Current Balance vs. Available Balance

Comparing your current balance vs. available balance can be a little confusing because the numbers do not always line up. While your current balance shows transactions that have been posted to your account, your available balance shows pending and posted transactions. It is critical to keep an eye on both so you can better budget and manage your money.

For help managing your wealth and finances, consider working with a financial advisor.

What Is Current Balance?

Your current balance is all the money in your bank account right now. This balance might include pending transactions, like a credit card payment or a check that has not cleared.

If there has not been any activity on your account in at least a week, your current balance might be the same as your available balance. However, if there has been recent activity on your account, the amount of money you are able to spend might be different from your current balance.

For example, suppose your current balance is $500, so you make your $350 car payment. However, you forgot that you made a $200 credit card payment yesterday that is still processing. Unless you have another deposit that clears in the meantime, your account could be overdrawn by $50.

Depending on your bank, that may result in an overdraft or NSF fee.

What Is Available Balance?

Available balance is your current balance with any pending transactions or holds included. Thus, there are many reasons why your available balance may differ from your current balance. A deposit, a check you have written or a payment made with your debit card are examples of pending transactions that might cause these discrepancies.

Suppose you spent $150 at the grocery store and paid with your debit card, or maybe you asked for a refund on a purchase and the refund is still processing. All these transactions could cause your available balance to be less than or more than your current balance. That is why it is so important to check both figures before making a purchase.

Difference Between Current Balance and Available Balance

The difference between the current balance and the available balance is small but important. Available balance is how much money you are able to spend right now, including any pending transactions. The current balance, on the other hand, shows how much money is in your account without subtracting pending payments or withdrawals. The current balance can be useful in some situations, like during monthly budgeting. However, it can be less useful when monitoring daily spending

Imagine you spend money frequently by writing checks or swiping your debit card. In this case, you might find that your available balance tends to be lower. If you have a large deposit like a paycheck that is pending, your current balance could be lower. If a large deposit is pending for more than a few business days, it might be worth contacting your bank. That money will not be included in your available balance until it clears, meaning you will not be able to spend it.

Which Balance Is More Important?

Generally, one balance is not better or more reliable than the other. Instead, each provides different information about your bank account balance. You can use your account’s available funds for several purposes:

In-store purchases
Pay your bills
ATM or teller withdrawals
Money transfer to family or friends
Write a check

However, be forewarned if your current balance seems high. There are likely payments that have not been posted to your account yet, and you could risk overdrawing your account or having your transaction declined if you spend more than you actually have.

Still, there might be situations where you prefer one balance over the other.

For instance, you might refer to your available balance if you have a large bill due in the next day or two, like rent or a car payment. This will show you how much you can safely spend at any given moment. If you refer to your current balance, instead, you might increase your risk of overdrawing your account. This is especially true if you are already cutting it close with your current balance.

If you have many pending payments, the risk can be even greater.

How to Avoid Overdraft Fees

No one likes overdraft fees, but it is possible to avoid them with basic precautions.

One of the simplest ways to avoid overdraft fees is to keep extra cash on hand. This way, you will be less likely to overdraw your account, even if you forget about a pending payment or an upcoming automatic bill payment. Keeping extra cash on hand can also help when you have an unexpected expense.

If you are living paycheck to paycheck, you can consider overdraft protection, which will at least prevent payments from failing. However, banks often charge significant fees for this protection, so be sure to check your bank’s fees before committing. In many cases, overdraft fees can be quite expensive for each overdraft.

Bottom Line

Current and available balances both give you a snapshot of the money you have in your bank account. However, only your available balance includes pending transactions. While the current balance can be useful for monthly budgeting, the available balance is often better for monitoring daily spending. Keeping an eye on your available balance will help you avoid overdraft or NSF fees. It might also prove useful to keep extra cash on hand to avoid spending more than you have.

Tips for Opening a Bank Account

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