You will see two balances associated with most credit and debit accounts: a current balance and an available balance, also called available credit with a credit card and revolving loan accounts. While the amount of money reflected in these balances is usually the same, there are some times when they differ.
Any time money enters or leaves your checking account, you will see a variation in your current and available balances. Knowing the differences between current balance vs. available balance is essential for those striving for good financial habits.
Check out the information below for everything you need to know about available credit vs. current balance.
What Is the Current Balance vs. Available Balance in My Bank Account?
So, what’s the difference between your current balance and your available balance? Your current balance is how much money you have in your account minus any pending charges. Your available balance is what you have to actually spend.
For example, suppose you have a few outstanding checks. In that case, you may see debit transactions for those checks reflected in your available balance but not your current balance. Those checks are still being processed and are considered transactions that are pending.
What Are Pending Transactions?
Pending charges or transactions are processing credit or debit payments that have yet to enter or leave a person’s bank account. For example, say you make a debit card transaction at 9:00 AM. The transaction may not entirely go through until later in the afternoon or even the next business day. During this time, that debit transaction is considered pending.
Another form of this type of transaction happens when you receive credit deposits. Credit deposits can be anything from direct deposits from an employer or home loan funding from an equal housing lender.
When your employer pays you via ACH direct deposit, you may see the funds on your available balance sooner than you will see them on your current balance. Thankfully, while your ACH deposit goes through, you usually have access to that money.
An Example of These Types of Transactions
For instance, say your paydays are on Friday, but right now, it is Thursday, and you have $20 in your checking account. On Friday, you may still see that the current balance of your checking account is still $20, while your available balance is the amount of your scheduled paycheck plus that $20. In this case, you would be able to spend the funds reflected in your available balance even though you see only $20 in your account.
Why Are My Current and Available Account Balances Different?
Have you ever noticed that the amount of money shown in your current balance and your available balance are different? This is because it takes time for debit and credit transactions to process and go through on your financial accounts.
Debit transactions like purchases on your debit card may take a few business days until you see them reflected on your current balance. However, these transactions are typically reflected right away on your available balance.
Credit transactions such as an ACH direct deposit from your place of work may also take one or two business days to show up on your current balance. But these transactions should show up in your available balance right away as well.
While pending charges are processed, you will see them in your available credit or balance but not your current balance. During this time, your current balance and available balance will be different. Once all your pending transactions go through, your current and available balances should be identical again until the next debit or credit transaction.
How To Check Your Available and Current Balances
For the most part, every major bank and financial institution offers free mobile banking services where account owners can check their available and current balances. Simply go to your bank’s site online and log into your account to view these two balances. From there, you can go to your account history and search through your most recent transactions. Purchases and transactions from the past few days are most likely reflected in your available balance, but perhaps not on your current balance just yet.
To make things easier, banks usually put your available balance in a prominent place, so you are able to view the total amount you have to spend right when you log into your account. Once you know exactly how much money you have available, you can pay bills and make other purchases without worrying about overdrawing.
Can I Use My Current Balance vs. Available Balance?
Research by Barclays shows that 83% of people don’t always keep track of how much cash goes in or out of their account.1 A personal finance tip for keeping a tight budget is to check your available balance or available credit before you spend money.
Never assume your current balance is the same as your available balance/available credit. You may have a debit or credit transaction in progress that is not yet reflected in your available credit or balance. If you spend money based solely on what you see in your current balance, you run the risk of pending transactions, causing you to overspend.
Some Consequences of Not Paying Attention to Your Available Credit or Balance
Overdraft Fees
Overdraft fees are just one of the consequences of overdrawing from your checking account. The cost for overdraft fees varies by bank, but they may cost around $35 per transaction.2 Suppose you unknowingly overdrew from your account and had a series of electronic payments scheduled to go through. When this happens, there is a possibility that those scheduled payments will fail to process.
Late or Missed Payments
This failure may cause you to make payments late or miss them altogether. Note payment history is one of the most important factors contributing to your credit score. Missing payments or making them late may negatively affect your credit score for up to seven years.
If you want to improve the payment history on your credit report, you should always reference your available credit or balance, not your current balance, when spending money. Then, you don’t have to worry about overdraft fees or other inconveniences that come with overspending on your checking account or with a credit card.
Ways to Protect Yourself
Here are some tips that can help you stay on top of your credit and checking accounts:
| Tips | Description |
| 1. Monitor Available Balance | Keep track of your available balance rather than relying solely on your current balance to manage your finances. |
| 2. Maintain Backup Savings | Ensure you have a backup fund in your savings account to cover unexpected expenses or prevent overdrafts in your checking account. |
| 3. Quick Fund Transfers | Be prepared to swiftly transfer funds from your savings to your checking account if you accidentally overdraw your checking account, minimizing potential fees. |
| 4. Replace Overdrawn Funds Promptly | Some banks or financial institutions may waive overdraft fees if you replenish your overdrawn account within a specified time frame, often within twenty-four hours. |
| 5. Sign Up for Overdraft Protection | Consider enrolling in overdraft protection, which automatically deducts funds from your savings or another designated account when you overspend from your primary account. |
FAQS on Available Credit and Current Balance
In checking accounts, the current balance is the total amount of funds available, not including pending transactions. For credit cards, the current balance refers to the total amount you owe to your credit card company as of the last transaction. This might be different from the statement balance that you see at the end of your billing cycle.
The credit limit on your credit card represents the maximum amount of credit that the lender has granted you. It sets the total amount you’re permitted to charge on the card. Knowing your credit limit is essential. In contrast, available credit indicates the remaining amount you can still spend or borrow. This is determined by subtracting your credit card’s current balance and any pending transactions from your credit limit.
For instance, if your credit card has a limit of $10,000 and your credit card’s current balance is $3,000, then you’d have $7,000 as your available credit. Being mindful of both these figures is essential.
Your available balance may differ due to transactions authorized but not yet posted by the credit card company. The statement balance is the amount you owe at the end of your billing cycle, while the current balance updates with each transaction.
It’s advisable to base your spending on your available balance. Frequently approaching or exceeding your credit limit can adversely impact your credit utilization ratio, a significant factor credit card issuers consider for your overall credit health.
Failing to make the minimum payment by the due date can result in late fees, increased interest rates, and potential negative marks on your credit report. It can also affect your relationship with the credit card issuer.
While available balances on credit cards can change frequently as you make purchases or payments, the current balance typically updates once all transactions have been posted, which is usually done daily by the credit card company. However, always refer to your online account or credit card statement for the most accurate information.
Overdraft protection, typically related to bank accounts, helps avoid potential overdraft fees by automatically transferring funds from another linked account. Some credit card companies offer a version of this by allowing a small overspend beyond your credit limit without immediate penalties, though terms can vary by issuer.
A statement balance is different from your current balance and available balance. It is the total amount owed on a credit card at the end of a billing cycle. It reflects all of the charges, fees, credits, and payments made to your credit card account within that specific billing cycle.
Once the billing cycle ends, the credit card issuer will generate a statement, either in paper form or electronically, detailing all transactions made during that period and providing the statement balance. You can see this on your credit card bill.
This balance is significant because it’s the amount upon which interest charges will be calculated if not paid off by the due date. Additionally, if you pay off the full statement balance by the payment due date, you can often avoid paying interest on purchases due to the grace period provided by most credit card issuers.
Final Thoughts From CreditNinja
Remember, always check both your current balance and available credit before you make a large purchase. While your current and available balance may be identical at times, it is still essential to know how they vary.
If you ever need extra money deposited in your account to cover an accidental overdraw, you have options like personal loan options, bad credit loans, and different installment loans. But these are just one of the many options out there for emergency cash.
You can find other helpful information and tips about organizing your finances on the CreditNinja blog!
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