What is Prorated Credit?
Definition
A partial refund or account credit given when downgrading or canceling a subscription before the end of the paid period.
Understanding Prorated Credit
Prorated credits ensure fair billing when subscription changes happen mid-cycle. If you've paid $30 for a monthly plan and cancel halfway through, a prorated credit of $15 would be issued. Proration policies vary significantly: some services credit your account for future use, others issue refunds to your payment method, and some offer no proration at all.
When downgrading plans, understanding the proration policy helps you time the change optimally. Always check whether credits expire and whether they apply to all future charges or only the next billing period.
Related Terms
Proration
The calculation of a proportional charge or credit when changing subscription plans mid-billing cycle.
Cancellation
The act of ending a subscription, which stops future billing and eventually terminates access to the service.
Downgrade
Switching from a higher-priced subscription plan to a lower-priced one, typically with fewer features or reduced limits.
Refund
The return of subscription payment to the customer, typically when cancelling within a specified window or due to service issues.