Key Takeaways
- Available funds are money you have to spend, withdraw, or use to pay bills.
- When opening a bank account, it's important to be aware of the funds availability policy so you know when you'll be able to withdraw the money you deposit.
- Available funds can also apply to investment accounts, retirement accounts, and borrowing.
- Available funds and your account balance or current balance may differ.
How Available Funds Work
When funds are available, this simply means you have the ability to use that money in some way. As you complete any of the transactions listed above, your available balance decreases. Your available balance can increase as you make new deposits. You can view your available balance by logging into online banking or your mobile banking app.
If you spend more money than what you have in available funds, that could put your account into overdraft. When that happens, you may be charged one or more overdraft fees until you deposit enough money into your account to bring the balance back into the positive.
Note
Enrolling in your bank's overdraft protection program can help you to avoid high overdraft fees.
Types of Available Funds
Available funds are money that's available to you for some purpose. How this works can vary, based on the situation. As mentioned, you can have available funds in a bank account. However, you may also have available funds in other scenarios.
For example, say that you need to take out a personal loan to pay for an unexpected expense. You apply for a loan online and are approved for $15,000. That $15,000 represents your available funds or the amount you'll pay back to the lender, along with any applicable interest and fees.
Lines of Credit
Available funds or available credit work differently with revolving credit lines. For example, say you have a credit card with a $5,000 limit. You currently have a $2,500 balance on the card. That means the available funds that you can make new purchases against is $2,500. You may have a separate amount that you can use to take cash advances.
Investment Accounts
You can also have available funds when investing for retirement. If you have a 401(k) at work, for example, your available funds can be determined by your plan's vesting schedule. Vesting refers to a process by which you become the owner of the funds in your account, including your original contributions, employer matching contributions, and earnings. Available funds would be the money you could withdraw or borrow against if your plan allows 401(k) loans.
Note
You are always 100% vested in the money you save in an individual retirement account (IRA).
Bank Accounts
Your available funds or available balance in a bank account excludes any pending transactions or check holds. Checks you've written that haven't been cashed, debit card purchases that haven't cleared, or deposits that have yet to post to your account are not included in your available funds—but they can be included in your total account balance.
Your available funds may be less than your actual account balance. This can happen if you have debit transactions that haven't been posted or deposits that haven't cleared. Banks and credit unions can establish funds availability policies in accordance with federal regulations that determine when deposits will clear.
Under federal Regulation CC, these deposits must be made available on the first business day following the banking day of deposit:
- Cash
- Electronic payments, including ACH and wire transfers
- U.S. Treasury checks deposited at a branch or ATM
- U.S. Postal Service money orders deposited at a branch
- Federal Reserve Bank and Federal Home Loan checks deposited at a branch
- State or local government checks deposited in person if the payer and the payee are in the same state
- Cashier's, certified, or teller's checks deposited in person
Generally, you can access up to $200 from checks deposited in person at a teller the next day. Anything above $200 would be available the second business day. Deposits must be made by 2 p.m. to be included in that business day's transactions. Deposits received after 2 p.m. are processed the next business day.
Note
A different funds availability timetable may apply to deposits made using remote deposit capture through your mobile banking app.
It's possible, however, that you could be waiting a little longer for funds to become available after depositing money to your account. Banks can impose longer deposit hold times if:
- You're depositing money into a new account
- Your past account history includes multiple overdrafts
- A deposit is greater than $5,000
- Deposits are made at ATMs that are not owned by your bank or credit union
- The bank believes there's a strong likelihood that deposited check may be uncollectible
- You're redepositing a check that was previously returned unpaid
For example, say you sell your car to a private buyer. The buyer gives you a cashier's check for $10,000 to complete the purchase. Following federal guidelines, the first $200 of the check would be available to you the next business day. However, the bank can hold the remaining $9,800 for up to seven business days to ensure the check will clear before releasing the funds to you.
Some banks and mobile banking apps allow you to get paid up to two days faster when you sign up for direct deposit of your paychecks.
FAQs
Available funds are money in a bank account that is accessible for immediate use. In other words, it represents the total amount of capital that can be withdrawn at an automated teller machine (ATM), used to make purchases with a debit card, write a check, transfer money and pay bills.
What is an example of available funds? ›
For example, say you have a credit card with a $5,000 limit. You currently have a $2,500 balance on the card. That means the available funds that you can make new purchases against is $2,500. You may have a separate amount that you can use to take cash advances.
What is the difference between available funds and balance? ›
In a checking account, the available balance is the amount of money that the account holder can withdraw immediately. The current balance, by contrast, includes any pending transactions that have not yet been cleared. The bank will honor any withdrawal or payment you make up to the available balance amount.
What is the meaning of fund availability? ›
Funds availability refers to when you can access money that you've deposited with your bank to pay bills, make purchases and cover everyday expenses. With some exceptions, money that you add to your checking account or savings account isn't always available to use right away.
What does total available funds mean? ›
Your available balance is the amount of your current balance that is available for immediate use. Certain pending transactions, such as deposits that contain checks or withdrawals that have not yet posted, may not be included in the available balance.
What are immediately available funds? ›
Immediately Available Funds The term "Immediately Available Funds" denotes a corporate or personal check drawn on a bank account and funds which are available for use by the receiving party on the same day on which they are received and include U.S. Federal Reserve bank wire transfers, U.S. Federal Reserve notes (paper ...
What are three types of funds? ›
The Generally Accepted Accounting Principles (GAAP) basis classification divides funds into three fund categories: governmental, proprietary, and fiduciary.
Why is my available funds more than my balance? ›
Overdraft Protection Makes Your Available Balance Higher Than Your Bank Account Balance. If you have overdraft protection on your account, your available balance will be higher than your bank account balance. However, you don't need to spend your overdraft.
Can you spend money from available balance? ›
What does available balance mean? Your available balance is the amount of money in your account, minus any credits or debts that have not fully posted to the account yet. This is the amount of money you can spend, but it may fully reflect the money you have at your disposal.
What does available funds mean on bank account? ›
Available funds are money in a bank account that is accessible for immediate use. In other words, it represents the total amount of capital that can be withdrawn at an automated teller machine (ATM), used to make purchases with a debit card, write a check, transfer money and pay bills.
Two business days. That's the average amount of time it takes before the money you dropped into your checking account is actually available to you. But that's just the average—depending on the type of deposit you make, you could access your money immediately, or you may have to wait longer than just two days.
When funds become available? ›
Funds deposited electronically or by cash are generally available by the business day after the banking day they were deposited. Review your deposit account agreement for policies specific to your bank and your account.
What happens when funds are not available? ›
When you cash or deposit a check and there's not enough funds to cover it in the account it's drawn on, this is also considered non-sufficient funds (NSF). When a check is returned for NSF in this manner, the check is generally returned back to you. This allows you to redeposit the check at a later time, if available.
Why are my available funds less? ›
Your available balance is your current balance minus any holds or debits that haven't yet been posted to the account. If you have no holds or pending transactions, the two balances are likely the same. But if you use your debit card regularly or you recently deposited a large check, the two balances may be different.
Why is my available balance so low? ›
Not-Yet-Available Funds
The rest of the money is being held by your bank. This generally happens for two reasons, resulting in a low available balance: You've made deposits that haven't cleared and been credited to your account yet. There are pending withdrawals or authorizations against your account.
What is the difference between collected funds and available funds? ›
What is the difference between Collected, Current & Available balance? Print. The Collected balance is your ending balance as of the previous business day. The Current balance is the amount available for cash withdrawal, and the Available balance is the 'real-time' balance reflecting all memo posted items.
What is total funds vs available funds? ›
Some of the funds included in your current balance may be from deposits you made or checks you wrote that haven't cleared yet, in which case they're not available for you to use. Your available balance is your current balance minus any holds or debits that haven't yet been posted to the account.
How do you calculate available fund balance? ›
Fund Balance = Assets – Liabilities
Fund Balance is the total accumulation of operating surpluses and deficits since the beginning of a local government's existence.
