What is credit interest?

Credit interest refers to the amount of interest that a bank or payment provider pays to a customer for maintaining funds in a deposit account, such as a savings account or a checking account with a balance. This interest is typically calculated based on the balance in the account over a specific period, providing an incentive for customers to keep their funds deposited with the institution.

In contrast to other financial terms, credit interest highlights the benefit received by the account holder, as it is effectively compensation for the use of their money by the bank in lending activities or other investments. Understanding credit interest is crucial for customers when evaluating financial products, as it can significantly impact the returns they earn on their deposits.