What It Means
(1) For a checkingChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more or savings accountSavings accountA bank or credit union account for money you're setting aside for later, which earns interest and is insured up to federal limits at insured institutions. See more, the account balance is the money in the account once every posted deposit, withdrawal and payment is counted. Banks also call it the current balanceCurrent balanceThe total you owe on a credit card right now, including charges and payments made since your last statement. See more or the ledger balance. In the CFPB's description it isn't reduced by holds for pending transactionsPending transactionA card purchase or other payment the bank has approved but that hasn't settled yet; it lowers your available balance before it reaches your account balance. See more, and it updates once each business day, after that day's transactions are processed together. (2) On a credit card or loan, the balance is the amount you owe.
Try It: Turn Your Balance Into a Daily Spending Number
Start with the account balance your bank shows, then take out what it doesn't count yet. Example numbers to start.
What's left can be spread across the days until payday.
The account balance can't cover what's already promised. Move money in, or ask to shift a due date, before the account overdraws.
How It Sounds at Home
- "My app says $1,400, but that's before rent clears."
- "Check the balance before you tap the card."
- "The balance hasn't caught up yet."
The Breakdown
Worked example. Sam's banking app shows an account balance of $1,400 nine days before payday. Three payments haven't reached that number yet:
| Still to come out | Amount |
|---|---|
| A check to a handyman that hasn't been cashed | $120 |
| A grocery purchase still marked pending | $85 |
| Phone and car insurance, set to autopay before payday | $650 |
| Total | $855 |
Taking $855 from $1,400 leaves $545, or about $61 a day for nine days.
What the result means. The account balance records what has already posted. A check sitting in someone's wallet and a bill that autopays tomorrow aren't in it, so spending from that number alone can leave the account short when those payments land. The figure after the subtractions is the safer one to spend from.
The balances on your banking app
| Number | What it counts |
|---|---|
| Account balance (current or ledger) | Posted deposits and payments only |
| Available balanceAvailable balanceThe money in a bank account you can use right now: the posted balance minus pending card purchases and any deposit the bank is still holding. See more | The account balance, minus pending debits and any deposit still on hold |
| Your own running total | All of that, plus checks and autopays you know are coming |
Good to Know
Banks don't all use the same balance to decide whether a payment overdraws your account. The CFPB's 2021 report on checking account overdraftOverdraftWhen a payment is bigger than your checking balance and the bank pays it anyway, leaving a negative balance you owe back, usually plus a fee. See more found that some institutions charge overdraft and NSF (nonsufficient funds) fees based on the ledger balance when a transaction settles, while others go by the available balance. Your deposit account agreement says which one your bank uses. FDIC supervisory guidance from 2023 deals with debit card purchases approved while the money was there that settle later against a lower balance, one more reason to count pending purchases and scheduled bills before you spend down to the last few dollars.
FAQ
Is account balance the same as available balance?
Only when nothing is pending. The account balance counts posted transactions, while the available balance also subtracts pending debits and any deposit the bank is still holding.
Why is my account balance higher than what I can spend?
Pending card purchases and deposit holds come off the available balance first and reach the account balance only when they post. Checks you've written and bills you've scheduled don't show in either number until they're paid.
How often does my account balance update?
In the CFPB's description of how bank systems work, the current balance updates once each business day, after the day's transactions are processed. Your app may list pending items sooner, and they join the account balance once they post.
Do It in Buhata
Accounts
Keep each bank account in Accounts in Buhata so every balance sits in one place, then subtract the checks and autopays still to come before you plan the week.
Open BuhataRelated Terms and Categories
- Available balance
The money in a bank account you can use right now: the posted balance minus pending card purchases and any deposit the bank is still holding.
- Pending transaction
A card purchase or other payment the bank has approved but that hasn't settled yet; it lowers your available balance before it reaches your account balance.
- Bank reconciliation
Checking your own record of a bank account against the bank's statement, line by line, and explaining every difference until the two balances agree.
- Overdraft
When a payment is bigger than your checking balance and the bank pays it anyway, leaving a negative balance you owe back, usually plus a fee.
- Checking account
A bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit.
- Safe-to-spend
The money left for everyday spending before your next payday, after upcoming bills, subscriptions, card payments and planned savings are set aside.
Sources
Consumer Financial Protection Bureau, "Checking account overdraft at financial institutions served by core processors" (December 2021); FDIC, "Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions" (2023)
- files.consumerfinance.gov/f/documents/cfpb_overdraft-core-processors_report_2021-12.pdf
- www.fdic.gov/sites/default/files/2024-03/fil23019a.pdf
Last updated .