What an offset account does with City Air Miles

An offset account is a savings or transaction account linked to your City Air Miles card that reduces the interest you pay on your card balance. Money sitting in the offset account counts against your outstanding balance for interest calculation purposes, even though you don't withdraw it to pay the card directly.

For example, if your card balance is $5,000 and you have $2,000 in a linked offset account, you pay interest only on $3,000. The offset account itself typically earns little or no interest, so the real benefit comes from lowering what you owe on the card—where interest rates are much higher.

Not all City Air Miles cards support offset accounts. The feature is most common on premium or rewards-focused cards, and some cards require you to hold a specific account type with the same bank. Check your card's terms or contact City directly to confirm whether your card is may be able to access.

Key Takeaways

  • An offset account reduces your card interest by counting savings against your balance, so a $2,000 offset on a $5,000 balance means you pay interest on only $3,000.
  • You must open an offset account with the same bank that issued your City Air Miles card, and it must be linked during setup or through your online banking.
  • The offset account is separate from your card—you don't transfer money to pay the card, and the offset balance doesn't count toward your credit limit.
  • Offset accounts earn minimal or no interest, so the savings come entirely from reducing the interest charged on your card balance.
  • You can deposit and withdraw from your offset account freely, and the interest reduction updates daily based on your current offset balance.

Check whether your City Air Miles card supports an offset

Before you set up an offset account, confirm that your specific card product allows one. Log into your online banking portal and look for account settings or card management options. Many banks display offset may be able to access right on the card details page.

If you don't see an offset option in your portal, call the customer service number on the back of your card. Ask directly: "Does my City Air Miles card support an offset account?" They will tell you whether the feature is available and what account type you need to link.

Some City Air Miles cards require you to hold a transaction account (everyday bank account) with the same institution. If you don't have one, you may need to open it before you can set up an offset. This is a separate account from your card and from any savings account you already own.

Open a transaction account if you don't have one

If your bank requires a transaction account to link an offset, and you don't already have one with them, you'll need to open it first. You can usually do this online through the bank's website or app, or by visiting a branch in person.

The process takes 10 to 15 minutes online. You'll need your ID, tax file number, and proof of address (a recent utility bill or bank statement). Once approved, the account opens within one to two business days, and you'll receive online access when ready.

You don't need to deposit a minimum amount to open the account, and you don't need to use it for everyday spending if you don't want to. Its only purpose is to serve as the offset account linked to your card. Some banks waive monthly fees on transaction accounts if they're linked to a credit card.

Link your offset account to your City Air Miles card

Once you have both a transaction account and an may be able to access City Air Miles card, link them through your online banking. Log in, find your card settings, and look for an option labeled "Link offset account", "Add offset", or "Manage offsets".

Select your transaction account from the dropdown list. The system will confirm the link, usually within seconds. Your offset is now active, and any balance in that transaction account will reduce your card interest starting the next business day.

If you can't find the offset option online, call your bank's credit card team. They can link the accounts over the phone and confirm the setup is complete. Ask them to send you a confirmation email so you have a record of the link date.

How interest reduction works once your offset is active

Once your offset account is linked, the bank calculates your card interest daily using your card balance minus your offset balance. If your card balance is $4,000 and your offset holds $1,500, interest is charged on $2,500.

The offset balance updates in real time as you deposit and withdraw money. If you withdraw $500 from your offset account, your card interest when ready increases because the offset is now $1,000 instead of $1,500. If you deposit $300, your card interest when ready decreases.

Interest is usually charged monthly on your card statement. The amount reflects the average daily offset balance for that month. This means keeping money in your offset account consistently saves more than depositing it only occasionally.

Manage your offset account and card balance together

Treat your offset account as part of your card strategy, not as a separate savings account. The goal is to keep as much money as possible in the offset while still having access to it for emergencies.

Set up automatic transfers to your offset account if you receive regular income. Many banks let you schedule weekly or fortnightly transfers from another account. This keeps your offset balance high without requiring you to remember manual deposits.

Keep your card balance as low as possible. The offset reduces interest, but it doesn't eliminate it—paying down your card balance is always more effective than relying on an offset alone. Use the offset for true emergencies or short-term cash flow gaps, not as a reason to carry a larger balance.

Monitor both accounts monthly when you review your card statement. Check that the offset is still linked, that your balance is where you expect it, and that the interest calculation reflects your offset correctly.

Frequently Asked Questions

Does the money in my offset account count toward my credit limit?

No. Your offset account is separate from your card. The money in it doesn't increase your available credit or count toward your limit. It only reduces the interest you pay on your card balance.

Can I withdraw money from my offset account anytime?

Yes. Your offset account is a regular transaction account, and you can withdraw or transfer money from it whenever you need to. The interest reduction on your card adjusts when ready based on your new offset balance.

What happens to my offset if I close my card?

The offset account itself doesn't close—it remains a separate transaction account. However, the link between the offset and your card breaks, so the offset no longer reduces your card interest. You can keep the account open for other purposes or close it if you no longer need it.

Can I link multiple offset accounts to one card?

Most banks allow only one offset account per card. If you have multiple transaction accounts, contact your bank to confirm which one can be linked. Some premium card products may support multiple offsets, but this is uncommon.

Is the interest saved worth the effort of maintaining an offset?

It depends on your card balance and interest rate. If you carry a balance of $3,000 or more regularly, an offset with $1,000 or more in it will save you $100 to $200 per year. If your balance is smaller or you pay it off monthly, the offset provides minimal benefit.