Though they sound similar, an account balance is not the same thing as an available balance. People should know the difference to avoid accumulating costly fees from their bank. An account balance shows the amount in your account, but you only have access to the available balance. Several factors can cause discrepancies between the two figures, and people who don't pay attention to the two can run into problems.
An account balance, also called a current or ledger balance, is the actual balance on the account at the start of the business day. It's the balance that is printed on bank statements. This is the balance that is used to calculate interest payments on interest-bearing accounts. It's also the figure that is used to figure out whether balance requirements have been met on certain types of accounts. It doesn't include pending activity.
The available balance is the amount of money in an account that is available for immediate withdrawal or other type of use. It represents the difference between the account balance and any activity that has not yet cleared on the account (such as pending deposits, checks and withdrawals). Banks sometimes put a hold on deposited checks to ensure their legitimacy, and the holds can last for as much as a week on larger deposits.
People who bank on the accuracy of the account balance and ignore the available balance do so at their own risk. Banks may charge hefty fees to customers who draw against unavailable funds, and it could even hurt your credit rating. For this reason, customers should always make sure deposits and other pending activity have gone through before attempting to use these funds.
Finding Available Balance
Most banks have toll-free numbers that customers can call to check their balance. Typically, the bank will give you both the account balance and available balance during that automated call. Eventually the two numbers will match once all pending activity is cleared. Customers can check these lines until the available balance matches their expectations and, only then, make use of the funds. People with online banking accounts can check available balances on the Internet.
Ripoffreport.com has an example of what can happen when people spend or withdraw more than the available balance. The writer racked up about £260 in overdraft fees in a short time. She got four £22 fees and six fees of £24.30 even though her account balance showed she had more than £260. The bank told her she needed to check the available balance instead, since some activity hadn't yet cleared. Others would be wise to heed that advice.