Banking – Differences of Current and Available Balance

Have you ever been stressed by the differences of current and available balance? If you have been, you are not alone we are in the same boat. This is something that has really troubled me for years. At one point i was so frustrated and i had to call the bank in anger.

I was expecting a certain amount only to find I was owing to the bank due to the differences in the current and available balances. After a couple of research and googling here is what i came to understand.

What is a Current balance?

Your current balance is the sum of money that you have in your account at the start of the current business day and doesn’t reflect any pending payments, deposits, withdrawals or other uncleared transactions.

What is an Available balance?

Your available balance, on the other hand, is your current balance minus pending payments, withdrawals, debit orders, deposits or anything else that may not have cleared as yet.

Based on these definitions, we can see that although the difference is quite subtle, these balances are not the same thing. It will usually be the case that your current balance is higher than your available balance and this can stress some people out, as they wonder where the discrepancy is coming from.

To be practical lets look at a simple example:

You go into China Mall or Mukuba Mall and do some shopping in game. At the till instead of cashing out you opt to use the point of sale with the card machine where you pay your bill of 1,500 kwacha using the debit card.

Despite you receiving a phone notification that a transaction has been done on your account the amount of 1500 kwacha will be instead reserved from your available pool of funds in your account pending approval and clearance.

Meaning if you had 10,000 Kwacha in your account your current balance would be 10,000 kwacha but your available balance will reflect the original funds Current Balance minus the Pending Amount of 1,500 Kwacha which was reserved when you swiped at the point-of-sale.

So this will give you an available balance of 10,000 – 1500 = 8,500 Kwacha. that is

Current Balance – Pending Payment(s) = Available Balance

The real confusion comes from the amount of time it takes for this discrepancy to be resolved. Some outlets take as much as 4 days especially done on a Friday. This depends on a number of factors that can include:

• The bank the restaurant uses
• Whether their card machine transactions are processed automatically
• How often said transactions are processed, etc.

But once the payment is fully approved and cleared, your current and available balance will once again level out and reflect your new balance of K8,500.

I hope the differences of current and available balance are close;y understood now. Because of the confusion, it’s a good idea to always use your available balance, rather than your current balance as the true indication of your available funds to ensure you’re not spending more than you have.

Ultimately on myself to help me eradicate this confusion i have been cutting down on the number of card swipes and have sought alternative transactions that reduce my balance immediately. e.g

Unless for larger transactions that require large movement of cash then I will opt for the swiping and use of the Visa debit card.

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