Dictionary of Banking Terms: split level balance
split level balance
- in bank credit cards or consumer lines of credit, an outstanding balance above which a lower interest rate can be charged. For example, a credit card may have a finance charge of 15% APR on balances up to $2,000, and a 13% rate on any outstanding balance above $2,000. The split rate is meant to encourage consumers to use credit cards for major purchases, because only a portion of the amount due is payable every month.
- deposit total in a savings account or other interest bearing account that determines the interest rate paid. Asplit balance can be the minimum balance needed to earn interest, or avoid service charges, for example, a $2,500 average balance requirement in a Negotiable Order Of Withdrawal (NOW) Account. Accounts with balances under $2,500 would be treated as ordinary checking accounts, earning no interest. See also target balance; tiered rate account.
