Depositing money into bank accounts gives you the ability to access that money any time. You can also use it to make purchases.

Understanding the difference between your current balance and your available balance is important to avoid accidentally spending more than you have and incurring overdraft fees. Here are some things to keep in mind:

How Much Money is in Your Account?

Knowing how much money you have in your account is important, but understanding what’s actually available to spend or withdraw is even more important. Check your current and available balances often to ensure you’re not overdrawing on a debit card or making payments that you can’t afford.

Most banks allow you to access your current balance by logging in through a web browser or mobile app. You can also ask your bank for the current balance by calling or visiting a branch. You’ll typically need to provide the current balance in question (or a statement of recent deposits and withdrawals) for the bank to provide you with this information.

Deposits made with cash generally get added to your account immediately. However, checks may take longer to process – especially large ones. This is because the bank has to verify the validity of the check and protect it from fraud.

If the deposited funds aren’t processed quickly enough, they may be frozen, reducing your available balance. Some banks also put what’s called an exception hold on deposits, which can last several business days. This is sometimes done if the bank reasonably believes a check could be uncollectible or might be dishonored.

What’s the Difference Between Your Current Balance and Your Available Balance?

When you manage your bank account, understanding the difference between current balance and available balance can help you stay on top of your spending. While both numbers reflect the amount of money you have in your account, only your available balance subtracts pending transactions and check holds. This gives you a more accurate representation of the funds you have available to spend because it accounts for any purchases or bill payments that aren’t processed yet, including debits from your ATM card that may not have passed through your bank or checks that are on hold because their recipients haven’t cashed them.

You may also find that your current balance does not include pending transactions, especially when you make a purchase with your debit card. This is because your purchase won’t be posted until your bank processes and clears it, which can take a few days. That’s why it’s important to monitor your available balance, particularly if you have large or recurring expenditures coming up, since it will be more affected by new transactions.

Keep in mind that your current and available balances will update daily based on the time frame your bank takes to process and clear transactions. However, as long as you’re not overdrafting your account and paying fees for overdrawing it, the two figures should sync up over time.

Why Are There Differences Between the Two Balances?

There are many reasons that a company or individual’s book balance and their bank balance may not match. For one, outstanding checks that have not yet cleared the company’s or individual’s books will reduce the book balance, but they will not appear in the bank balance until they clear or are presented for payment at the bank. Similarly, deposits in transit (e.g., Social Security direct deposits) will increase the book balance, but they won’t show up in the bank balance until the deposits are processed by the bank. Also, banks may charge service fees on the account, such as account maintenance charges and check processing charges, which will be reflected in the bank balance but not in the book balance.

Finally, if a company or individual has made transactions that are not properly recorded in their books (e.g., point-of-sale debit card transactions), these will not be reflected in the bank balance until they are reversed or otherwise corrected by the bank. Therefore, it’s important to periodically compare the client balance statement and ledger statement for a specific client.

The Depositing Balance Inquiry page allows you to use the Ledger Inquiry page to compare ledger balances for two different scenarios or for the same scenario over a period of time. To do so, select the inquiry scenario and the compare scenario, then enter the required information in the fields on the page to view the results.

How Do I Know What My Available Balance Is?

The best way to keep track of your spending is to use your available balance, which subtracts pending transactions from current and posted balances. This number is updated instantly each time you use your debit card, giving you an up-to-the-minute picture of how much money is actually available in your account.

It’s also helpful to know how your available balance differs from your actual balance, which will not include pending transactions like bill payments or upcoming checks that haven’t been processed. For example, if you deposit a check that’s due to be paid by your Internet provider within the next day or two, it won’t show up in your available balance until the transaction clears.

Some deposits may require special handling, which means they’ll show up in your account differently than other deposits. For instance, if you deposit a large amount of cash, your bank may put what’s called an exception hold on it, meaning the funds won’t be available for withdrawal or spending until the check clears.

By keeping your eyes on your available balance, you’ll be less likely to overspend and incur an overdraft fee. And if you do accidentally overdraw your account, most financial institutions will cover shortages in your checking account for a small fee. If you’re unsure how to use your available balance or what the differences are between it and your actual balance, don’t hesitate to contact your credit union for help.