Knowing the difference between current balance vs available balance can save you the headache of overdraft and non-sufficient funds (NSF) fees. These fees are often between $27 and $35. Unfortunately, banks can charge you multiple fees per day per account, too. You can get overdraft fees refunded in some cases, but it’s best to avoid them altogether.
If you aren’t careful with your available funds, the fees can add up quickly. When determining your available funds, it’s important to understand the differences between current balance vs available balance.
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What is a current balance?
Your current balance includes all of your available funds and the funds you currently hold. If you review your personal financial information and see $500 spread across your bank accounts, then your current balance is $500. Your current balance also includes pending transactions that will soon arrive in your bank account.
What is an available balance?
Your available balance is a measure of the available funds you can immediately access. It factors in any pending transactions and holds on your account, such as recent credit and debit card purchases that haven’t been fully processed yet.
Your available balance can provide you with a better understanding of your available funds, especially compared to your current balance, which is a number that can be misleading.
If you open up a banking account through the MoneyLion mobile app, you will get RoarMoney account protection, which never charges overdraft fees. The MoneyLion app also comes equipped with robust security features and customized alerts designed to help you easily stay on top of your money. MoneyLion provides all of these features and more for just $1 per month, all without hidden fees.
Comparing current balance vs available balance
Grasping the differences between current balance vs available balance is key to being on top of your personal financial information. Understanding these discrepancies will help shield yourself from unnecessary debt. Here are some examples of transactions you’ll make in life and how they affect your current balance vs available balance.
Credit and debit card payments
When you make a $100 purchase with a credit or debit card, your available balance decreases by $100. However, your current balance remains the same until the payment is fully processed.
If you continue to use your debit card without deducting each unprocessed purchase from your current balance, you can end up spending more money than you have available. This will result in overdraft and NSF fees once those unprocessed purchases are finalized.
If you deposit a $50 check into your bank account, those funds immediately become part of your current balance. However, it takes one to two business days for the check to clear.
Therefore, your available balance will remain unchanged despite the increase in your current balance. Avoid spending this money right away in the event the check does not properly clear.
If you want to get money in your bank account fast, MoneyLion can help. The MoneyLion app’s InstacashSM option allows you to receive a $250 cash advance at 0% interest to hold you over until your next payday. The extra cushion can make a big difference in protecting yourself from those pesky fees.
Transfers between accounts
If you make a transfer between bank accounts, your current balance and available balance will look different while waiting for the transfer to process. Online transfers take place in minutes which means the available balance will quickly reflect the transfer.
However, if you conduct a transfer between bank accounts at a local branch, it can take anywhere from two to five business days for the transfer to finalize. During that waiting period, your current balance will increase by the amount you transferred, while your available balance will remain unchanged. The available balance will only change once the transfer is complete.
You can transfer available funds from your bank account to your RoarMoney account and vice versa. You may transfer up to $2,500 per day and $10,000 per month into your RoarMoney account. RoarMoney allows you to bank, borrow, save, and invest with no hidden fees.
Let’s say you have a gym membership and set up pre-authorized monthly payments. When you make those automatic payments, your available balance will immediately decrease. However, that gym payment won’t immediately show up in the current balance. That payment will only be reflected in the current balance once the payment clears.
Paying via check
If you pay someone via check, your available balance will immediately take a hit. There’s an extra concern when paying with checks because you don’t have control over when the recipient deposits it. If you continue to spend money and forget about the check you wrote earlier, that check can put your checking account in the negative if you overspend before the recipient deposits the check.
This risk isn’t properly presented in the current balance. If you have $100 in your checking account and pay with a $50 check, you can still spend all of the $100 in your checking account. This habit would eventually result in NSF fees. Keep track of the checks you write so you don’t end up being badly surprised.
Want early access to your paycheck?
Understanding the differences between a current balance vs available balance will help you make financially smarter decisions and decrease the likelihood of encountering overdraft and NSF fees along the way.
Think you might overdraft your account and need early access to your paycheck? You’ve come to the right place! Open a RoarMoneySM account to help maximize your dollars and get early access to your paycheck up to two days before payday. Download the MoneyLion app and sign up for RoarMoney’s incredible banking features for just $1 a month!