When you open your banking app or log into your account online, one of the first things you’ll see is your account balance. This reflects the amount of money in your savings or checking account that is available to spend. However, the balance shown may not factor in transactions you’ve authorized but have not yet been processed for payment, such as any outstanding checks or upcoming recurring payments.
Knowing how to read and interpret your bank account balance can help you avoid overdrafts, manage your spending, and make informed financial decisions. Here’s what you need to know about the balance in your bank account.
What Is a Bank Account Balance?
By definition, a bank account balance is the amount of funds you have available in a given financial account, such as a checking account. It represents the amount available after credits have been added and debits have been subtracted.
Your account balance can fluctuate from day to day as transactions are processed, such as deposits, withdrawals, cashed checks, and electronic payments. Checks you’ve written but have not yet been cashed and upcoming automatic payments and direct deposits aren’t generally reflected in your available balance, so you’ll need to keep that in mind when budgeting.
Bank statements will typically provide two account balances: your “starting balance,” which is how much was in the account at the beginning of the statement period; and your “ending balance,” which is how much was in your account as of the end of the statement period, after all credits and debits were calculated.
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Understanding Your Bank Account Balance
Understanding how bank account balances work, and which transactions are factored into your balance, can help prevent you from running into issues like overdrafting your account or dipping below your bank’s required minimum balance to avoid monthly maintenance fees.
Pending Charges
Pending charges are transactions that have been authorized but not yet fully processed by the bank. A bank will temporarily hold funds in your account for these charges and reduce your available balance to prevent those funds from being otherwise spent. Common pending charges include debit card purchases, ATM withdrawals, and online bill payments. While these transactions have not yet been deducted from your account, they are still considered when calculating your available balance.
For example, let’s say you have $1,000 in your account and you make a $100 purchase with your debit card. Depending on the business that charged your account, there may be a delay in their banking system connecting with yours. In this case, your bank will factor that charge into your overall account balance, and will mark the payment as “pending” or “processing,” and give you an available balance of $900.
What Happens if Your Bank Account Balance Is Negative?
If you spend more money than you have in your bank account, you can end up with a negative account balance. This can happen if an automated payment goes through and you don’t have sufficient funds to cover it or you get hit with an unexpected bank fee. A negative balance can lead to several consequences:
• Overdraft fees: If you’ve opted into overdraft coverage, your bank may cover a transaction that overdrafts your account then charge you an overdraft fee. They may charge this fee for each transaction that causes a negative balance or only one overdraft fee per day.
• Nonsufficient (NSF) fees: If you don’t have overdraft coverage and a check or electronic payment is returned due to insufficient funds, your bank may charge you a nonsufficient funds (NSF) fee.
• Account closure: Repeatedly overdrawing your account can lead to your bank closing your account.
• Difficulty opening a bank account in the future: Information about your banking activity does not typically appear in credit reports from consumer credit bureaus or impact your credit scores. However, if ChexSystems, a reporting bureau for the banking industry, has a record on file reflecting negative account balances and an involuntary closure, it could make it more difficult to open a new bank account in the future.
Balancing a Checking Account
Balancing a checking account, also known as reconciling your account, involves comparing the transactions in your own records (such as a check register, accounting software, or personal finance app) to the ones on your bank statement to make sure the balances line up, and if they don’t, finding out why. Here’s how to do it.
• Gather records: Collect your bank statement, check register, and any receipts or transaction records.
• Compare transactions: Match each transaction in your check register (or other records) with those on your bank statement. Check off each item as you go.
• Identify discrepancies: Note any transactions that don’t match or are missing and investigate them further. Be sure to account for any checks or payments that may not have cleared yet.
• Contact your bank: If you find any unauthorized or incorrect transactions, contact your bank immediately to report the issue.
• Update your records: Adjust your check register or other records for any interest earned, fees, or other transactions not previously recorded.
Account Balance vs Available Credit on a Credit Card
With your credit card, your account balance means something different. It represents the total amount of money you owe to the credit card issuer at a given time. This includes all purchases, interest charges, fees, and any other transactions that have been posted to your account.
Your available credit refers to the amount of unused credit you have left on your credit card. It is calculated by subtracting your current account balance from your total credit limit. For example, if your credit limit is $5,000 and your account balance is $1,000, your available credit would be $4,000. Available credit indicates how much more you can spend on your card before reaching your credit limit.
Recommended: Guide to Paying Credit Cards With a Debit Card
Where to Check Your Bank Account Balance
Checking your bank account balance regularly helps you stay informed about your financial status, make key budgeting decisions, and avoid overdrafts. Here are some easy ways to do it.
• Online banking: Once you set up online banking, you can log in anytime to view your account balance, recent transactions, and other account details.
• Mobile app: If you download your bank’s mobile app, you’ll be able to get an up-to-date view of your account balance and recent transactions on the go.
• ATM: You can check your account balance at an ATM by inserting your ATM or debit card, entering your personal identification number (PIN), and selecting “balance inquiry” or something similar. You’ll see your account balance, along with any recent transactions.
• Text alert: Some banks also offer low-balance alerts via text or email to keep you informed if your account dips below a certain threshold.
• Over the phone: You can call the phone number listed on your debit/ATM card, then follow the prompts to check your account balance.
• Bank statement: Whether you get paper statements or e-statements, you can use them to see your account balance as of the end of the statement period.
• At a branch: You can also check your account balance in person with a teller. You’ll likely need to provide your debit/ATM card or account number and a photo ID to get your balance information.
Recommended: What Is an Online Savings Account and How Does It Work?
The Takeaway
A bank account balance is the total amount of money available in your financial account after debits and credits have been calculated. Keeping tabs on your account balance and regularly reconciling your account can help you monitor your spending, avoid overdrafting fees, and maintain good financial health.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How do I check the balance on my bank account?
You can check your bank account balance by logging in to your bank’s online banking platform or mobile app, using an ATM with your ATM or debit card, calling your bank’s customer service number, or visiting a branch.
Does the “balance” mean I owe money?
With bank accounts, the “balance” typically refers to the amount of money you have available in the account, not what you owe. A positive balance means you have funds in your account, while a negative balance indicates you’ve overdrawn your account.
With credit accounts, such as credit cards, the “balance” refers to the amount you owe your lender.
What happens if my bank account balance is zero?
If your bank account balance is zero, you won’t have funds available for transactions. Any attempted withdrawals or payments may be declined or if you have overdraft coverage, they may go through but result in overdraft fees.
It’s important to monitor your account regularly to avoid a zero balance and ensure you have sufficient funds to cover your expenses. Some banks may also close accounts that remain at zero balance for an extended period.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
Photo credit: iStock/simonkr
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