Current Balance Vs. Available Balance: How They’re Different

When you’re managing your finances, there are many ways to evaluate your account balances. If it’s an account from which you frequently withdraw or deposit funds, understanding the difference between your current balance versus available balance can help you determine how much is at your disposal. While these terms may sound similar, they’re different ways of representing your account balance and it’s important to know what they mean so you can spend within your budget.

Put simply, your current balance in a checking account is your total amount, why may include pending transactions, while your available balance specifies the actual amount you can withdraw at that point in time. In other words, your bank will allow withdrawals up to your available balance.

Let’s go over these terms and how they impact your finances.

What Does ‘Current Balance’ Mean?

Your current balance is the total amount of money presently in your bank account, which may include pending transactions like credit card payments, deposits and more. Depending on your recent activity, it’s also possible for your current balance to match your available balance. Your current balance shows the funds in a checking or savings account.

Contrary to the name, your current balance does not represent the amount you could withdraw from an account at that time. If you have processing deposits or pending transactions, your current balance may show a much higher or lower number than your available balance.

What Does ‘Available Balance’ Mean?

Your available balance is the amount in a bank account that can be taken out immediately, for things like debit card payments or withdrawals at an ATM. Unlike the current balance, it will not factor in any pending transactions. For example, if you are depositing a check that has not processed yet, you will not be able to withdraw that amount and it will not be reflected in the available balance.

Your available balance represents the amount you can withdraw from an account. It accurately reflects the funds you can access based on processed transactions.  

Available Balance Vs. Current Balance: The Difference

While both balances show the funds in your account, knowing the difference between your current balance and available balance can help you make informed decisions about your budget. Here are a few of the spending habits that may cause a difference between your available balance and current balance.

• Depositing checks. If you’re depositing a check, the amount will not be reflected in your available balance until the bank clears it. Typically, it clears within a few days of depositing. If it is a larger check, then the bank may hold it for additional time to verify it. Holding policies vary by bank, so it’s best to contact your bank for additional information.  
• Credit card payments. If you open a credit card and use it regularly, any payment won’t be reflected in your available balance until it’s paid off at the end of a month. While it’s processing, your available balance will likely differ from your current balance.
• Debit card transactions. If you make payments with a debit card, it may take a few days for the payment to process. For example, a restaurant may need to adjust the final cost to include the tip on a transaction. Until it’s processed, your available balance may not reflect the final cost.
• Pending transactions. Any other transactions where there may be a hold as a company decides on the final payment may cause a difference between balances.
• If there is a lot of activity within your account, then there will be a difference in the current balance versus available balance. There’s nothing wrong with frequently making withdrawals or deposits to an account and seeing different balances, but it’s important to understand the difference.

The available balance and the current balance are meant to help you budget and understand the funds in your savings or checking account. If they’re different, it only means that you have a pending transaction. If you rely on debit cards or checks frequently, you’ll usually see a discrepancy between balances.

By keeping track of both balances, you can find better ways to budget your funds. The current balance helps you see processing transactions. The available balance allows you to view the current funds you have while deposits are still processing, which you can rely on to avoid overdraft fees.

All this said, it is possible for the account balances to be the same. If you rely on credit cards instead of debit cards, then the balances may stay the same for most of the month until you pay off a credit card. If you rely mainly on cash transactions or it’s a savings account with funds you don’t usually access, then that can also cause the balances to be the same.

Which Balance Is More Reliable?

When looking at the available balance vs. the current balance, both are reliable ways to help manage your finances. If you’re trying to budget for the long term, then using the current balance may be more helpful. This will help give you an overview of how much is in your account once everything processes, especially outstanding payments.

However, if you’re trying to see what funds you currently have access to, the available balance is more reliable. Watching the available balance will help you only spend the money that’s currently in your account, and not accidentally overdraft based on pending transactions, such as a check that hasn’t processed yet. If you’re trying to budget for immediate purchases, the available balance is more reliable.

Keep in mind that neither the available balance nor the current balance will track automated payments. So if you rely on subscription services or automatic bill pay, make sure to track when those payments are due so you don’t spend your available balance right before subscriptions renew.  

The Bottom Line

Your available balance and current balance help you properly track your finances for savings and checking accounts. The available balance shows how much you could withdraw immediately, and the current balance represents your funds after pending transactions. Monitoring both of these can help you make more accurate financial choices.

If you want further guidance on managing your money, sign up today for Rocket Money℠ and use the app to manage and monitor your accounts today.