You might find that you have several balances, including an "available" balance, when you check the status of your bank account, and the amounts of these balances can differ. Your available funds can sometimes be less than your actual account balance.
Your Available Funds
Your available balance is the amount you can spend right now. You can think of it as "funds available to withdraw." You can use the money in several ways.
- You can take that amount out of your account in cash, either at an ATM or with a bank teller. You can even withdraw cash at other credit unions nationwide if you use a credit union that participates in Shared Branching.
Shared Branching is a network formed by more than 5,000 participating credit unions allowing members to transact banking business at any of them.
- You can spend with your debit card. Your card pulls from your checking account, so you can only use it if you have available funds there. Swipe or insert your card at a card reader, or make purchases online.
- Checks are also funded from your checking account. You should assume that the funds are no longer available as soon as you write a check, even if your bank says you still have that money. It can take several business days—or longer, if your payee waits to deposit the check—for the transaction to appear in your account. Meanwhile, that money isn't really "available." This is something you should keep of. It's easiest if you use a check register or balance your account regularly.
- Available funds can be used for online bill payment, whether you create the payment from your bank or your biller asks your bank for the money. Be sure to keep enough money on hand so your balance is sufficient if your billers pull from your account automatically.
Sometimes you’ll see an available balance that’s less than your account balance. You can only spend your available balance in this case, or less if you have outstanding checks. The rest of the money is being held by your bank.
This generally happens for two reasons, resulting in a low available balance:
- You've made deposits that haven't cleared and been credited to your account yet.
- There are pending withdrawals or authorizations against your account.
Deposits Not Credited
Your bank might not allow you to use the money immediately when you deposit checks into your account. They don’t know whether the payment is legitimate, and the money takes several days to transfer from the payee's bank to yours.
You can generally use up to $200 by the next business day, and some banks let you use your money more quickly, especially if you’re a longtime account holder with no history of depositing bad checks. Government-issued checks such as tax refunds might also be available more quickly. But others, such as personal checks and checks from overseas, are riskier, and banks take longer to release these funds.
Banks will even hold cashier's checks for a few extra days in some cases.
This can be inconvenient, but these holds can protect you. You're responsible for any funds that have been spent if that check you deposited ultimately bounces. You'll have to replace the money in your bank account and pay fees to your bank if you spend the money from a bad check
You might also end up bouncing checks of your own and racking up fees if the check you deposited isn't honored and doesn't clear. Not granting you access to this money right away allows your bank a chance to make sure the check is good.
Wait a while before you spend the money if you have any doubt about a check, even if your bank doesn't put a hold on it.
Pending Withdrawals and Authorizations
Funds can be unavailable to you because the bank knows that the money is already spoken for if you've scheduled an upcoming payment through your bank's online bill pay feature. The same is true when you swipe your debit card. That money is typically deducted from your balance immediately.
Debit cards can be especially troublesome because merchants sometimes charge more than you're actually going to spend. This happens most often at gas stations, rental car agencies, and hotels. Some places simply authorize $100 or more every time you swipe your card, and that money can be tied up for several business days until the hold is released.
It's helpful to know how much is potentially available after all those holds go away, even if you can't spend that money immediately.
You might find an "account balance" or "running balance" noted on your account in addition to your available balance. These balances include all your money—all available funds as well as funds that are being held.
You can always balance your account yourself if you want to double-check your bank's math. It's a good way to track your spending and catch any identity theft issues before they get out of hand, in addition to helping you catch mistakes.
You’re often protected from errors and identity theft, but you have to act quickly to get the full protection available under federal law.
How to Avoid Cash Crunches
Receiving your paychecks by direct deposit gets money into your account quickly. Sign up for electronic payments, if possible, so the money goes directly from your employer’s bank account to yours. You won't have to wait on the check, especially if it goes through the mail, and you don’t have to go out of your way to deposit it.
The money might even hit your account a day or two before the checks are printed, and some banks offer same-day availability for these payments.
Keeping a cushion in your account can protect you from unexpected expenses and delays. A small cash buffer can help avoid problems if a payment doesn't clear when you think it will or at all, or if your bank puts a larger-than-expected hold on your funds.
Look into overdraft protection if you can't manage a buffer, but only sign up if you’re going to use it as a safety net—don’t make a habit out of paying the associated fees. Use a less expensive overdraft line of credit if possible.