge, then multiply by the number of days in the month.
It's simply your loan balance minus your offset account balance. This is the amount your bank should actually be charging interest on.
Log in to your bank's app or online banking and confirm the offset account is listed as linked to your home loan. Then use a calculator like this one to work out roughly what your monthly interest charge should be, and compare it to what's shown on your statement.
Contact your bank and share your workings. If you formally lodge a complaint, they're required to respond within 30 days. If you're not satisfied with the outcome, you can escalate the complaint to the Australian Financial Complaints Authority (AFCA) at no cost.
No, it's an estimate. It assumes your loan and offset balances stay constant for the month and doesn't account for daily balance changes, principal repayments made during the month, fees, or mid-month rate changes. Your actual bank statement may differ slightly for these reasons.