S really simple stupid banking question

Factual Questions
1

OK, so I recently opened a new bank account, and have been bad at writing down all my purchases, debit card transactions, etc… into the register. Now, I never use to do this with my old account either, but with that one I used it infrequently, so it was easy to keep track of in my head when there was one or two purchases a week, tops. Now I’m writing checks here and there for rent, utilities, etc…and using my debit card a lot. So, to check my balance, I used the online banking. Well…this confused me more. For one, it doesn’t show my first few transactions, cause I did them before setting up the online banking, so as far as the online banking is concerned, though don’t exist. The balance, of course, still relfects them happening, I just don’t get to see when/where the happened until I get a maield statement.

The confusing part: On my online balance, there are TWO balances!? :eek:
One is the “current balance” and the other is the “available balance.”

Now, logically, my “available balance” sounds like the actual amount of money I could spend in one day, and not go over my amount. It might not relfect my most recent credits and debits, so it’s put a little lower than the “current balance,” which one might expect to be the amount I have, assuming all pending transactions go through just fine, right? Well, I don’t think that’s how it works. Here’s the desription it gives for each one:

So to me, this reads thusly: current balance is the amount you have as of yesterday (or last posting cycle)
Available balance is the amount that you have added or removed from the account that we haven’t done anything with yet.

Is this right? Am I reading this properly?

Now, let’s assume my current balance is $987.55, and my available balance is $972.60.

How much money do I actually have? As said, I can’t just run through the transactions it lists to tally it up, cause not all of them are shown. Does this mean that, assuming I do nothing with my account and let the “available balance” clear, I will have $1960.15? That can’t be right, cause I KNOW I haven’t put that much money into the account. Does it mean I really have $14.95? That also seems wrong cause I’m pretty damn sure I have more than that!

Does it just mean what I originally thought it mean, that I have, in effect, just what the available balance says? And, in time, that will all clear and the two balances will be equal?

This is a pretty important thing for me to know, cause it will determine if I can buy anything before my next paycheck.

2

Current Balance is the amount after accounting for all posted transactions. Available Balance is the amount you have available to you for withdrawal. The reason the two numbers differ is because the Current Balance reflects transactions which have posted, but not been verified. Once these transactions have been verified (a deposited check clears the issuing bank, for example) they become part of your available balance.

3

Here’s an example:

Let’s say I have $100 in my account. I go to the bank and deposit a check for $50, then when I return to my desk I check my balance online. My Current balance will now reflect $150, however my available balance will only be $100. Why? Because my deposit check has not yet cleared and is not available to me.

4

As the description says, Current Balance reflects everything that has been processed and verified by the bank, and Available Balance adds to that items that have been entered into the pipeline but not yet completely processed and verified.

The conservative approach is to assume that you have the lesser of the two available to spend at any given moment. However, if you’re mailing a check to Lake Lillian, MN and need money that has been deposited but not yet processed (i.e. your Available Balance is higher than your Current Balance) to cover it, you should be OK.

5

Er, according to the descriptions in the OP, you seem to have the labels bass ackwards (but are otherwise correct).

6

Whoops… Must. Type. Slower. :smack:

7

OK, that’s pretty much what I thought…their wording was just confusing the Hell out of cause I don’t speak Bankenese.

8

Just to complicate things, often (well, at least at my (major) bank it’s this way), the first $100 of a deposit is immediately available.

E.g., I have $1000. I deposit a check for $500 at the ATM. Here’s what the receipt will say: current balance: $1500. available balance: $1100.

In contrast to what previous posters said, the current balance is not the verified balance (at my bank). The *available balance is the verified balance (plus the $100 freebie).

9

Even if the transactions took place before you set up online banking, they should be there. Most online banking systems default to showing only one month or two months worth of transactions. At the top of the screen there should be some settings to adjust the date ranges of transactions which will display. Try setting it back to the time you opened the account.

10

The first and second sentances are correct. The third sentance is correct for deposit transactions, but not for debit or check card transactions.

Here’s how it works: “Current Balance” is the amount of actual, verified, honest to goodness money they are currently holding for you. Imagine as if they were an all-paper bank, and Current Balance is the actual number of bills they have on hand in your name.

“Available balance” is what you can spend. It does not include deposits pending, but it does include visa transactions pending, because when the retailer runs your card to verify available funds, it puts funds “on reserve,” meaning the bank earmarks that money for the retailer, but technically, it’s still in your account earning interest. (At least for them if not for you.)

A retail sale like a grocer will do a reservation of funds for exactly the transaction amount. Most gas pumps do a reservation of $1, so beware of that. And never use a check card at a rental car counter or hotel, because even if they take it, they do a reservation of funds for far more than the expected transaction amount, just to cover their risk; it ties up that extra money for several days.

Now, for an example of the difference between “Available” and “Current” balances: In our hypothetical “All-paper Bank” let’s say you have a balance of $100. There’s been no activity for over a month, so there are no transactions pending. You go to the bank and deposit a $100 check. And you go to the grocery and write a $5 check. Your current balance doesn’t change, but you know that if you went to the bank and withdrew everything they had on hand for you, but left enough to cover your outstanding check, you’d have $95. Since the deposited check didn’t clear yet, and your bank is still waiting for the other back to send the bills, that $100 is not on hand for you yet. So your “Available Balance” is $95. But your drawer has $100 in it, which is still the “Current Balance.”

Now, add debit cards and visa check cards and all the modern wonders of finance back in, and it works the same way. The difference is now that this stuff is all kept track of by numbers in databases, and your visa transaction reservation of funds are all transmitted and recorded instantly.

11

A typical reserve taken by a hotel or car rental on a debit card is $500. And, when you check out / return the car, it usually takes several days for the hold to be released. Big ol’ pain.

12

Trust me, I tried this. I set the thing to go back to June (before I opened the account) and I get nothing. Now that I look at it, I think the only transaction it isn’t showing is my inital deposit upon opening the account. Anyways, I’ll be able to verify this when I get my next statement in the mail.

13

Here’s a link describing Regulation CC in more detail:

http://www.federalreserve.gov/pubs/regcc/regcc.htm

14

For the record, your bank HAS to make that first $100 of your deposit available to you in the bulk of situations… due to Federal Reserve regs. There are exceptions, because apparently ALL bank regulations have exceptions.
www.bankersonline.com has tons of good stuff on this.

15

Not quite, as far as the banks records are concerned. I start out with a $100 balance. There are no pending transactions. I deposit $100. My current balance is $200 and my available balance is $100 (they won’t let me spend the $100 that hasn’t yet cleared). I then write a $5 check to the grocery store. That check doesn’t change either balance on the bank’s books until it is presented at the bank for payment,(How could it? They don’t know I wrote it until they get it) and then it will affect both balances. This is part of the reason why checkbook register balances don’t match up with online balances- you deduct the check from the register balance when you write it, but the bank doesn’t deduct it until it arrives for payment.

16

Well, that’s why I wrote:

The point was a hypothetical example to illustrate what “Available Balance” meant, not a precise analysis of how banks books are kept.