How much interest could an offset account save?

At a hypothetical 6% rate, $10,000 continuously offsetting a larger loan corresponds to $600 less interest across 365 days on a 365-day basis. Doubling the offset to $20,000 doubles that simple estimate to $1,200.

The loan must remain larger than the offset throughout. These are interest reductions before fees, not cash paid to you or predicted bank-statement amounts. The last column is a monthly average, not a daily-interest calculation for a particular calendar month.

Consider a deliberately simple 30-day period: the offset holds $10,000 for 15 days and $30,000 for the next 15. Its average balance is $20,000. At 6%, with a loan above both balances and a 365-day basis, the interest reduction is:

Using the closing $30,000 balance for all 30 days would give about $147.95 instead. That would overstate the reduction by roughly $49.32. The money was not there for the whole month.

Sidelo applies regular savings monthly rather than reconstructing every salary deposit and card payment. Actual day-to-day transactions are one reason a bank’s result can differ.

Over years, repayments reduce the loan, savings change the offset and the amount exposed to interest changes again. Multiplying today’s annual reduction by the remaining term misses those interactions. It can also keep counting savings after the debt would have been repaid.

Sidelo runs a daily loan simulation. The comparison labelled “No offset or extras” removes the offset and additional repayments. If your plan includes both, the displayed difference reflects both effects; it is not the benefit of the offset alone.

To explore the offset’s effect in isolation, a hypothetical comparison needs the same loan, rate and repayment assumptions and no additional repayments. Different rates or account fees would require a broader product-cost comparison, which Sidelo does not perform.

The calculator needs the balance still owing, the remaining term, the rate and the offset currently available. Quick-mode monthly savings should already be after living costs and loan payments. Alternatively, the linked budget derives available saving from income and expenses.

A repayment date is only as plausible as those inputs. If the model shows a funding shortfall, it still assumes scheduled loan payments occur; additional money would be needed to achieve that path. The methodology explains this limitation and the rest of the calculation.