COMPENSATING BALANCE
Dictionary entry overview: What does compensating balance mean? • COMPENSATING BALANCE (noun)
The noun COMPENSATING BALANCE has 1 sense:
1. a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank
Familiarity information: COMPENSATING BALANCE used as a noun is very rare.
Dictionary entry details
• COMPENSATING BALANCE (noun)
Meaning:
A minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank
Classified under:
Nouns denoting possession and transfer of possession
Synonyms:
compensating balance; offsetting balance
Context example:
the compensating balance increases the effective interest rate to the bank since the net amount loaned is reduced but the interest paid is unchanged
Hypernyms ("compensating balance" is a kind of...):
balance (the difference between the totals of the credit and debit sides of an account)
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