Is my offset account actually working?

This calculator detects one specific failure: the offset is linked but is not reducing your interest by the right amount. That is the smallest of the four failure modes ASIC found. The larger ones need no arithmetic at all, just a look at your banking app.¹

ASIC's own advice to customers is to check three things. In the failures banks reported, 55% were an offset account that had been opened but never linked to the loan, and a further 22% were an offset that was never opened at all. Together that is more than three quarters of the problem, and neither shows up as a gap in the interest calculation because there is nothing to compare against.

1. Has the offset account actually been set up? Not requested. Set up.
2. Is it linked to the correct home loan? Linking to the wrong loan is a failure mode banks specifically told ASIC their controls did not reliably detect.
3. Is it actually reducing your interest? Half the banks reviewed do not show the interest saved anywhere in the app. It appears only on statements, which is what this calculator is for.

ASIC found that 86% of offset failures came from manual staff error, and that banks failed to detect 77% of the failures they eventually reported until ASIC asked them for the data. One bank had not reviewed the exception report that was its main tool for finding these failures in almost five years. The point is not that banks are careless; it is that nobody is checking on your behalf.

This is the least known part and the most expensive. Refinancing, switching from a variable rate to a fixed rate, or changing product will typically de-link an existing offset account. When that happens you usually have to make a fresh request to have it re-linked. It does not carry over.

ASIC found that complaint records suggested many customers did not understand a separate request was needed, and that some banks did not warn them. In four cases at one bank, the settlement team did not tell the customer's broker that the offset needed re-linking after an internal refinance. Two of those customers paid more than $17,000 in extra interest.

In another case a bank error removed the link during an in-life change in April 2025. It went unnoticed until the customer questioned the interest. In just over one month they paid more than $3,500 in additional interest.

So the moment to check is not annually. It is immediately after any change to the loan: a refinance, a fixed rate starting or ending, a product switch, or a split. If your fixed term is about to expire, check in the month after it rolls to variable.

ASIC published a worked example. A $750,000 loan over 30 years at 6.25%, with $50,000 kept in the offset. The offset was requested at settlement but never linked.

After one year, more than $3,000 in extra interest. Had it gone undetected for the life of the loan, nearly $230,000 of interest savings foregone, and four additional years to repay.

That is the case for checking. The repayment does not change when an offset fails, so there is no signal. The loan just runs longer.

Because offset accounts fail more often than you would think, and the failure is invisible on a statement.

In July 2026 ASIC published a review of eight banks covering more than 70% of Australia's home loan market. Banks had repaid over $55 million in compensation for offset account failures between September 2023 and August 2025.¹

The most common failure was mundane. Of the documented cases, 55% involved an offset account that was opened but never linked to the loan. Another 22% were never opened at all. Most of it came down to manual staff error. One customer was repaid more than $17,000.

An unlinked offset looks completely normal. The money is there, the account exists, and the interest charge is simply higher than it should be. Nothing on the statement says so, which is exactly why the arithmetic is worth doing.

Most Australian home loans accrue interest daily and charge it monthly. Each day the lender subtracts your offset balance from your loan balance and applies the daily rate to what is left.²

So the expected charge is the net balance, times the annual rate divided by 365, times the days in the period.

This page uses one average offset figure rather than a real daily series, which is the main reason it approximates. If your offset balance swings through the month, your average matters more than any other input here.

Rule out the offset link first, because it is both the most consequential cause and the easiest to check.

Open your banking app and confirm the offset shows as linked to the loan. This is worth re-checking after any refinance or product switch, since that is when the link most often breaks.

Then check whether your offset is 100% or partial. A partial offset, commonly 40%, only offsets part of your balance, and the maths here assumes a full offset unless you enter the offsetting portion.

Then check whether the rate moved during the period, and whether fees were included in the interest line.

If none of those explain it, ask your lender to walk you through the daily calculation. You are entitled to that breakdown. If the answer does not satisfy you, the Australian Financial Complaints Authority handles disputes at no cost to you.³

This is worth knowing if you are reading from outside Australia, because the offset mode may not apply to you at all.

Offset accounts are exceptionally common in Australia, where around 40% of mortgage holders use one.⁴ They exist in New Zealand and the United Kingdom but are much less common, and in New Zealand only some lenders offer them.

They do not appear to exist in the United States, and the reason usually given is tax regulation.^4,5 The closest American equivalent is simply paying extra off the principal, which is a different thing with different consequences.