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Information > Financial Terms > This page Interest Balance Prior to passage of the Banking Act of 1933 which prohibited interest on demand deposits, the interest balance of an account was the amount upon which interest for the day was computed. This amount did not necessarily agree with the total credit balance in the account because of deposit of checks and other items not available until cleared or collected. In modern account analysis, average collected balances, after deducting reverse requirements, are the basis for allowance of the earnings credit to the account, usually based on the current rate or return on earning assets. Against this, the cost of handling items deposited or drawn is charged. Back to Information |