Introduction
Nowadays, almost every individual holds a bank account for their frequent security checks of their own earned money. Now, what becomes the most important particulars to be handled while holding a bank account? It’s the key to managing the funds successfully and knowing all your transactions that are reflected in your account, like from where the money has been credited or debited. There are hundreds of transactions that occur in a person’s account every day, and it's really important to know the differences between the different areas from where it comes, like your check and cash deposits, fund withdrawals, debits, transfers, and more, and which are reflected in your accounts in the form of two types of balances namely available and posted. So, at times it gets very important for a person to be familiar with these terms as it could result in negative effects on your budgeting. Let’s start with knowing these terms and their differences,
Available vs Posted Balance
The two terms might seem confusing. But if you want to know the real amount from your account that you can spend then, it is the available balance. Posted Balance doesn't take into account any pending transactions.
Difference Between Available Balance And Posted Balance in Tabular Form
| Parameter of Comparison | Posted Balance | Available Balance |
| Definition | It refers to the total amount of money held in your account without considering any pending debits or credits. | It deducts any pending transactions, or any hold from the total balance and shows the actual amount of money you can spend. |
| Nature | Not an accurate representation of the funds you can spend | Most accurate representation of your account balance: |
| Purpose | Reflects fully processed transactions, not pending transactions. | Reflects pending transactions that haven’t been fully processed yet |
| Areas Of Involvement | Includes all processed and posted transactions | Includes all completed transactions. |
What is Posted Balance?
It is the balance that exists in the account and is available for one's use. It shows the balance that was on the last working day or the balance posted prior to the close of the day.
Let us understand this with the help of an example. Suppose, John has 250$ in his account. He has a cheque on hold of 50$ and he has spent some money for his shopping of 70$. So, his posted balance is 250-70=180$ and his available balance is 250-50-70=130$.
What is Available Balance?
We calculate this balance by deducting any hold from the posted balance. By "hold", we refer to the amount that the bank has kept as a reserve for our pending transactions that have been initiated by us.
The available balance is continuously updated in the account based on every transaction or swipe that you make.
Depending on the type of deposit, the length of time the hold lasts can vary. With a normal hold, some of the funds may be available on the same day and the remainder the next business day or two business days later.
In some cases, such as with new bank accounts or very large deposits, the bank may put what’s called an exception hold on deposits. Exception holds can last longer than normal holds — up to five business days or even longer in some circumstances. In this case, you’ll want to make sure you understand when your funds will be available before you make any debits or withdrawals.
Let’s understand this further with the help of an example: say your current balance shows $120, but you have pending transactions for $60 worth of household spends. Your available balance shows $40, but before that pending transaction clears, your mobile company automatically bills you $50. That would leave your account with a negative available balance (minus $10) even though your current balance may still reflect a higher amount.
Difference Between Available Balance And Posted Balance in Points
- The posted balance is the total amount of money in the account. But it might not all be available for spending. There might be some holds, and after the deduction of that hold amount, comes the available balance for spending.
- In case you do not have any hold, both the balance are the same.
Conclusion
In an emerging nation like India, where people are keen to devolve themselves into new technologies, it gets even more important to come out with stricter rules and regulations. It is not something that can be done within one go but will take a certain amount of time. Same is with the online apps with regards to banks and even the physical appearance where the bank terms, holding of balances is the need of an hour to be understood in a very well manner. Both of the type of accounts as stated above, are the major sources which differentiates the amount of money one holds as it gets more easy to separate the transactions and keep a check on each of your moves.