An Introduction To Offset Banking

An Introduction To Offset Banking

If you've been searching for a new bank account or mortgage, you're quite likely to have come across the term offset banking. It's a relatively recent development in the financial world, and has the potential to save certain groups of people large amounts of money.

While the concept of offsetting can be used in a wide variety of financial situations, the most common scenario is combining a mortgage or home loan with a current account, and savings account. Sometimes, a credit card and/or a personal loan is added to the mix as well.

This is all well and good, but what does offsetting actually mean?

Traditionally, we took out a mortgage to cover the purchase of our home. We also had a current account to handle our day to day finances, and if we were financially prudent we'd also have some sort of savings facility to put money aside for a rainy day.

In offset banking, these various kinds of account are all rolled into one. Each month, when your salary is paid into the account, it is applied to your mortgage balance, temporarily making it smaller. A smaller mortgage balance means more of your monthly repayments go towards repaying the debt itself, and less towards the interest charged on it. Similarly, any savings you have also go towards reducing your mortgage balance, which will either decrease your monthly repayment or reducing the effective term of the loan.

The crucial thing to bear in mind is that your salary and savings are still instantly available for you to use as and when you see fit. There is no lock-in period - all that happens is that if you remove money from your account, your mortgage balance rises again. One way of viewing an offset account is as a huge overdraft that you need to clear over the period of your mortgage term.

But how does this help? Historically, your mortgage would cost you a higher rate of interest than a savings account would pay. Even with today's high direct savings rates, this is still generally the case. Instead of earning a lower rate of interest on your savings, you're instead avoiding paying a higher rate on your mortgage. This is clearly going to see you come out ahead in the end, even before taking into account that you'll avoid having to pay tax on savings earnings, which makes the deal seem even sweeter.

As an additional benefit, your monthly mortgage repayments are usually not set in stone - you can vary them as circumstances allow, paying more or less depending on how much spare cash you have each month. Your only commitment is to clear the balance by the end of the term (usually before your retirement date).

But are there any drawbacks? The main one is that as offset accounts are so flexible, you'll pay a little extra in terms of the base mortgage rate compared to, for example, a five year fixed rate deal. If you take full advantage of the offsetting benefits though, this difference is easily overcome.

The second drawback is that the flexibility requires discipline if you're to keep your repayments on track. Ideally, you should only use the flexible payments feature to make overpayments, and keep any underpayments to an absolute minimum.

So is offsetting for you? If you need some flexibility in your repayments, for example if your income varies dramatically from month to month, then it's an option worth considering.

Similarly, if you often have large amounts of surplus funds, for example if you are self employed and need to put money aside to pay your yearly tax bills, then you could find that your money works much harder for you in an offset account than in a traditional savings account.
About the Author/Author Bio
Nicholas writes for Your Banking Guide, where you can compare savings accounts and get a high rate of return on your investment.
By Expert Author: Nicholas Hunt
Article Source: http://www.articlesphere.com/

Some Ideas About Introduction To Offset Banking

Some Ideas About Introduction To Offset Banking

Traditionally, we took out a mortgage to cover the purchase of our home. We also had a current account to handle our day to day finances, and if we were financially prudent we'd also have some sort of savings facility to put money aside for a rainy day.

In offset banking, these various kinds of account are all rolled into one. Each month, when your salary is paid into the account, it is applied to your mortgage balance, temporarily making it smaller. A smaller mortgage balance means more of your monthly repayments go towards repaying the debt itself, and less towards the interest charged on it. Similarly, any savings you have also go towards reducing your mortgage balance, which will either decrease your monthly repayment or reducing the effective term of the loan.

The crucial thing to bear in mind is that your salary and savings are still instantly available for you to use as and when you see fit. There is no lock-in period - all that happens is that if you remove money from your account, your mortgage balance rises again. One way of viewing an offset account is as a huge overdraft that you need to clear over the period of your mortgage term.

But how does this help? Historically, your mortgage would cost you a higher rate of interest than a savings account would pay. Even with today's high direct savings rates, this is still generally the case. Instead of earning a lower rate of interest on your savings, you're instead avoiding paying a higher rate on your mortgage. This is clearly going to see you come out ahead in the end, even before taking into account that you'll avoid having to pay tax on savings earnings, which makes the deal seem even sweeter.

As an additional benefit, your monthly mortgage repayments are usually not set in stone - you can vary them as circumstances allow, paying more or less depending on how much spare cash you have each month. Your only commitment is to clear the balance by the end of the term (usually before your retirement date).

But are there any drawbacks? The main one is that as offset accounts are so flexible, you'll pay a little extra in terms of the base mortgage rate compared to, for example, a five year fixed rate deal. If you take full advantage of the offsetting benefits though, this difference is easily overcome.

The second drawback is that the flexibility requires discipline if you're to keep your repayments on track. Ideally, you should only use the flexible payments feature to make overpayments, and keep any underpayments to an absolute minimum.

So is offsetting for you? If you need some flexibility in your repayments, for example if your income varies dramatically from month to month, then it's an option worth considering.

Similarly, if you often have large amounts of surplus funds, for example if you are self employed and need to put money aside to pay your yearly tax bills, then you could find that your money works much harder for you in an offset account than in a traditional savings account.

About the Author/Author Bio
Find offset banking and more useful information about banking at this general directory.
By Expert Author: Nicolas Green
Article Source: http://www.articlesphere.com/

Some Advices For You About Choosing The Right Bank

Some Advices For You About Choosing The Right Bank

If you are looking to open a bank account, whether that bank account is a checking account or a savings account, you have a number of banking options. In fact, you have so many options that choosing the right bank may seem like an overwhelming process. To make that process easier, you will need to know what to look for in a bank.

Location is the key to many. If you are interested in having easy access to a bank, you may want to consider doing business with a local bank or a national bank that has a local office in your area. These banks are ideal for those with checking accounts or debit cards. You may find that using an ATM machine, other than the one provided at your bank, results in extra fees. This is one of the many reasons why banking with a local institution is popular, because you will have easy access to your money.

When finding the perfect bank for you to do business with, it is also important to determine what you want and need from a bank. Whether you are interested in opening a savings account or a checking account, it is important to examine the fees that each bank will charge. If you are interested in opening a savings account for someone under the age of eighteen, you may find that you are able to receive a free account. Adults, on the other hand, are often required to pay a monthly fee or maintain a certain balance in their account.

If you are interested in opening a checking account, there are also a number of fees that you should be on the lookout for. It is possible to obtain a free checking account, but many of these accounts come with specific requirements. You are likely to come across a number of financial institutions that require you to have a set amount of money in your account at all times. It is also possible to find banks that grant you free checking as long as you have your paychecks directly deposited into your account.

There are a large number of banks that will allow you to carry a debit card. These debit cards can often be linked directly to a savings account or a checking account. It is important to determine if you will be charged for obtaining a debit card. Many banks charge an upfront fee, typically less than five dollars, for requesting a debit card. A number of banks also change monthly fees for using a debit card. The same can be said for checks. In addition to paying for new checks, there are many financial institutions that charge their clients a set amount of money each time they want to write a check.

It is important to keep all of the above mentioned points in mind when searching for a bank. In addition to determining the cost of banking with a specific institution, you are also encouraged to examine the level of service that you will receive. You will want to do business with a bank that has a friendly and knowledgeable staff. By visiting the bank or calling to speak with an employee, you can easily determine the level of service that you should expect to receive.

Choosing a bank is not a decision that should be made on a whim. A bank is supposed to save you money, but without the proper amount of research it is possible to end up with one that costs you money.

About the Author/Author Bio
Find bank guide and other information about business services and online resource for business at this business directory.
By Expert Author: Nicolas Green
Article Source: http://www.articlesphere.com/

Manage Your Bank Account With Ease And Convenience

Manage Your Bank Account With Ease And Convenience

Of late, online banking has increasingly gained popularity. Countless consumers have largely benefited from this real possibility to conduct all their without having to stand in a queue at the bank. Even speaking to someone miles away has now become fairly easy and lightning fast.

You can now run your day-to-day finances, and manage your bank account with ease and convenience, thanks to online banking. This method of banking gives you total control of your transactions. Convenience, ease, speed, and increased control are the benefits of online banking. This has resulted in more and more people now deciding to conduct their banking transactions online, rather than at a branch. Specifically speaking by bankruptcy informations.com, the main reasons why people prefer online banking are the following:

i) Convenience: Online banking is so convenient that you can conduct your transactions from the comfort and privacy of your own home. For this kind of
banking, you don’t have to worry spending time queuing up at your local branch details by bankruptcyinformations. Particularly easy for those who work full time, online banking is a blessing - your banking commitments easily fit into your busy day.

ii) No time constraints: Regular banking is ‘time-restricted’. The timings of the functioning of the banks determine your contact with the bank in order to
conduct transactions. For people with busy lifestyles and full time jobs, this can be quite frustrating. However, online banking gives you the benefit of
conducting transactions around the clock, which means that you can effectively manage your account at any time of the day, and even at night.

iii) Control: By going online, you are able to conduct almost any banking transaction that can be performed by phone or visit to Bankruptcyinformations.com website for more details. The only exception is that you cannot deposit or withdraw cash online. Other than that, it is from the privacy of your own home that you can effectively keep your finances under your watchful eye.

iv) Greater security: To ensure the safety and security of customers, banks now use very secure software, making online banking safer than ever before.

However, you need to exercise caution too - never link to your bank account from an email link, as this could be a false link. Also, avoid saving your

banking passwords and security details on a shared computer, as that could give easy access to others.

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Bankruptcyinformations.com is the right place for Bankruptcy Advice and California Bankruptcy Laws.
By Expert Author: Jim Brown
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Liberty Reserve Payment Processor

Liberty Reserve Payment Processor

Liberty Reserve is an account-based e-currency system in which you can store your money in American dollars, European EUROs and GOLD (soon) and transfer payments to other people and receive payments from others. It is safe, reliable and confidential. The payments are irrevocable (which means they can not be reversed). Liberty reserve is instantaneous, real-time currency for international trade. Within minutes, you can send and receive payments from anyone, anywhere on the globe!

E-currency, or digital currency, is a stored value and payment system, that allows users to store funds (such as Euro, USD, Yen, and metals such as gold, silver, etc., or anything else of value for that matter). The main feature of a digital currency is that spends (payments) are irrevocable, unlike bank payments (wires, checks), and other systems that have similar features (online payments) but can easily reverse payments, such as PayPal. Liberty Reserve is protected by an offshore Trust, and is at all times backed 100% by U.S. dollars for LR-USD accounts, and by gold for LR-gold accounts, etc.

Liberty Reserve is incorporated under the laws of Costa Rica and is a 100% irrevocable payment system and digital currency. You can send or receive money to or from anyone in the world.

One of the most important features of Liberty Reserve is the security of your account. Passwords, PIN's, stop account feature, and anti-keylogger (trojan) login system are just a few of the security precautions that Liberty Reserve has added to keep your value safe and secure within your account. Nothing works better, however, than your own due diligence when it comes to security. Always use an anti-virus for safe computing.

Transactions are instant and irrevocable.Eliminate risk and fraud. No more charge backs, defaults, high bank wire fees and bad checks! Use Liberty Reserve to make your online payments quickly, easily and in real time. Liberty Reserve is secure, easy to use and cost-effective.

Pay your bills using Liberty Reserve by just use any of approved exchange providers to send a check to you or anyone and anywhere in the world in exchange for your Liberty Reserve funds.

Liberty Reserve also provides personal, live, one-to-one chat with a customer support representative to answer your questions. No more waiting hours or days to get a simple question answered. Support representatives can also push a URL onto member's computer as a pop-up so that not have to go looking for a particular link.

About the Author/Author Bio
Martin Bert is an active online investor in gold, FOREX and offshore funds since 2002.You can check his last tips on HYIP investments on LRHyip.com
By Expert Author: Martin Berlin
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