Tried to balance transfer $10000 to a debit card, obviously with the plan on transferring it onwards to my offset account and reducing mortgage interest for about 18 months.
I thought I was being clever. It was declined. Looks like they can identify the type of "target" card based on the number. Just a PSA for anyone thinking of doing the same.
Thanks.
I guess the way around it is to spend on the legit credit card, balance transfer to that account, and chuck what I would have otherwise paid on that card into the offset. Same principle, just more effort.
What you talkin bout willis? Balance transfer to credit card then transfer positive balance to offset account.
Doesn't that incur a cash advance fee?
Not that I've come across, though check CC T&C.
Westpac and BoM will charge you $2.5 if you do a BT from a POSITIVE Credit Card balance to a Bank Account (normally internal transfer) AND the resultant balance after the balance transfer becomes POSITIVE (ie: $1 in Credit). Do not BT to zero because it will trigger the up to $50 charge.
NAB does not charge you to a BT provided the resultant of balance remains 0 or positive.
To round off Burningrage's list, ANZ-Zero, CBA $2.50. Final balance can be zero, like NAB.
Noted Westpac 'catch' on resultant balance.
What tinny said. Or Citibank if you can get it - they'll write a cheque to you.
Tinny is correct. I did it twice like that.
Can someone direct me to a idiot's guide or noob friendly resource that explains everything everyone just said?
Things like offset account and reducing mortgage interest and POSITIVE credit card… O_o How is it even possible to get a POSITIVE cc balance? Overpaying the bill?
Exactly. You dont even need a bill. Just transfer more than the balance of the card to the credit card account.
Ok, that's one topic down and thankfully, I got that pretty much close to the mark.
Thanks for chiming in.
An offset account is a transaction account linked to a home or investment loan. The money in this account offsets the amount you owe on that loan, and you'll only be charged the interest on the difference.
Once again, thank you for the education.
Let me get this straight, if I owe $1000 and I have $900 in the offset account, the bank folks will only charge interest on $100?
And if I am correct on this, why don't I just pay off the $900 so that the total I owe actually reduces?
100% correct, the offset just keeps cash readily available. Interest is usually charged daily, so using this account for income and outgoings will shave interest off mortgage repayments.
@tinnybastard:
TY. This is all very interesting. I didnt know that the interest on the loan was computed daily.. I thought it was quarterly or yearly. Shaving off interest charged will certainly be very beneficial.
If I may, I'd like to ask one more question?
Is there any advantage of putting this cash on a debit card like the op did or into a cc like mentioned by some others as an interim step prior do ultimately arriving in the ofset account?
@tebbybabes: As far as I'm aware all BTs require a credit card to transfer the balance to, with exception of Citibank who offer the cheque in the mail.
If you have an investment property and you are negative gearing (or might negative gear in future) paying money off the actual mortgage will be there forever as far as the ATO is concerned. Once it goes in, even if you redraw it back out, it was once there - for tax purposes, forever.
I had a loan and I was using the property. I was saving money though to buy another property so I saved the money in an offset account linked to that loan. I would leave $1 difference between the offset account and the money I owed. Offset can't go over what you owe. I was paying cents in interest every month and all my payments therefore came directly off the principle, reducing it quickly.
Now I have another property and that property (above) is negatively geared. I couldn't do that if I'd paid the money onto the loan. The ATO would consider that loan to be $1.
I usually get Citibank to transfer directly into my mortgage account and re-draw it out to the offset. They can't or won't do it directly to the offset.
However last week they couldn't do it to even my mortgage account so I pushed it to the Credit Card, still waiting for the funds to be transferred, hopefully can easily transfer to the offset from there. In hindsight I should have got a cheque but I really couldnt be fussed going to the bank.
What's the best credit card to get at the moment?
Westpac - 50,000 qantas points (can be sold on OzB classifieds for $500) and no annual fee for the first year. Balance transfer for 18 months at 0%
Excellent deal, though I doubt the balance transfer would class as the $2500 spend required to acquire the 50k of Qantas points.
Yep, fortunately now if you make a payment on to a credit card, it is deducted from the balance that charges the highest interest rate.
So if your balance is $12500 at your first statement (balance transfer of 10k plus 2.5k spend) and you pay $2500 your interest rate should still be zero
Interesting.. I assume you wouldn't get interest free days on the 2.5k unless within the first billing cycle.
welcome to how a card number works….
do some research next time