Difference Between Current Balance and Available Balance

Current Balance vs Available Balance

Have you been confused by the statement slip coming out of the ATM machine that mentions both current balance and available balance in your bank account? Often it so happens that you go to your bank presenting a withdrawal slip thinking that you have the money in your account, but the cashier tells you curtly that your account does not have sufficient balance to entertain your withdrawal command. You are flabbergasted as you received a check from your client that you deposited duly in your account, and now you are being told that the amount in your account is not sufficient. It is here that knowing the difference between current balance and available balance comes handy. Many like you face difficulties as they do not know the differences between these two terms. This article attempts to explain the difference between current balance and available balance so that you are never in doubt pertaining to balance amount in your bank account.

In banking parlance, available balance refers to the actual amount available to the user without any restrictions, holds or uncollected funds. Current balance is often a bigger amount that includes all funds including those that may be on hold, are still uncollected and thus, restricted by the bank from being used by the person holding the account. It usually happens in instances of checks (cheques) having been deposited in a bank account. In different countries, there are differences in clearing systems, and so there are places where clearing may be over in a few hours and banks that take longer in clearing a check, especially if it is outstation check. Also, checks (cheques) drawn on another bank rather than your own take a longer time for clearance than that are drawn in favor of your bank. Current balance just implies that though your bank has noticed that you have deposited a check in your account and the amount is being deposited in due process in your account, you are still barred from using these funds until the check clears. Until the time check is cleared, you are allowed to make use of only available funds and the check amount is reflected in available balance only when it is finally cleared. Current balance is also referred to as shadow balance in some places to differentiate it from the available balance.

Suppose you have $200 in your saving account and use your debit card to pay $50 to Electricity Company against monthly bill. The terminal at the company sends a message to the bank that you wish to spend $50 from your account. The bank agrees and puts $50 aside for the transaction, and now, though current balance in your account is still $200, the available balance is $200-$50 = $150 and not $200.