Current balance vs. available balance: What’s the difference?

Young woman with coffee sitting outside on stairs, using cellphone to look up current balance vs available balanceImage: Young woman with coffee sitting outside on stairs, using cellphone to look up current balance vs available balance

In a Nutshell

Wondering what the difference is between current balance vs. available balance? Only available balance reflects the money that’s actually available to spend from your checking account. If you base your spending on your current balance amount, you could be at risk of overdrawing your account.
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Keeping an eye on your checking account balance is key to managing your money. But checking accounts typically have more than one type of balance. So which one should you watch?

If you’ve ever deposited a check one day only to see your balance the next day be less than you expected, or if you’ve had a check bounce for nonsufficient funds when you thought the money was there to cover the payment, the discrepancies may involve the difference between current balance vs. available balance.

While both numbers provide important information about your bank account, they also differ in some critical ways. Let’s take a look at the difference and how to keep track of both.

What’s the difference between current balance vs. available balance?

The current balance on your bank account is the total amount of money in the account. But that doesn’t mean it’s all available to spend. Some of the funds included in your current balance may be from deposits you made or checks you wrote that haven’t cleared yet, in which case they’re not available for you to use.

Your available balance is your current balance minus any holds or debits that haven’t yet been posted to the account. If you have no holds or pending transactions, the two balances are likely the same.

But if you use your debit card regularly or you recently deposited a large check, the two balances may be different.

Current balance: What to know

You’ll probably be able to tell what your current balance is simply by checking your online account through your web browser or mobile app. You’ll also be able to get the information by visiting your local bank branch and speaking with a teller or checking an ATM.

It’s important to know your current balance because it gives you an idea of how much money you have at a given time. If you’re trying to budget for the upcoming week or month, it’ll give you a broad idea of how much you can spend.

That said, if your current balance and available balance are different, you’ll want to note both, especially if you have upcoming transactions like direct deposits or unprocessed checks.

How does direct deposit work?

Direct deposit is the electronic transfer of your paycheck into your bank account.

By signing up for direct deposit, your employer will be able to make deposits straight into your bank account instead of giving you a paper check that you’d have to deposit yourself.

Direct deposit payments are sent using the Automated Clearing House, or ACH, network. The money is sent electronically using encryption, keeping your bank account information safe.

The funds will typically be available at least as soon as if you had deposited a paper check, and often sooner.

With a Credit Karma Money™ Spend online checking account, you can set up direct deposit to get access to your paycheck up to two days earlier and federal benefits up to five days earlier than the standard electronic deposit.

Credit Karma Money™ Spend is free to open and comes with no penalties, overdraft fees or minimum balance requirements.

Available balance: What to know

Like your current balance, you can usually view your available balance via your online account or mobile app, or by checking with a bank teller or ATM.

At times, your available balance may be different from your current balance, especially if you just deposited a check or you’ve made a purchase but there are delays in the posting process.

More specifically, when you deposit a check, the bank may hold some or all of it while it verifies that the check is good and receives funds from the issuing bank. Holding policies can vary by bank, so check with yours to get more information about what you can expect.

As for debits, if you’ve used your debit card to make a purchase but the bank hasn’t completed the transaction, it may show up as pending in your account. During this time, you’ll still have a current balance that doesn’t include the pending debit, but you’ll only be able to spend the amount you have in the account assuming that transaction goes through.

It’s important to refer to your available funds if you’re planning to make a purchase or you have a recurring payment or transfer in the next few days. If the new transaction is more than your available balance, it could result in a nonsufficient funds, or NSF, fee or overdraft fee.

How reliable is my available balance?

For the most part, your available balance is an accurate view of what you have to spend. But if you’ve made a debit card transaction that the merchant hasn’t reported to your bank yet or still have outstanding checks, those items may not be included in your available balance. The same goes for upcoming payments that will hit your account in the next day or two but haven’t been processed yet.

Depending on the type of deposit, the length of time the hold lasts can vary. With a normal hold, some of the funds may be available on the same day and the remainder the next business day or two business days later.

In some cases, such as with new bank accounts or very large deposits, the bank may put what’s called an exception hold on deposits. Exception holds can last longer than normal holds — up to five business days or even longer in some circumstances. In this case, you’ll want to make sure you understand when your funds will be available before you make any debits or withdrawals.

Which balance should I rely on when making payments?

If you have a payment or transfer coming out of your account soon, or you plan to use your debit card or make a withdrawal, look at your available balance to determine how much money you actually have to use.

Using the available balance instead of the current balance can help reduce the chance of overdrawing your account, which could trigger overdraft fees and possibly NSF fees.

What’s next? Tips to avoid overdraft and NSF fees.

If you have overdraft protection on your account, your bank agrees to cover transactions even if you don’t have enough cash in your account to pay for them. In this instance, though, you may be slapped with an overdraft fee if your account balance goes into the negative.

Of course, some banks don’t charge overdraft fees. Others may offer fee-free overdraft protection that links your checking account to a savings account to cover overdrawn amounts.

NSF fees, on the other hand, occur when you don’t have overdraft protection, you overdraw your account and the bank returns the transaction unpaid.

In either case, it’s important to be aware of your available balance in your bank account so that you can avoid potential fees. Monitor and balance your checking account regularly to ensure your budget is up to date. Also, avoid writing checks for more than you have available in your account — even if you expect to make a deposit in the next day or two.

Finally, consider keeping some extra money in your checking account so that you have a small buffer in case you make a mistake.

About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Credit Karma, you can find his wo… Read more.