An account balance indicates the present value of a financial account, whether it is a checking, savings, investment, or loan account. It shows the amount of money available or the outstanding amount owed, depending on the account type. The balance is determined by subtracting withdrawals and debits from deposits and credits.
Financial institutions offer access to account balances through paper statements, online platforms, or mobile banking apps, providing account holders with real-time or periodic updates.1
Account balances come in various types2, each tailored to specific financial purposes, such as managing everyday transactions, tracking debts, monitoring investments, or accessing diverse financial assets.
Understanding the different types of account balances allows individuals and businesses to manage their finances more effectively, from everyday transactions to long-term financial planning.
Sources:
1 Investopedia: What is an account balance?
2 Indeed: What is an account balance? (Definition and examples)
An interest rate is the cost of borrowing or the reward for saving, expressed as a percentage of the principal amount in an account or loan, reflecting the time value of money and compensation for risk. It influences economic activity by guiding consumers, investors, and businesses in decisions related to spending, saving, and investing.
Interest rate risk refers to potential financial losses that may arise from fluctuations in market interest rates. Rising or falling rates affect borrowing costs, the value of fixed-income investments, and liquidity planning. For internationally active companies, this can also impact financing and the return on liquid assets. Effective treasury strategies, such as hedging, help reduce this risk.
A minimum balance is the lowest amount of money that must be maintained in a bank account to keep it active or to avoid fees. Banks may require a minimum balance for business or personal accounts as a condition for waiving maintenance fees, earning interest, or accessing certain account features. Falling below the required threshold can result in penalties or loss of benefits.
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