Key Takeaways
- Available funds refer to money in your bank account that you can immediately use.
- Your account balance includes any payments that are pending. If you’re checking your account to see whether you have enough money to cover a payment, your available funds amount is a safer number to rely on.
- When a deposit becomes available depends on factors like the type of deposit, the time of the deposit and where the deposit is made.
Overdrawing on your bank account or writing checks that end up bouncing is a hassle and can cost you a ton in fees. To avoid such situations, you should go beyond just peeking at your current balance – you should verify how much you have in available funds.
An available balance, or available funds, refers to how much money you have to work with at a particular point in time. So while your balance might include a check amount that you deposited that morning, those funds are not actually available until the check clears. Therefore, if you try to spend more than is in your account using your debit card, or if an automatic payment is set to come out and you don’t have enough available funds to cover it, your bank may charge you an overdraft fee.
Are Available Funds the Same Thing as Account Balance?
When you log in to your checking account online, you’ll probably see two figures: account balance and available balance. On some days, these numbers might match, but if you’ve got an active account with a lot of transactions being made, your available funds and account balance will likely differ much of the time.
Available funds in your bank account are accessible for immediate use, says Mark Sanchioni, chief banking officer for Ridgewood Savings Bank in New York. “It is the amount of money that can be withdrawn at an ATM or used to make purchases with a debit card, write a check, transfer money and pay bills.”
Account balance, or current balance, is different since it also includes any payments that are pending. “Until these incoming and outgoing items are cleared, or made available, by a bank, customers are unable to conduct transactions with them,” Sanchioni says.
Not accounting for pending transactions, such as a check you’ve deposited that still hasn’t cleared or a payment you’ve made that hasn’t posted, may give you a false sense of the amount of cash you actually have on hand. That’s why your available funds amount is safer to rely on since it shows how much is in your account at a given moment.
When Do Deposits Become Available Funds?
A deposit’s availability depends on many factors, including the type of deposit, the time of the deposit and where the deposit is made, says Jaspreet Chawla, senior vice president of Savings Products at Navy Federal Credit Union. “Additionally, certain deposits may have temporary holds placed on them, which only allow some funds to be immediately available for use.”
Transactions such as ATM withdrawals and debit card purchases generally post to your account immediately and will be reflected in your available funds. But other deposits or payments may take longer.
Under federal Regulation CC, certain kinds of deposits have to be available the next business day, including cash, ACH transfers, some kinds of checks (government, cashier’s or certified checks, for example) and the first $225 of any check. Other types of funds should generally be available by the second business day, but there could be some exceptions.
“While every bank must comply with Regulation CC, which governs funds availability, not every bank chooses to hold items for the maximum time allowed, so customers can see different experiences from one financial institution to another,” Sanchioni says.
Individual banks may also choose to place longer holds in some cases. For example, a deposit can take longer to clear if you’re a new account holder, you have a history of being overdrawn or the check is over $5,525.
Can You Get Available Funds Faster?
In some cases, you might benefit from having faster access to funds that you deposited, so it’s good to know your options.
One route to consider is to pay a fee for immediate access to the money. FastFunds from TD Bank, for example, lets a check be processed immediately, but the bank gets a 2% fee.
Another way to speed up the availability of funds is to take a check to the issuing bank and cash it. Then, you can deposit that cash into your bank, and it will be available no later than the next business day.
Finally, if you get paid via direct deposit, some banks may offer access to your paycheck up to two days early, as Capital One’s 360 Checking does. Navy Federal’s Free Active Duty Checking account also provides early access, says Chawla.
If you need funds fast, your best bet is to call your bank’s customer service to go over your options. “Consumers should check with their financial institution’s funds availability schedule to see which incoming payment methods are made available faster than others,” says Sanchioni.
