Difference between Available Balance and Current Balance

Technology has made our lives easier in the past few years, for example, individuals had to sit and wait for their turn to withdraw cash from their bank accounts whenever they visited banks. But today, ATM machines provide us the fastest way of withdrawing the money from our bank accounts along with the receipt that carries a detail of remaining balance. Banks issue Visa card or Mastercard to users in order to get the money from ATMs. However, many a times individuals fail to understand certain terminologies used by the banks. They end up getting confused, which makes them spend more than their required limit and as a result, they have to pay the penalty.

Two of the most commonly confused terms used in the banking sector is Available Balance and Currency Balance. Although, these terms seem almost similar, if someone hears about them for the first time, yet, they are not similar. Available balance and current balance are two different terminologies, and every card holder should be aware of the difference between the two.

Available Balance

So, what exactly is Available Balance and Current Balance? Available balance is the amount of balance or funds that you can access immediately. If you exceed the level of available balance, overdraft balance starts to form, even if you are within the limits of your current balance. This balance is updated on a continuous basis in order to show the fees, charges, pending transactions, holds, and cleared deposits. Available balance can also be used by banks and other financial institutions to calculate overdraft balances and penalty charges in case the customers exceed the limit.

Current Balance

Current balance, on the other hand, is the amount of the money that you have in your account at all times. It changes every day when the business day ends at banks and remains the same until the business hours closes the following day. The current balance is also referred to as Account balance. However, some of the individuals may confuse the term ‘current’ with the updated amount shown in your bank account, but this may not always be the case, because the purchases you make or any other charges, fees, or deposits that you make after the business day closes do not appear until the next business day.

Chances of Error

It is quite common for an individual or a layman to confuse these two account balances when he uses one of these balances as a reference point. As a result, the chances of errors increase and he may have to pay the penalty because of that confusion. Therefore, it is important for you to understand that available balance may not always reflect the true picture of your account, if, for example, you make an overnight purchase. Sometimes, the account charges appear a few days later than expected, due to which the account holder exceeds the allowed limit and he is unable to understand as to how he has exceeded the limit. It is not possible to remove each and every chance of error that is likely to occur unless of course, you reconcile your business or personal records with your account ledger on a regular basis.

If you are doubtful and confused about the available and current balance, you should refer to your bank statement, or the list of transactions to review your spending, because wire transfers, withdrawals and deposits also appear on your transaction list. Therefore, available balance should be compared with the starting balance of the month and the listed transactions on the statements in order to make sure all the transactions are accounted for correctly and accurately.

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