Available Balance

What Is an Available Balance?

The available balance is the balance in checking or on-demand accounts that is free for use by the customer or account holder. These are funds that are available for immediate use, and includes deposits, withdrawals, transfers, and any other activity that has already cleared to or from the account. A credit card account's available balance is normally referred to as available credit.

An account holder's available balance may be different from the current balance. The current balance generally includes any pending transactions that haven't been cleared.

The available balance is different from the current balance, which includes any pending transactions.

Understanding Available Balance

As noted above, the available balance represents the funds available for immediate use in a customer's account. This balance is updated continuously throughout the day. Any activity that takes place in the account — whether that's a transaction done through the teller, an automated teller machine (ATM), at a store, or online — affects this balance. It does not include any pending transactions that have yet to clear.

When you log into your online banking portal, you will normally see two balances at the top: The available balance and the current balance. The current balance is what you have in your account all the time. This figure includes any transactions that have not cleared such as checks.

Depending on both the issuing bank and the receiving bank’s policies, check deposits may take anywhere from one to two days to clear. This process may take much longer if the check is drawn on a non-bank or foreign institution. The time between when a check is deposited and when it is available is often called the float time.

A customer's available balance becomes important when there is a delay in crediting funds to an account. If an issuing bank has not cleared a check deposit, for example, the funds will not be available to the account holder, even though they may show up in the account’s current balance.

Using the Available Balance

Customers can use the available balance in any way they choose, as long as they don't exceed the limit. They should also take into consideration any pending transactions that haven't been added or deducted from the balance. A customer may be able to withdraw funds, write checks, do a transfer, or even make a purchase with their debit card up to the available balance.

For example, your bank account balance can be $1,500, but your available balance may only be $1,000. That extra $500 may be due to a pending transfer to another account for $350, an online purchase you made for $100, a check you deposited for $400 that hasn't cleared yet because the bank put it on hold, and a pre-authorized payment for your car insurance for $450. You can use any amount up to $1,000 without incurring any extra fees or charges from your bank. If you go beyond that, you may go into overdraft, and there may be issues with the pending transactions.

Available Balance and Check Holds

Banks may decide to place holds on checks under the following circumstances, which affect your available balance:

Banks may not hold cash or electronic payments, along with the first $5,000 of traditional checks that are not in question. On July 1, 2018, new amendments to Regulation CC — Availability of Funds and Collection of Checks — issued by the Federal Reserve took effect to address the new environment of electronic check collection and processing systems, including rules about remote deposit capture and warranties for electronic checks and electronic returned checks.

Special Considerations

There are cases that can affect your account balance — both negatively and positively — and how you can use it. Electronic banking makes our lives easier, allowing us to schedule payments and allow for direct deposits at regular intervals. Remember to keep track of all your pre-authorized payments — especially if you have multiple payments coming out at different times every month. And if your employer offers direct deposit, take advantage of it. Not only does it save you a trip to the bank every payday, but it also means you can use your pay right away.