As Effie Zahos reports in the March issue of Money magazine, perhaps the most ground-breaking product in recent times is the salary transaction home loan. It works on the principle that interest is calculated daily, so the more you throw in on day one, the more you can save.
It's linked to a credit card. Borrowers are encouraged to deposit all of their salary into the loan, live off their credit card during the interest-free period and withdraw living expenses once a month.
If followed correctly, at 7% a homeowner with a $160,000 25-year mortgage who has a monthly salary of $3100 and spends around $2000 a month can expect to save one year and three months off their term and over $14,000 in interest payments.
The Commonwealth Bank, for instance, allows some purchases over $1000 to be paid off at a heavily discounted rate of just 0.99%. The rate applies for three months and there's no interest-free period during that time. Then it's back to the regular interest rate of 15% to 17.65%.
Citibank has a credit card that matches interest rates to spending.
Cash-back credit cards
Trendy card users may like the fact that the card, nearly half the size of a standard credit card, comes in five different colours, has a phone hook and a cover.