An account balance is the amount of money in a financial repository, such as a savings or checking account. It factors in all debits and credits, providing a clear picture of your financial standing at any given time. Account balances are also evident on billing statements for credit cards, utilities, and loans.
Key Takeaways
- An account balance represents the current value of a financial account, including checking, savings, or investment accounts.
- Financial institutions provide account balances on both paper statements and online platforms.
- For investments in brokerage accounts, an account balance may fluctuate daily with market changes.
Calculating Account Balances
An account balance reflects total assets minus total liabilities. It indicates the net amount available after balancing all deposits and credits against charges or debits.
In brokerage accounts, account balances can change daily as security prices vary in the market. Similarly, utilities and loan accounts also have balance amounts that show the remaining or owed amounts.
A bank account balance might sometimes be inaccurate if a check is pending or if a transaction has not yet been processed.
Enhanced Examples of Account Balances
Example 1: Credit Card
Consider a credit card with purchases of $100, $50, and $25, then a $10 returned item. The total spending of $175, minus the returned item, results in a net balance of $165.
Example 2: Checking Account
For a checking account, if you start with $500, receive a $1,500 deposit, and have a scheduled $750 automatic payment, the immediate balance might show as $2,000. However, your real balance after the automatic payment is $1,250.
Account Balance vs. Available Credit
On credit cards, account balances represent the total debt owed as of the statement date, including any rolled-over debt with interest. Meanwhile, available credit indicates the unused portion of the credit line, calculated by subtracting the account balance from the credit limit.
Checking a Bank Account Balance
To check account balances, holders may log into their bank’s app or website for real-time updates or visit their local branch for assistance.
Types of Accounts with Balances
Checking, savings, and brokerage accounts all hold balances. Additionally, expense accounts like utility bills, mortgage loans, and credit cards have balances indicating the owed amounts.
Understanding Available Credit
Available credit refers to the remaining amount on a credit line after subtracting the account balance from the credit limit.
The Bottom Line
An account balance is a crucial indicator of available funds in financial accounts, whether in checking, savings, or investment accounts. In brokerage accounts, balances can vary daily with market fluctuations. Pending transactions can cause temporary inaccuracies in bank account balances.
Related Terms: available credit, billing statements, debits, credits, security prices
