What Is Credit Balance?

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Credit balance is a term used in accounting to describe money that might be owed to a client or customer on his account. Credit balances can occur for a variety of reasons.

Definition

  • A credit balance is a certain amount of money owed to a customer or client on her account from a bank, creditor, utility company or investment service after all related debts have been settled.

Causes

  • A credit balance could be the result of an overpayment, refund due to the customer, investment return or courtesy credit.

Refunds

  • Depending on the size of the credit balance, you might be able to request a check from the institution that holds the account. Call the institution to find out the specific policies regarding credit balance refunds.

Future Balances

  • On accounts that become payable at certain intervals (such as a credit card or utility account), leaving the credit balance on the account means that it will be deducted from your next bill.

Considerations

  • Credit balances can be confusing to the accounts payable department. Check the accuracy of your bill payments to eliminate credit balances.

References

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