Westend61/Getty Images; Illustration by Austin Courregé/Bankrate
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Key takeaways
- The current balance of your bank account is the total amount of money in the account, while the available balance is the amount you can actually access and use.
- The available balance is important to track because it reflects the funds that you can withdraw and use, and may be less than the current balance.
- Understanding your available balance can help you avoid overdrawing your account or having transactions declined.
Available balance vs. current balance
Available balance
The available balance consists of the funds that you can withdraw immediately, including through debit card purchases or ATM withdrawals. Your bank will typically allow you to make transactions up to this amount.
Current balance
The current balance listed in your account includes any transactions that are pending but have not yet cleared. As such, the current balance might be listed as higher than the available balance — in other words, the current balance can be an amount that’s greater than what you’re able to withdraw from the account.
Reasons the available balance and current balance don’t match up
There are a few reasons why your account’s available balance might not match up with its current balance, including:
- Pending transactions: You may have transactions pending in the account. For example, if you have $500 in your account and swipe your debit card to buy a $10 lunch, the merchant might not immediately remove that money from your account. Instead, the transaction may take a day or two to clear. Until the transaction clears, the current balance of your account may still be listed as $500, but the available balance will be only $490.
- Authorization holds: Merchants may also authorize a transaction up to a certain amount before withdrawing the amount you actually owe. For example, a restaurant may use your debit card to authorize a transaction up to $50, even if your meal only costs $30, to account for any tip you may add. Until the transaction goes through, this could reduce your available balance by the larger $50 amount. Once the restaurant processes your transaction, it will remove the $50 hold, instead withdrawing from your account the true cost of the meal plus any tip you added. Authorization holds are also common at gas stations and hotels since the final amount of the transaction is not yet known at the time the authorization is requested.
- Check deposits: When you deposit a check into your account, some or all of the funds from the check might not be incorporated into your available balance until the check clears — which usually takes about two business days.
Which balance should you use?
The available funds in your bank account consist of all of the money that you can access and use freely. You can do almost anything you desire with available funds, including:
- Withdraw it from an ATM
- Withdraw it in-person at a bank
- Spend it using a debit card
- Send it to a friend using a peer-to-peer transfer app
- Write a check against your account
- Pay a bill online
You may not be able to do all of these things based on your current balance, since it doesn’t reflect what is actually available to use. That makes it essential to keep track of your available balance as it compares to your current balance.
If you try to spend more than you have available, you could bounce a check, overdraw your account or have a transaction declined.
Delays in crediting deposited funds
Differences in current and available balance can also happen when you make a deposit. For example, your bank might not make all of the money from a check deposit available at once.
If you have $500 in your account and deposit a $1,000 check, for instance, your bank may only make the first $200 available immediately. The current balance will show $1,500, but the available balance will just be $700. Once your bank processes the check transaction with the paying bank, it will make the rest of the money available for you to spend.
How much of a deposit a bank makes available immediately, and how quickly the bank makes the rest of the deposit available, depends on a variety of factors.
In general, banks are more hesitant with new checking customers. If you’ve only had your account open for a few days or weeks, the bank may take longer to make the full amount of your deposit available because it wants to clear the transaction with the paying bank.
Banks will also be more careful with larger deposits. Longer holds are common for check deposits exceeding $5,000.
These holds are designed to help protect you against fraud. If you deposit a fraudulent check, the bank will deduct the amount of the deposit from your account when it discovers that it can’t collect on the check you deposited.
If the bank made those funds available immediately and you spent them, then you might not have enough money in your account to return to the bank. This would drive your account balance into the negative.
If you want to know how long it will take for your money to become available, you can check your bank’s fund availability policy. This policy will outline how long the bank takes to process deposits and make the money available for your use.
Bottom line
Your bank accounts have two separate balances: the current balance and the available balance.
For checking accounts, the important balance to track is your available balance. This number shows the amount of money you can withdraw and spend from the account and may be less than the current balance.
Understanding your available balance is important because it can help you avoid accidentally overdrawing your account and incurring hefty fees, or having a transaction declined.
– TJ Porter contributed to an earlier version of this article.
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