What Is a Remaining Balance?

Remaining balance is a financial term used to describe how much money is needed to settle an account. The remaining balance may be a positive or negative figure, depending on the type of account, and is equal to the amount of money required to bring the balance to zero. If the balance is on a credit account, such as a car loan, it represents a liability for the car buyer and will be a negative amount. If the balance is on a bank account or similar instrument, it represents an asset and will be a positive number. By paying the full amount of the loan or withdrawing the contents of a bank account, the holder could bring the remaining balance to zero and settle the account.

This financial concept can be used by anyone from bankers to individuals. Homeowners and mortgage lenders use remaining balance to describe the outstanding amount due on a mortgage loan. Credit card companies may use remaining balance to describe total charges by a consumer, or the amount of available credit remaining on an account. Banks and other financial institutions also rely on this concept as they conduct daily business transactions or help consumers understand their accounts.

To calculate remaining balance, one needs to gather a variety of data. This includes the original balance, or total amount borrowed, as well as the amount and frequency of payments on the account. This calculation also requires information on the interest rate and the duration of the loan. Many financial institutions provide online calculators to help consumers figure out remaining balance, while some list the balance on monthly statements. This balance may also be listed as payoff amount or outstanding balance.

In a non-interest-bearing checking account, remaining balance is equal to the total amount of money left in the account once all checks and debits have been satisfied. Without interest to contend with, this figure is relatively easy to calculate. On an interest-bearing loan, the calculation can be more difficult. For example, consider a car loan of $10,000 US Dollars (USD) at five percent annual interest. After paying a total of $8,000 USD in payments, the buyer would have a remaining balance much higher than $2,000 USD to account for both remaining principal and interest.

This information can be very useful for consumers, and serves as a helpful tool in financial planning. People looking to pay off debt or analyze their credit should check the balance on all credit and debit accounts. This balance can also be used to allow consumers to calculate how much interest they are paying, and may spur them to pay off loans faster or seek better deals. Knowing the balance remaining on an account can also help a loan holder figure out when a car or house will finally be paid off.