Ever run into a situation where clearly had balance in your Bank & Savings Account but was unable to pay for your purchase? If that has happen to you then the most likely cause was that you did not have enough available balance.
Bank & Savings Account balance & available balance may sound similar but serve different purposes. In some instances, your available balance can be lower than your account balance.
Make sure to read up on their differences beforehand so you are not left standing by the cash register without a means to pay for your purchase!
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Funds available is the dollar amount you have access to at that instance in time. The number tied to this category is the amount of money you can withdraw, spend using associated debit card, use to pay bills, and write out checks.
Cash can be withdraw from ATM machines or at a brands location via bank teller. Goods & services can be purchased via your debit card at merchants that accept card payment, it is also most widely accepted form of payment on the web.
Debit card purchases pull away resources residing in your account and only works if there are funds available.
You may also write checks in lieu other payment methods listed above for various reasons ranging from paying bills to money gifts. Funds available in your account enables you to do all this and more in contrast to account balance.
Not Yet Available
There will be some instances where you will see that your available balance is lower than your account balance. This happens because the rest of your available balance is being held by your bank. Generally, there are two reason behind this:
- Deposits to your account have not cleared yet
- There are pending withdrawals or authorizations against your account
For deposits, banks may not allow you to access your funds immediately due to multiple reasons. They are not sure if the payment is legitimate, and the money takes several days to transfer. To make up for this, banks will normally allow you to use up to $200 by the next business day.
Government issued checks like a tax refund will be available much sooner.
However, items like personal checks and checks from overseas are much riskier and will take a longer period of time. This inconvenience isn’t all that bad though because if a check bounces, you are responsible. Or if you spend money from a bad check, you will have to replace those funds from your bank account.
Any type of future withdrawals and authorizations can also reduce your available balance. For example, if you scheduled any upcoming payments through your bank’s bill pay feature, those funds will be unavailable because the bank knows tha the money is already on the way. The same will apply for debit card holders because the bank knows you intend to spend that money.
Your account balance refers to the potential total of funds, this includes available balance and all pending transactions that has not been cleared.
Pending transactions may include recent purchases, recent deposits, future withdrawals, and others. Financial institutions wants to protect its customers from fraudulent charges and withdraws so they needs time to verify your transactions.
Banks acknowledges the transaction taking place by upping the account balance, but that money is not available until after the verification process. Behind the scenes verification process may take several days but some banks are known to give earlier access to valued customers. Once the hold is cleared, customers will gain access to their rightful fund.
The available balance on your account is the amount of money you can freely use at anytime, if you wish to increase this number then you need to transfer or deposit more money.
Increasing your available balance takes time, so if you plan on doing activities such as online shopping or wiring money then make sure to deposit sufficient money into your account ahead of time. Plan ahead to avoid cash crunches and remember to keep a buffer of cash for unexpected expenses.
Many financial institutions offer free online and mobile apps that can help you better keep track of your money. Use the tools at your disposal for convenience. Check out HMB’s in-dept list on Best Bank Account Bonuses, Credit Card Promotions, and Bank Rates.