offset account

A 100 percent offset account can save you money if you tend to carry a larger balance in your transaction account. They typically come with an ATM card, cheque book and internet access like a regular cheque account. But the balance is automatically subtracted from your mortgage balance when the bank calculates your monthly interest payment.

EXAMPLE

MORTGAGE BALANCE:

$120,000

OFFSET ACCOUNT BALANCE:

$7,200

YOU PAY INTEREST ON:

$112,800

You typically don’t earn interest on an offset account. But you save interest on your mortgage, which is usually at a much higher rate than you would earn on a transaction account.

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