What Is Credit Balance?

by Lee Tea; Updated September 26, 2017

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.

About the Author

Leeann Teagno has been writing professionally since 2006. An English major, she continues to study information systems management at American Public University. Teagno is an organic gardener, cook and technology buff with past employment in mobile communications. She also volunteers at an animal shelter and operates a home bakery.