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.
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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Each issue will feature articles and advice on how to grow financial peace, improve your credit, simplify accounting, and much more.
Imagine the possibilities. At Midwest Community, we are well-known for advancing our employees and promoting from within at all levels of the organization. Take the first step in starting your career and grow with us!
Float Member Service Representatives may have days scheduled at any location (Defiance, Bryan, Napoleon). Computer literacy is required and cash handling or banking experience is preferred.
Starting pay is $17.44 an hour
$19.62 an hour after 180 days of service
$21.79 an hour after 1 year of service
Please see the job overview for a list of duties. Resumes may be submitted to Sondra Manon at .
All are welcome. Midwest Community Federal Credit Union is an Equal Opportunity Employer.
The primary purpose of this position is to assist Midwest Community Federal Credit Union by delivering outstanding service to both internal and external members. A key element of excellent service is to identify the financial needs of each member and recommend an appropriate credit union solution. In addition, receives members in person and by telephone. Helps Member Investors reach financial goals utilizing our consultative sales process. In addition, responsible for ensuring that outstanding service is delivered to both internal and external members. A key component of this service is to provide proactive guidance on investment solutions via a needs-based consultative selling approach to both current and prospective Members who have placed an inbound call or referral to the Investment Representative.
For more details, please contact .
Midwest Community Federal Credit Union is an Equal Opportunity Employer.
Midwest Community Federal Credit Union is looking for a Member Service Representative to process transactions, accurately perform end of day balancing procedures, follow company policies and utilize the core data processing system and various software applications, including electronic banking services. We are seeking candidates who are punctual, honest, friendly, and have outstanding communication skills. Please see the job description for a full list of duties. Resumes may be submitted to Sondra Manon at .
Midwest Community Federal Credit Union is an Equal Opportunity Employer.
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