Available-for-Sale Securities

Available Balance: What It Is and Why It’s Important

What is the available balance?

The available balance is the total amount in a checking account that is available to spend. The available balance on a credit card account is how much credit the cardholder can borrow. 

With a checking account, the available balance does not include pending transactions that have yet to clear. Cleared pending transactions, like an ATM withdrawal or online or in-store purchase, typically show up immediately and are deducted from your available balance. 

Account holders can use their available balance in any way up to the available balance amount with their debit card. If you happen to use more money than the available balance, you may be charged an overdraft fee or penalty. 

How is the available balance different from the current balance on a debit card?

When you log in to your online bank account, you will see two different balances: current balance and available balance. They are both money you have, they take pending and uncleared transactions into account differently. So, it is important to understand the difference between the two accounts so that you don’t end up spending money you don’t actually have. 

Current balance is all the money that is currently in your bank account including pending transactions and uncleared checks or bill payments that are pre-authorized and still being processed. 

Available balance in your checking account is your current balance minus pending transactions. It does not include pending deposits. 

Here is an example: You have a checking account with a current balance of $100 and you spend $20 at the grocery store. 

Your current balance is still $100, but your available balance is now $80. Transactions can take a day or two to clear, so until the money is withdrawn from your account the pending transaction isn’t reflected on your current balance but is reflected on your available balance.

Let’s say that same day you deposit a $50 check. Your current balance will update to $150, but the available balance will stay at $80 until the check clears. 

How is the available balance different from the current balance on a credit card?

The current balance on your credit card is the total amount due on the credit card. When you make a payment on your credit card, the payment is immediately added to your current balance.

Unlike a debit card, credit cards list available credit instead of available balance. Available credit is how much money you can still charge on the card. It is calculated by subtracting your current balance from your credit limit.

For example, if your credit limit is $1,000 and your current balance is $200, you can still charge up to $800 before you reach your credit limit. 

This is different from your statement balance which is the total amount of money that you owe to the credit card company as of your statement closing date (which is usually a set date each month). It includes all of your charges, including any interest and fees. If you do not pay the statement balance in full, you will be charged interest on the remaining balance.

As StellarFi reports all your on-time monthly bill payments to all major bureaus, your credit score gets higher each time a bill is paid on time!

StellarFinance, Inc. does not necessarily constitute or imply its endorsement, recommendation or favoring, sponsorship, or representation in reference to any specific company, products, processes, or services by trade name, trademark, manufacturer, or otherwise in this article. StellarFinance, Inc. and its affiliates do not provide financial, tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own financial, tax, legal and accounting advisors before engaging in any transaction.