There are many people out there that fail to differentiate between current balance vs available balance. However, if you are one of those people, you are in the right place!
Whereas we have written the whole article about current balance vs available balance, we thought that it’s only fair that we summarized the entire concept in a few lines.
To simply put, Available Balance only represents the money that you have available at the current moment in your checking account.
If your spending is based on your current balance amount, you are putting yourself at the risk of unintentionally overdrawing money from your account.
As it happens, it is very important to keep an eye on your checking account balance.
After all, it’s fundamental to keep a check on your money. However, checking accounts usually have multiple types of balances.
So, which one to observe first?
Let’s say you have deposited a check on any day.
The next day, the balance of your account shows that what you anticipated it to be. Or, let’s say if you had a cheque that bounced due to having insufficient funds.
One would think that the money was there to make sure that the payment goes through.
However, the inconsistencies might be some things that differ from current balance vs available balance.
Having said that, both of these numbers happen to be of immense importance, as it depends on your bank account. However, they differ in some critical ways as well.
Let’s take a detailed look so that we can set both of them apart.
What are the Key Differences Between Current Balance vs Available Balance?
The total amount of money present in your bank account is classified as the current balance.
But, since we are on the topic of Current balance, there’s one more thing we would add to like.
Let’s say you have $100 in your account. It doesn’t mean that all of the $100 is there for you to spend.
Some of the money included in the current balance can be from the deposits that you have made or the cheques you have written, but they haven’t cleared out yet. In this scenario, this money cannot be utilized by the person.
Now, the available balance is the term we use to represent the money you have in your account minus any debts.
Consider Available balance as current balance minus any holds or debts that haven’t been taken out from your account yet.
If you don’t have any holds or there are no pending transactions, then both the terms are likely going to be the same for you.
However, if you prefer to use your debit card rather regularly or you have deposited a large check in some recent time, then it is likely that both balances be different.
What Must You Know about Current Balance?
For anyone, We think it’s pretty simple to tell what their current balance is.
After all, all they have to do is to check their online account. They can either use their web browser or if their bank has a mobile app, they can even check the balance from their phone.
However, if there are no technological means available, the best way to find out your current balance would be to visit a local branch.
After you visit a local branch, you can consult a teller there, or you could check through your ATM.
Having said that, it is essential to know the current balance. Knowing it is important because knowing your current balance can help you have an idea of how much money is present in your account at that time.
If you are setting up budget plans for the coming week or for the next month, you will be able to draw a vivid picture of how much money you can afford to spend.
However, if your current balance and available balance differ from each other, it is ideal that you note both of them.
Taking note of both terms becomes essentially important in the scenario where you have upcoming transactions.
Upcoming Transactions might include direct deposits or cheques that are yet due to be processed.
What Must You Know about Available Balance?
Very much like the previously discussed Current balance, you will also be able to check your available balance through the same means.
It is possible that at some position, your available balance is going to be different from the current balance.
This is likely the case if you recently deposited a cheque or went shopping and made some purchases.
However, due to some delays in the process, the amount has not been deducted from the account.
To be a tad bit more specific, the time at which you deposit a check, it is likely that your bank is going to hold some or the whole amount.
The bank is going to hold the money until it has ensured that the cheque is good and until it has received the funds from the initiating bank.
In most cases, the holding policies vary depending on the bank. Having said that, we think that it’s essential that you straight out this information with your bank.
Doing so will give you information about what you can expect.
Now, let’s talk a little about debits. You have a debit card and you have recently used it to make a purchase. However, the bank has failed to complete the transaction.
Until the bank completes the transaction, the transaction is going to appear as pending in your account. In the interim, you will have your current balance.
Not that the current balance is not going to be including the pending debit.
However, you will be able to only spend the amount that you are left within the account, keeping in mind that the transaction follows through in the meantime.
However, it is essential to consider your available funds if you are planning to purchase something else or you have a recurring payment or transfer due in a few upcoming days.
But, if the newer transaction that you are planning to make supersedes your available balance, then your transaction is not going to proceed.
You may see an error that says insufficient funds, NSF, or fee/overdraft fee.
How Trustable Can Available Balance Be?
Majorly, the available balance is the most accurate view of the money that you have available to spend.
However, if you have made a transaction using your debit card which the receiving party hasn’t reported to the bank, or there are outstanding cheques available, then it is likely that such items may not be included in your available balance.
The same thing applies to upcoming payments that you are going to be receiving in your account in the coming days, but you haven’t received them yet.
Considering the type of your deposit, the length of time they hold lasts is going to differ.
When we talk about a casual bank hold, usually, a small part of the funds are available on the same day and the held amount is likely to show up on the next day or after two days. Take note that these are going to be working days.
However, in some cases, such as when you get a new bank account or make very large deposits, the bank might put something known as “Exception Hold” on the deposits. Exception holds are going to last longer than the usual hold-ups.
Having said that, they can last up to five business days or even longer, depending on the scenario.
However, if this is the case, you must ensure that you understand that you know when your funds are going to be available before you decide to make any debits or withdrawals.
Which Balance Should I Rely on When Making Payments?
If there is a transfer or a payment that is due, it means that it is going to come out of your account soon.
Moreover, If you make a withdrawal using your debit card, then we just might have a tip for you.
It would be best to consider the available balance and then figure out how much money you will actually need to use.
If you use the available balance instead of using the current balance, it can reduce the chance that you might overdraw money from your account.
Overdrawing can trigger overdraft fees and possibly NSF Fees as well.
Also Read: FDIC vs SIPC: What’s the Difference?
Hopefully, by this point, we have succeeded in helping you understand the current balance vs available balance.
It is essential to grasp the difference between the two of them as they can allow you to realize the correct sum of money available in your hand.
To give you a short overview of the Current balance vs available balance, the Current balance means the total sum of money that you have in the account.
This amount includes the deposits that are yet to be deducted from your account or any dues that will be deducted in the near future.
However, an Available balance means the amount that is available in your account after all the deposits and the due sum of money clears out, meaning the Available balance is far more accurate.