Available Balance vs. Current Balance

Westend61/Getty Images; Illustration by Austin Courregé/Bankrate

When you log onto your bank account, you’ll typically see dollar amounts next to the headings of “available balance” and “current balance.” The two amounts may be the same, although they might actually be assigned different amounts of money. Knowing what these terms mean can help you understand how much money you currently have access to, possibly keeping you from overdrawing your account.

Available balance vs. current balance

Your bank account may list both an available balance and a current balance — and the two may show different dollar amounts.

Your available balance consists of the money you have access to right now, such as through debit card purchases or ATM withdrawals. Typically, this is the limit on how much you can spend or withdraw from the account at this time. Often, the available balance has already factored in the amounts of transactions that are still pending.

Often, your account’s current balance has not factored in the amounts of recent transactions that are pending but have yet to clear. For instance, this could be the case if you’ve made purchases with your debit card that haven’t been fully processed yet by your bank.

As an account holder who’s making debits or withdrawals, you might pay closer attention to the available balance because it reflects the amount of money available for immediate use.

Why is my available balance different from my current balance?

There are a few reasons why your account’s available balance might not match up with its current balance, including:

• Pending transactions: These are transactions that haven’t been fully processed yet. For instance, if you have $200 in your account and swipe your debit card to buy a $20 lunch, the restaurant might not immediately take the money from your account. Rather, the debit may take a day or two to clear. Until that happens, the account’s current balance may still be listed as $200, while the available balance will be only $180.
• Authorization holds: When you make a debit card purchase, merchants may pre-authorize a hold on your account before the charge goes through. This gives the business time to make sure your account has enough money to cover the purchase. For example, a restaurant may place a $50 hold on your account for a $30 meal, to account for any tip you may add. Until the transaction clears, your available balance could be reduced by $50 due to the hold.
• 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

Because the current balance doesn’t reflect pending transactions, the balance there could be greater than the amount you have available when making any of these transactions.

If you try to spend more than you have available, you could bounce a check, overdraw your account or have a transaction declined.

While your available balance is useful in showing how much you can spend, your current balance can come in handy if you wish to determine if your account has any pending transactions that haven’t cleared yet.

How to avoid an overdraft fee

Not paying attention to your available balance can result in overdraft fees to your account. You can help avoid overdrawing your account by taking some precautions.

• Opt out of overdraft coverage. When you open your checking account, you may be asked whether you want the bank to cover overdrafts, within their set guidelines. If you decline this offer, any transactions that would overdraw the account will simply be declined, with no fees charged.
• Choose an account that doesn’t charge for overdrafts. Some banks don’t charge for overdrafts. This is either because transactions that would overdraw the account or declined, or the bank might not charge overdrafts that are under a certain dollar amount (although they’ll likely need to be repaid within a set amount of time).
• Sign up for account alerts. You can set up your bank’s mobile app to notify you when your balance falls below a set threshold. This can help make you aware when you’re in danger of overdrawing the account.
• Sign up for overdraft protection. Overdraft protection initiates a transfer from your savings account or an established line of credit whenever a transaction takes place that would overdraw your checking account. Some banks charge a fee for overdraft protection transfers.
• Keep extra in your checking account. Having a cushion balance in the account can help avoid overdraft fees if you accidentally overspend.

Bottom line

Your checking account can display a current balance and an available balance, and the two might not show the same amount. Your available balance shows the money you can currently spend, so it’s important to pay attention to this dollar amount when making debit card transactions, paying bills, writing checks or withdrawing cash.

Ultimately, monitoring your account’s available balance can help keep you from accidentally overdrawing your account and incurring hefty overdraft fees, or having a transaction declined.