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.