Salary crediting involves having all your income paid into your loan account, and can be a very powerful tool for reducing the size of your loan and the time it takes to pay it off.

With salary crediting, every time you receive income into your account – whether it be your salary, interest, investment income, etc – you are actually reducing the principal amount of your loan, because your total income is treated as a repayment on the loan, rather than just the minimum amount needed as a repayment.

You can still draw on your income in the usual way, but any withdrawals are treated as a redraw on the loan, leaving the rest of your income in the account to help reduce the total loan amount.

Interest on these types of accounts is calculated daily on the loan amount outstanding and charged monthly in arrears, so if your income has gone into the account and paid off more of the loan, the interest added to the loan will be less.

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