Difference between available balance and posted balance

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In order to successfully manage your funds, it is paramount to have an understanding of banking activities and how your account balance is affected by these activities. Nowadays, almost every individual has a bank account and hundreds of thousands of transactions are processed daily thus resulting to a more complex banking system. Every day, various banking activities are posted. This may include debit entries, credit entries or bank transfers and it is paramount to understand how your bank balance will be affected by a certain bank activity.
Among the credit entries include cash and cheque deposits and internet inter-bank transfers. On the other hand, debit entries include cash withdrawals, money transfers to other bank accounts, bill payments and online purchases. In the bank statement, the transaction entries appear as balances. Posted balance and available balance are the two of these balances. If you are unfamiliar with banking activities, these terms can easily be confused and one may end up taking decisions that can adversely affect his financial objectives.

Posted Balance
This is the actual balance that is readily available for use which exists in one’s bank account. It is calculated as a transactional result which was executed in the past. It is the actual or real balance in the account and does not factor in transactions that are not posted. It can also be referred to as the account balance existing at the end of the last working day. Similarly, a prior posted balance refers to the balance as at the close of the day just before the previous working day.
The balance changes at the close of the business day of the bank on daily basis and stands in that position till the end of the business following that day. Even though it may be seen as an updated display of what is really in the account, this is not always the case. Any fees, purchases, holds, deposits and other charges to the account after the posting date will not reflect until the posting period of the following business day.

Available Balance
Available balance is computed by deducting ‘holds’ bearing a future and today’s date from ‘posted balance. A ‘hold’ amount is prohibited for use by the customers. It normally arises from purchases of debit cards, direct deposits, cheque deposits due for clearance, return notices and collection notices. A hold is for just a temporary period of time, usually 1 to 14 days and upon resolving the reason for holding the money, it becomes part of the transaction posted. It is the balance that can be used by an individual at any time. It is the difference between an unprocessed transaction and a ledger balance.

In most cases, this balance is what causes an overdraft to occur while listing the account and current bank balance. Available balance is normally updated immediately and throughout the day so that it can reflect fees, charges, pending transactions, holds and cleared deposits as they occur. Available balance is used by banks in the calculation of penalties and overdrafts in case limits are exceeded.
Deposit Holds

Cash deposits, direct deposits and wire transfers are normally available on the same day that the deposit is made to your account and if they are done before the cut off of the business day. In many cases, funds from cheque deposits are normally made available after the first business day following that of receiving the deposit. Business days do not include Saturdays, Sundays and also federal days. In certain instances, cheque deposits are subject to deposit holds which delay funds availability. The holds protect one from losses which may occur in case the item deposited s returned.

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