Understanding the Difference Between Available Balance and Current Balance
Keeping track of your finances is an essential part of managing your money effectively. Whether you have a checking, savings, or credit account, it’s important to keep track of your account balance to avoid overdrafts and other fees. However, understanding the difference between the available balance and the current balance can be confusing for some people.
What is a Current Balance?
Your current balance is the total amount of money you have in your account at any given time. This includes all deposits, withdrawals, and fees that have been applied to your account, regardless of whether they have cleared or not. For example, if your account has a starting balance of $200 and you deposit $50 and withdraw $25, your current balance would be $225.
What is an Available Balance?
Your available balance is the amount of money in your account that you can actually spend or withdraw. This takes into account any pending transactions that have not yet cleared, such as outstanding checks or debit card authorizations. For example, if your current balance is $225, but you have a check for $20 that has not yet cleared, your available balance would be $205 until the check clears.
How to Manage Your Account Balance Effectively
One of the best ways to avoid overdraft fees and other financial troubles is to manage your account balance effectively. This means keeping track of your current and available balance and making sure you have enough funds to cover any upcoming expenses. Some helpful tips include:
– Recording all transactions in a check register or financial app
– Checking your account balance regularly, especially if you have pending transactions
– Setting up alerts or notifications for low balances or overdrafts
– Avoiding spending more than your available balance
– Depositing funds to cover any outstanding transactions as soon as possible
By understanding the difference between the available balance and the current balance, you can manage your finances more effectively and avoid unwanted fees and charges. Make sure to keep an eye on your account balance regularly and take proactive steps to keep your finances in order.
Table difference between available balance and current balance
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