What is the Difference Between Current Balance and Available Balance?
🆚 Go to Comparative Table 🆚The main difference between current balance and available balance lies in the transactions they include:
- Current Balance: This is the total amount of money in your account, including any pending transactions that have not yet been cleared. It is the sum of all posted transactions as of the previous day. However, it may not be the most accurate picture of your account's status.
- Available Balance: This is the amount of money in your account that is available for immediate use, excluding any pending transactions. It is updated continuously throughout the day and reflects any transactions that have been cleared by the financial institution. Your bank will typically allow you to make transactions up to this amount.
Reasons why your account's available balance might not match its current balance include:
- Pending transactions: You may have transactions pending in the account, such as a credit card payment or a check that hasn't cleared.
- Delays in crediting deposited funds: Some financial institutions may add a deposit to your available balance but not to the current balance, causing a discrepancy between the two.
It is essential to keep track of your available balance rather than just the current balance when making purchases or withdrawals to avoid issues like bouncing a check, overdrawing your account, or having a transaction declined.
Comparative Table: Current Balance vs Available Balance
The difference between current balance and available balance lies in the transactions that have been cleared or are still pending. Here is a table comparing the two:
| Current Balance | Available Balance |
|---|---|
| Includes all transactions, both cleared and pending | Includes only cleared transactions and excludes pending ones |
| Reflects the total amount of money in the account | Shows the amount available for immediate use |
| May not accurately represent the actual spending power | Accurately represents the spending power available for use |
| Pending transactions are included | Pending transactions are excluded |
| May cause confusion when managing finances | Helps avoid overdraft fees and provides a clearer picture of account funds |
The current balance includes all transactions, whether they have been cleared or not. This means it reflects the total amount of money in the account, including recent purchases, withdrawals, or other activity that may not have been processed yet. On the other hand, the available balance only includes transactions that have been cleared, excluding any pending transactions or holds. This provides a more accurate representation of the actual spending power of the account holder. Knowing the available balance can help avoid overdraft fees and ensure a better understanding of the account's actual funds.
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