What Is an Account Balance?
Let me tell you directly: an account balance is the amount of money present in a financial account, like your checking or savings account, at any given moment. It accounts for all the debits and credits that have been processed. You'll see this balance on statements for things like credit cards, utility bills, or loans as well.
Key Takeaways
Understand that an account balance shows the current value in accounts such as checking, savings, or investments. Banks provide these balances on statements or through online access. For brokerage accounts, expect the balance to shift daily with market fluctuations in security prices.
Calculating Account Balances
You calculate an account balance by taking total assets and subtracting total liabilities. In a bank setting, it's the net amount after adding all deposits and credits, then deducting charges or debits. For investment accounts, the balance varies with daily changes in security values. Other accounts, like utilities or mortgages, show what you owe as the balance. Be aware that your bank balance might not be accurate if checks haven't cleared or transactions are pending.
Examples of Account Balances
Consider this example: on a credit card, if you have purchases of $100, $50, and $25, plus a $10 refund, the balance is $165 after netting out the debits and credits. For a checking account starting at $500, adding a $1,500 deposit but with a pending $750 payment, the displayed balance might be $2,000, but the real available amount is $1,250.
Account Balance vs. Available Credit
Don't confuse account balance with available credit on credit cards. The balance is the total debt owed at the statement's start, including any carried-over amounts with interest. Available credit tells you what's left of your credit line for spending.
Frequently Asked Questions
You might wonder how to check your bank account balance—simply log into your bank's app or site, review recent transactions, or visit a branch. Accounts with balances include checking, savings, brokerage, as well as bills like utilities or loans. Available credit is your credit limit minus the current balance. And yes, you can withdraw your bank balance since it represents your available funds.
The Bottom Line
In summary, your account balance is the available funds in financial accounts like checking, savings, or investments. It can change daily in brokerage accounts due to market shifts, and bank balances might not reflect pending items yet.
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