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Current Balance vs. Available Balance

When you check your bank account, you may wonder about your current balance vs. available balance. Here’s how they differ.

Updated April 14, 2022

•5 min read

Current balance vs. available balance: What’s the difference?

Written by: Ben Luthi

Image: Young woman with coffee sitting outside on stairs, using cellphone to look up current balance vs available balance

In a Nutshell

Wondering what the difference is between current balance vs. available balance? Only available balance reflects the money that’s actually available to spend from your checking account. If you base your spending on your current balance amount, you could be at risk of overdrawing your account.

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Keeping an eye on your checking account balance is key to managing your money. But checking accounts typically have more than one type of balance. So which one should you watch?

If you’ve ever deposited a check one day only to see your balance the next day be less than you expected, or if you’ve had a check bounce for nonsufficient funds when you thought the money was there to cover the payment, the discrepancies may involve the difference between current balance vs. available balance.

While both numbers provide important information about your bank account, they also differ in some critical ways. Let’s take a look at the difference and how to keep track of both.

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What’s the difference between current balance vs. available balance?

The current balance on your bank account is the total amount of money in the account. But that doesn’t mean it’s all available to spend. Some of the funds included in your current balance may be from deposits you made or checks you wrote that haven’t cleared yet, in which case they’re not available for you to use.

Your available balance is your current balance minus any holds or debits that haven’t yet been posted to the account. If you have no holds or pending transactions, the two balances are likely the same.

But if you use your debit card regularly or you recently deposited a large check, the two balances may be different.

Current balance: What to know

You’ll probably be able to tell what your current balance is simply by checking your online account through your web browser or mobile app. You’ll also be able to get the information by visiting your local bank branch and speaking with a teller or checking an ATM.

It’s important to know your current balance because it gives you an idea of how much money you have at a given time. If you’re trying to budget for the upcoming week or month, it’ll give you a broad idea of how much you can spend.

That said, if your current balance and available balance are different, you’ll want to note both, especially if you have upcoming transactions like direct deposits or unprocessed checks.

Available balance: What to know

Like your current balance, you can usually view your available balance via your online account or mobile app, or by checking with a bank teller or ATM.

At times, your available balance may be different from your current balance, especially if you just deposited a check or you’ve made a purchase but there are delays in the posting process.

More specifically, when you deposit a check, the bank may hold some or all of it while it verifies that the check is good and receives funds from the issuing bank. Holding policies can vary by bank, so check with yours to get more information about what you can expect.

As for debits, if you’ve used your debit card to make a purchase but the bank hasn’t completed the transaction, it may show up as pending in your account. During this time, you’ll still have a current balance that doesn’t include the pending debit, but you’ll only be able to spend the amount you have in the account assuming that transaction goes through.

It’s important to refer to your available funds if you’re planning to make a purchase or you have a recurring payment or transfer in the next few days. If the new transaction is more than your available balance, it could result in a nonsufficient funds, or NSF, fee or overdraft fee.

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How reliable is my available balance?

For the most part, your available balance is an accurate view of what you have to spend. But if you’ve made a debit card transaction that the merchant hasn’t reported to your bank yet or still have outstanding checks, those items may not be included in your available balance. The same goes for upcoming payments that will hit your account in the next day or two but haven’t been processed yet.

Source : www.creditkarma.com

The Difference Between Available Balance and Current Balance

Available Balance vs. Current Balance Two of the most commonly confused terms used in the financial sector are “Available Balance” and “Current Balance.” Although these terms seem very similar, they refer to two very different things. Knowing the difference might just save you some money in fees. Your available balance is the amount you can spend right now. To determine whether you have enough money in your account to cover a transaction, we use your account’s available balance which is...Read More

The Difference Between Available Balance and Current Balance

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Available Balance vs. Current Balance

Two of the most commonly confused terms used in the financial sector are “Available Balance” and “Current Balance.” Although these terms seem very similar, they refer to two very different things. Knowing the difference might just save you some money in fees.

Your available balance is the amount you can spend right now. To determine whether you have enough money in your account to cover a transaction, we use your account’s available balance which is based upon the deposits and withdrawals to your account and all pending electronic transactions, including pre-authorized transfers, point of sale transactions, and merchant payment authorizations (regardless of whether they have posted to your account).

Sometimes you’ll see an available balance that’s lower than your current balance. In those cases, you can only spend your available balance (or less if you have outstanding checks), and the rest of the money is being held by your financial institution. Current balances include all of your money, including all available funds PLUS funds that are being held.

For example, assume your available and current balance are both $50, and you swipe your debit card at a restaurant for $20. A hold is placed on your account, so your available balance is only $30. Your current balance is still $50. Before the restaurant charge is sent to us for processing, a check that you wrote for $40 clears. Because you have only $30 available (you have committed to pay the restaurant $20), your account will be overdrawn by $10, even though your current balance is $50. In this case, we paid the $40 check. You will be charged an overdraft fee. Instead of paying the $40 check, we could have returned the check and would have charged you a non-sufficient funds fee. The fees (overdraft or non-sufficient funds) will be deducted from your account, further reducing the balance.

Avoiding Cash Crunches

For the most part, you depend on your bank to release funds. However, there are ways to reduce the chances of your account running dry.

Direct deposit gets money into your account quickly. If your employer still pays you with a check, sign up for electronic payments so that the money goes directly from your employer’s bank account to your bank account. You don’t need to wait on the check (especially if it goes through the mail), and you don’t need to go to the trouble of depositing the check. As a bonus, the money might even hit your account a day or two before the checks are printed, and some banks offer same-day availability for those payments.

You can also keep a buffer of cash in your account to protect you from unexpected expenses and delays. If you’re always “running on fumes,” you’re eventually going to have a problem. A small cash cushion can help you avoid problems. If that’s not possible, look into overdraft protection, but only sign up if you’re going to use it as a safety net – don’t make a habit out of paying those fees – and use a less expensive overdraft line of credit if possible.

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OnJuno

It’s time to master your checking account and avoid unnecessary fees.

PERSONAL FINANCE • 6 min read • April 22, 2021

Current Balance vs. Available Balance: What's the Difference?

It’s time to master your checking account and avoid unnecessary fees.

If you’re trying to become better with your money, chances are that you’re watching your checking account and learning the financial jargon you see on your statements. Amongst those terms, “current balance” and “available balance” are often confused, but these two are not interchangeable.

Current Balance vs. Available Balance: Why Are They Different? 

Your current balance is the total amount of money in your account, but your available balance is the total amount of money you can spend at any given time.

The reason these two numbers are different is because pending transactions, such as a recently deposited check, may not be available for you to use yet, but they still get counted into your current balance.

If you don’t have any holds or pending transactions, these two numbers will be the same. But, on the other hand, if you just deposited a large amount of money, say a bonus, you may not be able to spend that money just yet.

What is Your Current Balance?

Your current balance is typically the number you see when you log in to check your bank account. This number is important because it gives you an idea of how much money you possess at a given time — and this number can be useful for budgeting purposes.

Still, you’ll want to note the differences between your current balance and your available balance if you have major payments coming up, particularly if you have pending payments and the two figures aren’t the same.

What is Your Available Balance?

Your available balance is the amount of money you can access immediately and spend. If you deposit a check, that pending transaction won’t be counted in your available balance immediately, though it will be a part of your current balance.

This occurs because banks take a few hours to a few days to verify the validity of the check you’ve deposited and transfer those funds to your account. Every bank has a different policy regarding pending transactions, though, so certainly check what your bank’s policies are so you’re aware of your available balance and how long it might take for it to become identical to your current balance.

It is important to be aware of your available balance, though, as you don’t want to incur fees if you have insufficient funds. For example, if your available balance and current balance are identical, say $100, but you spend $25 on dinner with your debit card, your available balance now falls to $75, while your current balance remains $100.

At the same time, if you make a check for $80, the bank may pay that check, first, leaving your current balance at $20, which means you have insufficient funds to pay for dinner. Any fees incurred for this transaction will further be deducted from your account. As such, it’s important to keep these figures separate and not assume you have all of your current balance to spend when you also know you have pending transactions.

Current Balance vs Available Balance: Which Should I Refer To?

As you can tell from the example above, it’s easy to confuse these figures and overspend. The most obvious solution here is to pad your checking account with extra cash, just in case, so that you don’t have to worry about overpaying by a small amount like $5.

But, if you’re hoping to rely on just one of these figures, refer to your available balance. Your available balance will still not reflect all of the funds at your disposal at a given time since, if you have a check that needs to be deposited, your available balance could be lower than it will be once the pending transaction goes through, or vice versa if you’re the one writing the check.

However, your available balance will still reflect some changes to your account faster than your current balance will, such as debit card payments. As such, the best account to refer to is one where you track your expenses closely and in real-time, faster than your bank. But, barring those methods, your available balance is typically more reliable.

The confusion and inaccuracy between your current balance and available balance in the 12-72+ hours it may take your bank to process your pending transactions is in large part why people use credit cards, instead, and why keeping on top of those payments every month is sometimes easier than tracking multiple transactions in your checking account throughout the month.

While some banks may not even charge you an overdraft fee, it’s easier to avoid those hurdles by using a credit card or, as suggested above, maintaining a buffer amount in your checking account that guarantees you haven’t overspent.

Ultimately, get comfortable with both your current and available balance. While your available balance is likely more up-to-date, your current balance has its uses, too, particularly when creating an accurate budget. And, better understanding both of these balances is essential to staying ahead of unnecessary fees and tracking your expenses more efficiently.

Keertana Anandraj

Keertana Anandraj is a recent college grad living in San Francisco. When she isn’t conducting international macroeconomic research at her day job, you can find her in the spin room or planning her next adventure.

Source : onjuno.com