What is an Account Balance?

An account balance is like a scale…

You can use a scale to weigh things, like food or liquid that you want to cook with. The scale starts by showing a weight of 0. The reading on the scale increases as you add things to it, and decreases as you take things off. Similarly, an account’s balance rises and falls as you deposit and withdraw money from it over time.

An account balance is the total amount of money that someone has in a financial account. Many different accounts, including checking accounts, savings accounts, certificates of deposit (CD), money market accounts, and brokerage accounts have account balances.

Account balances reflect all of the additions and withdrawals of money from the account. With some accounts, like checking accounts, these transactions happen frequently. With others, such as CDs, transactions are less common. In brokerage accounts, the balance reflects the overall value of the securities (like stocks, bonds, or mutual funds) in the account as it fluctuates.

When you open a financial account, the account usually starts with a balance of $0. When you deposit money into the account, that amount adds to the balance. For example, if you deposit $100 to an account with $0 in it, your new balance is $0 + $100 = $100. Over time, you can calculate your account’s balance by adding each dollar you’ve deposited to the account and subtracting what you’ve withdrawn from it.

Many financial institutions will send regular updates (aka account statements) to customers. These statements show the balance of the customer’s account at the start of the statement period, as well as all of the deposits and withdrawals that occurred during the period. Finally, it shows the account’s current balance based on the starting balance and those transactions.

An account balance can change in different ways depending on the type of account and transactions. Here are a few examples.

1. Checking account. Imagine John opens a new checking account and deposits $500. The account started with $0 in it, so the new balance is $500.

Over the course of the month, he receives a $1,000 paycheck, spends $600 on rent, $200 on groceries, and wins a $50 prize that he deposits into his bank account. Later, he spends $75 on a night out with friends.

At the end of the period, his account balance is:

$500 + $1,000 - $600 - $200 + $50 - $75 = $675

2. Savings account. Suppose Jane opens a savings account and deposits $1,000. She makes no further deposits or withdrawals, and leaves the money in the account to earn interest. After a year, the account earns $15 in interest. The new balance is:

$1,000 + $15 = $1,015

3. Brokerage account. Imagine Joan has a brokerage account that holds 10 shares in the fictional company Widgets Inc. and 50 shares in the imaginary business Bowling Amusements Co. At the end of the day, each share of Widgets Inc. is worth $75 and each share in Bowling Amusements Co. is worth $15.37. Her brokerage account balance would look like this:

(10 x $75) + (50 x $15.37) = $1,518.50

There are many ways to check your bank account balance.

Each month, your bank or credit union sends an account statement, usually in a letter or email. A typical statement includes:

• The balance of your account at the start of the statement period.
• Every transaction that occurred in the account over the statement period.
• The current balance of the account as of the last day of the statement period.

You can check the bank’s math if you want to make sure the current balance is correct. Use the starting balance as your starting point, then add the amount of every deposit to the account and subtract the amount of each withdrawal or expense. You should arrive at the amount listed as the account’s current balance.

In between statements, you can track your current balance by doing the same math. Use the balance listed on the most recent statement, add any money you deposited and subtract any you withdrew or spent.

Many banks make it easy for customers to check their account balance at any time. Most brick and mortar banks offer online banking services or apps that allow customers to log in from their phone and check their balance. Some people who have accounts at different institutions may use a financial tracking software to keep track of their balances across multiple accounts.

An account balance is the amount of money that is in a bank account. The available balance is the amount of money that the account holder can access from the account, either by withdrawing the money, or spending it using a debit card or writing a check.

In many cases, the account balance and available balance is the same, but there are some situations where they may be different.

One scenario is when a merchant places a hold on some of the funds in your account. If you use your debit card to make a purchase, for example at a restaurant, the restaurant may place a hold on your checking account for a small additional amount. For example, if your meal cost $20, the hold might be for $30. The extra hold is to make sure that when you add a tip for the wait staff, there is enough money in the account to cover the meal and the tip. Once the transaction clears and the restaurant knows the amount that you tipped, it releases the hold on your funds. Merchants may place holds on your account for many reasons, which can cause the available balance to be less than the account balance.

Another scenario where the account balance and available balance might differ is when someone makes a large deposit by check. Many banks have policies that release some of the funds from large check deposits immediately, but require the customer to wait a few days before they can withdraw the rest of the amount. This lets the bank confirm the check’s validity with the check writer’s bank.

For example, if you deposit a $2,000 check, your account balance will increase by $2,000 but the available balance may only increase by $200. Typically, the rest of those funds generally become available in a few business days.

When people say “account balance,” they may be referring to two different things:

• The statement balance of an account is the balance of the account at the time that the last statement was issued. Most financial companies, such as banks and credit card issuers, send monthly statements to customers so they can get an update of their account balance each month.
• Banks also track the current balance of each account. In between the sending of each statement, people generally continue using their accounts, adding or withdrawing money. To find the current balance, start with the most recent statement balance, then add all of the money deposited to the account since then and subtract the withdrawals.

In many cases, you can spend the money in your current balance, but there are some situations where not all of the current balance is available to spend. For example, if your available balance is lower than the current balance, you can only spend the available balance.

An account’s available balance may be lower than the current balance for a few reasons. One is if a merchant places a hold on some of the funds in your account. This can happen in situations where a merchant needs the bank to authorize a purchase, but does not know what the final total will be. For example, restaurants often use holds because they do not know how much a diner will tip.

Another scenario where the available balance may be lower is if you recently made a large deposit. The deposit is typically added to the current balance immediately, but many banks will hold a portion of the funds deposited for a few days to make sure the transaction clears. After a period of time, the bank removes the hold and adds the remainder of the deposit to the available balance.