Difference between available balance and current balance

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Available Balance

This is the bank balance that can be accessed immediately. If the available balance level is exceeded, then an overdraft balance will form even though one is within limits of the current balance. This balance has to be updated continuously for purposes of showing charges, fees, holds, transactions pending and the deposits that are cleared. Financial institutions and banks use available balance for purposes of calculating penalties and overdraft balances in case the customer exceeds the limit. This balance does not factor in transactions that are pending which are already in the account. Withdrawing funds against cheques that have not cleared attracts penalties and fees. It is therefore important to enquire the available balance before any withdrawals are made.

Current Balance

This is the amount of money in the account at any given time. It keeps changing on daily basis upon the closure of a bank’s business day and remains unchanged till the close of business in the next day. Current balance is also known as account balance. Nonetheless, some people confuse the term updated amount and current balance of the bank account even though this should not be the situation at all times since any purchases made, fees , other charges or deposits made after the closure of a business day don’t appear till the following business day.

When one receives cheques, they have to be deposited to the individual’s account since they are cheques drawn from other banks. They have to be cleared by the issuing bank for verification of authenticity and funding. To clear a local cheque, it takes one to two days. The process may take one to two weeks to clear foreign cheques. The amount can’t be used till the amount clears, gets withdrawn or gets wired to another account. Therefore, total bank balance amount includes cheques deposited which must be cleared to become available for withdrawal from the account.

Chances of Error

Laymen or individuals confuse between both of these balances when one balance is used as a reference point. Consequently, the probability of errors rise and one may end up paying this penalty due to this confusion. It is therefore important to understand the true account picture if for instance you make a purchase overnight. Occasionally, charges to the account appear a number of days later than anticipated in which case the account holder exceeds the limit allowed and is not able to understand how the limit was exceeded. Removing every error that occurs is not possible unless business and personal records are reconciled with your account ledger every now and then.

Online Banking
When faced with doubts and questions regarding the available balance of the balance versus the current account balance, one may view transactions on the online statement in order to get a view of each dollar spent, why it was spent, when and where. Deposits, transfers, wired funds and withdrawals are transactions also noted in the list of transactions so that there is no query raised concerning the state of the business account. One needs to compare the available balance to the monthly beginning balance and listed transactions in the statement to ensure that every transaction is posted and accounted for.

Main Differences

  • While current balance is the total balance that an individual has in his account factoring in every transaction pending, available balance is what can be withdrawn and transferred.
  • While current balance forms the basis of interest computation in accounts that bear interest, available balance is not.

Whenever one makes an inquiry, current balance is what is given on the amount of money in the account. On the other hand balance available balance is not given unless particularly asked.

 

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