When you look at your bank account balance, there are two figures you should pay attention to: the current balance and the available balance.
While they are generally the same, they can differ from one another, depending on what’s going on in your account.
The available balance is the amount of money that’s actually in your bank account, minus any pending transactions. This figure is often lower than your current balance.
Transactions
The available balance in a bank account is a number that shows the amount of money that is currently accessible in the account. It is calculated after all transactions, including pending electronic transactions, have been accounted for and reflected in the account.
Your available balance can be used to help you avoid fees and overdrafts. You can also use the available balance when making purchases or bill payments online. However, it is important to note that your available balance may be different than your current balance, depending on the type of transaction you are making.
A transaction is an individual unit of work, such as transferring funds from one account to another, that is completed and posted. This can happen in full or it can stop halfway, leaving the money untouched. A bank’s available balance includes these pending transactions, which are deducted in anticipation that they will be completed and reflected in your current balance.
For example, if you deposit a check for $300 in your checking account, the money is debited, but it hasn’t cleared the bank yet. Then, when you write a check for $100 and your landlord cashes it, the money is not reflected in your available balance until the merchant posts the transaction to your account.
Similarly, an automatic payment that you’ve set up with your bank or an online purchase you make from your account will not be reflected in the available balance until it is processed. For this reason, it is always better to rely on your available balance when planning future purchases and recurring payments.
Deposits
There are several types of deposits that can be made to your bank account, including cash and checks. Some bank deposit accounts pay interest, while others don’t.
A bank’s primary function is to accept funds from those who have money, pool them and lend those funds to other people or businesses who need them. Its income comes from this process, as well as the interest it receives on the loans it makes.
However, the amount of money that is deposited to your bank account often isn’t available for immediate use until it has been cleared by the bank. This is especially true if you have a direct deposit or a check that is yet to be processed.
While this may be confusing, it’s important to understand the difference between your current balance and your available balance. Understanding these figures can help you save money on unnecessary fees and keep you in good standing with your bank.
If you don’t have a large enough available balance to cover your expenses, you will end up being hit with overdraft fees. That’s because your current balance is a total of all cleared and posted credits and debits, while your available balance is a more accurate picture of what you have available for spending.
The reason your available balance is a better indicator of what you have left in your bank account is because it includes all pending transactions that have not been fully processed yet. For example, if you write a check for $100 and your landlord cashes it, that payment won’t show up in your available balance until the day following the post period.
Checks
As you’re likely aware, the current balance and available balance for your checking account are both important numbers to monitor. However, they’re not always in sync with one another. For example, your available balance may show that you have $50 in funds when in fact you have a pending transaction for $40 that won’t clear until tomorrow.
This difference is important because it can make you susceptible to bouncing a check or incurring an overdraft fee, both of which are costly. Understanding the difference between your current and available balances can help you avoid these costs and stay on top of your finances.
For example, if you write a check for $100 to your internet company, and that payment is pending before it clears, it won’t appear in your available balance until that pending payment actually posts. This is because your bank will take a few hours to several days to process the check and then transfer those funds to your account.
In the same way, if you schedule an automatic draft or pay a bill through your online banking platform, that amount isn’t reflected in your available balance until you actually make the payment. This is why it’s so important to keep an accurate check register in which you record all checks and deposits, deducting them from your available balance accordingly.
You can also use your available balance to determine whether or not you have enough money in your account to cover a purchase, bill payment or other transaction. This can be especially helpful if you’re making payments using your debit card, because a negative available balance indicates that you won’t have sufficient funds in your account to complete the payment.
Payments
When you log into your online banking profile to check your balance, you’ll see two figures displayed: a current balance and an available balance. Those numbers may be confusing to you at first, but they offer important information about your account.
When your available balance is lower than your current balance, it usually means there are pending payments that you haven’t yet posted to your account. This can happen when you make a payment online, use your debit card, or write a check.
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You can check your available balance anytime, day or night, using your online banking profile. It will be updated as you receive new payments to your account. This allows you to be more confident in your spending decisions and avoid overdraft fees, NSF charges, or bounced checks.
The available balance also takes into consideration things like holds placed on deposits and pending transactions (such as pending debit card purchases) that Members Exchange has authorized but has not yet posted to your account. For example, if you used your credit card to book a hotel stay and paid them with a check, the hotel would withhold $200 from your available balance until they received the payment.
Your available balance is the most accurate figure of how much money is available to spend without disrupting other pending payments. It’s especially useful when you’re making a large purchase or paying a bill, as it helps you avoid overdrawing your account and incurring an overdraft fee.