Difference Between Current Balance and Available Balance

The amount of money that is in an individual’s account is called Balance. In the field of banking, current and available balance are often confused terms. People often think of the same terms. But there is a slight difference between the two. In accounts, if there is a difference between the debit and credit amount in a given period, then it is also referred to as balance. If credit and debit value becomes equal, then it is termed as zero balance. Balance is used to reflect the net value of liabilities and assets in the account.

Current Balance vs Available Balance

The main difference between the Current Balance and Available Balance is that the Current Balance is an individual amount of money that is in his/her account. The Current Balance is the total amount in the bank account at a time. While Available Balance is the amount of money that an individual can spend at any given time. The current Balance can include all the money of the deposits, checks written by someone or deposited or may not have been cleared by the bank. Available balance doesn’t include all these pending transactions. Available Balance is always less than the Current Balance. Because it doesn’t hold the pending amount.

Current Balance and Available Balance

The Current Balance is the total amount in an account. It is superficial money that gives a vague idea to a bank account holder about its account. The current Balance is also maintained by the different countries in the world. Balance of payments is the place where various countries keep a record of all the monetary transactions. The current balance of a particular country is maintained. It helps all the other countries to know about the capital, services, markets, investments etc. The current Balance, in theory, should remain zero. But it is not possible in reality. So it is used to tell whether the individual’s account or countries; account is in surplus or deficit.

Available Balance is like an on-demand balance where an individual can use whenever they want. It is free to use. Available Balance includes all the transactions like deposits, checks, withdrawals etc., that has been cleared by the bank. If a person holds a credit card, then the available balance in its account is referred to as available credit. It includes the funds that can be used by the customer immediately without any delay. Available Balance is updated by the bank continuously as and when a customer takes out the money or deposits it.

Comparison Table Between Current Balance and Available Balance

Parameters of ComparisonCurrent BalanceAvailable Balance
MeaningTotal AmountCurrent Balance- Debit
In TheoryShould be ZeroFor immediate use.
IncludesAll the pending transactionsAll the cleared transactions.
ComponentsGoods, Income, Services, and Current transfers.Transfer, Purchase, Deposits, Checks and withdrawals.
Formula​CAB=(X−M)+(NY+NCT)PAB = On Hand + Scheduled Receipts – Total Demand

What is Current Balance?

In theoretical terms, the Current Balance should ideally be zero. But it is not possible in reality. Current Balance always shows the bank holder where the amount in their account is in surplus or on the deficit. The Current Balance is the total money available. It plays a key role in maintaining the monetary activities and transactions of the countries. Various factors form the components of the current balance. The current Balance doesn’t mean that all the money in the account can be spent.

 Current Balance is very easy to check either by opening a mobile app or through the internet, via ATM or visiting the nearest local branch. It is very important to check the current balance regularly as it gives you an idea of your account. For planning any big upcoming event, the current balance gives us a broad idea and scope. It includes all the pending transactions like deposits, transactions, withdrawals etc. 

Current Balance holds an important role for the countries’ surplus or deficit. Whether the economy is weak or strong depends upon the various factors of the current balance. Goods, Income, Services and Current Transfers. Current Account Balance tells the whole world if a country is a net creditor or net debtor. It is important to examine what would be the effects and what will fuel the debit or credit of the account.

What is Available Balance?

Available Balance is the balance that shows how much funds are available for immediate use in an individual’s account. Available Ballance is updated by the individual’s bank continuously depending upon its transactions in a day or month. Any activity, whether the amount is debited from ATM or credited into the account or taken from the store or via online. 

All the things get updated. It doesn’t show any pending transactions. All the transactions in the available balance are clear. Whenever we open the online portal of any bank, then it will always show the column of the available balance.

An individual’s available balance is necessary, and it can be used by the customer till the time it doesn’t exceed the limit. There are special cases where available balance can get affected positively and negatively. 

Main Difference Between Current Balance and Available Balance

  1. Current Balance means the total amount in your account. Available Balance means current balance – debit.
  2. In Theory, the Current Balance should be zero. Available Balance should be available for immediate use.
  3. The current Balance includes all the pending transactions. Available Balance includes all the cleared transactions.
  4. Components of the Current Balance are Goods, Income, Services, and Current transfers. Components of Available Balance is transfer, Purchase, Deposits, Checks and withdrawals.
  5. The formula of the Current Balance is CAB=(X−M)+(NY+NCT). The formula of Available Balance is PAB = On Hand + Scheduled Receipts – Total Demand.

Conclusion

Both Current and Available Balance is the most confusing terms to use. Because a person gets confused about which term should be referred to when and where. If a person wants only one very accurate figure, then it should call it an available Balance. But if it needs to refer to all the superficial money that are pending or will be getting, then it should be termed as the current balance. If the payment comes into an individual’s account or he/she has to debit the money or withdraw it. Then they should focus on their available balance. Available Balance is considered better than Current Balance because it saves the person from using or withdrawing extra money and also saves them NSF or over-drafting fees.

References

  1. https://content.iospress.com/articles/journal-of-vestibular-research/ves00334
  2. https://ieeexplore.ieee.org/abstract/document/7829384/
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