Why your bank might be overcharging you interest – and how to check

August 1, 2026 — 5:01am

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Have you got an offset account, and if so, have you ever checked it’s working properly to reduce the interest paid on your home loan? Sounds like something most people would assume the bank knows how to get right, right?

Well, according to a report by ASIC that was published this week, it’s now something we should all be worrying about, and checking on promptly.

The Australian Securities and Investments Commission has reviewed the practices of eight banks, looking at more than 200,000 individual home loans to check whether the offset accounts in place were delivering the savings that were promised, and the commission has been unimpressed by the mess.

Its report shows that, in the period from September 2023 to August 2025, banks paid out compensation of more than $55 million to customers for cases where offset accounts were not offsetting correctly – and that was chiefly only to people who discovered a problem and asked about it.

Fifty-five million dollars in compensation is what banks have so far admitted to getting wrong – but ASIC says the real number could be a lot bigger. Several banks couldn’t even reliably tell them who had asked for an offset account in the first place, let alone who had lost money on one that hadn’t been set up or linked correctly, or even set up at all.

An offset account is a transaction account linked to an eligible home loan that is designed to reduce the amount outstanding on the loan used to calculate interest. Offset accounts, when set up correctly and used well, can significantly decrease your interest costs over a lifetime.

Even after a mortgage could be paid down outright, many Australians approaching retirement choose to keep their money in an offset account – rather than closing the loan down entirely – so they can have access to credit in their later years that might otherwise be difficult to get or even be inaccessible.

According to the report, in March this year Australians held $349.1 billion in offset accounts, a number that grew by an enormous 28 per cent over the past two years.

Yet, with this growth, there is clearly a........

© Brisbane Times