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
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compensating balance::noun | Spocien Dictionary
| Type | Words |
|---|---|
| Synonyms | offsetting balance |
| Type of | balance |
the compensating balance increases the effective interest rate to the bank since the net amount loaned is reduced but the interest paid is unchanged.
