Vested vs Current Balance in Old 401K

What’s the difference between current balance vs. available balance?

The current balance on your bank account is the total amount of money in the account. But that doesn’t mean it’s all available to spend. 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. 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.

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How to Find Your Statement Balance and Current Balance

Your statement balance is listed on your monthly credit card statement. In most cases, your lender will send this to you in the mail or electronically, if you’ve requested.

Since your current balance can change in real time, you can get the most up-to-date information by signing into your online account. 

It’s also easy to find your statement balance and current balance when using the Capital One Mobile app. After opening the app and signing in, tap the icon with your Capital One credit card. The homepage will display your current balance and available credit at the top of the screen. 

What is the Current Balance?

The current balance includes all the cardholder’s transactions in the present moment. If the cardholder charges something on the card after the billing cycle ends, it is reflected on the current balance. Likewise, your current available bank account balance shows everything that is happening now, including debit purchases you might have made in the last few minutes.

While your statement balance only changes once each billing cycle, it’s possible for your current balance to change multiple times during the day, keeping you up to date as you spend money.

What is Your Available Balance?

Your available balance is the amount of money you can access immediately and spend. If you deposit a check, that pending transaction won’t be counted in your available balance immediately, though it will be a part of your current balance. 

This occurs because banks take a few hours to a few days to verify the validity of the check you’ve deposited and transfer those funds to your account. Every bank has a different policy regarding pending transactions, though, so certainly check what your bank’s policies are so you’re aware of your available balance and how long it might take for it to become identical to your current balance. 

It is important to be aware of your available balance, though, as you don’t want to incur fees if you have insufficient funds. For example, if your available balance and current balance are identical, say $100, but you spend $25 on dinner with your debit card, your available balance now falls to $75, while your current balance remains $100.

At the same time, if you make a check for $80, the bank may pay that check, first, leaving your current balance at $20, which means you have insufficient funds to pay for dinner. Any fees incurred for this transaction will further be deducted from your account. As such, it’s important to keep these figures separate and not assume you have all of your current balance to spend when you also know you have pending transactions. 

The Statement Balance and Your Credit Utilization Ratio

Your statement balance can actually impact your credit score. This is due to the credit utilization ratio, which compares how much you are charging to your credit card in relation to your credit limit. If your credit limit is $1,000 and you spend $400 each month, then your credit utilization ratio will be 40 percent. In general, the higher your credit utilization ratio is, the lower your credit score will be.

How Statement Balance vs. Current Balance Affect Y

How Statement Balance vs. Current Balance Affect Your Credit Score

The credit utilization ratio makes up a third of your total credit score, so reducing your credit card spending in relation to the card’s limit can improve your credit score substantially. Credit bureaus will receive your statement balance each month and score it accordingly.

It is often recommended to keep your credit utilization ratio below 30 percent to help your credit score, but it’s increasingly being recommended to keep it below 10 percent.

You can improve your credit utilization ratio by doing any of the following:

  • Reduce your total credit card spending
  • Offset some charges that you would normally put on a credit card by paying with cash
  • Determine your statement balance date and pay off part of the balance before it’s reported

The credit bureaus determine your credit utilization ratio by seeing your statement balance. If you pay off enough of your balance prior to receiving the statement balance to land in the 10 to 30 percent credit utilization range, from their perspective, you were there all along.

Which Balance Should You Pay?

You can avoid paying finance charges by paying your statement balance by the statement’s due date, but only if you started the billing cycle with a $0 balance, or you paid your previous balance in full by the payment due date. This is the end of the “grace period.” You have until the end of this grace period to pay the statement balance in full to avoid a finance charge on that balance.

You may already have a finance charge added to your balance if you carried a balance from the previous billing cycle.

If You Set Up Autopay

You can set up autopay with your credit card issuer to ensure that your statement balance is paid on time each month. The payment will automatically deduct from your bank account on the date you specify. It should be on or before the payment due date.

Be sure you have enough funds available in your checking account when you set up an automatic payment. Otherwise, you'll be charged a returned payment fee if the bank rejects the payments, plus you'll end up paying finance charges because the balance wasn't paid in full by the due date.

You may still have a balance left even if you pay the statement balance if you made new charges after your statement was issued. You'll see that leftover balance plus any new transactions on your next billing statement in this case.

You can also pay the full current balance if you want to have a low or zero balance on your next credit card billing statement. Contact your credit card issuer to find out the "payoff balance" if you want to bring your credit card balance down to zero. This may include finance charges that haven't yet been added to your account.

You must pay at least the minimum to avoid receiving late payment penalties if you can’t pay the entire statement balance. Pay more than the minimum if you can. This will reduce your credit card balance faster and lessen the amount of interest you pay over time.

Why Are Your Statement Balance and Current Balance Different?

Depending on the way you use your credit cards, when you make payments and how often you check your account balance overview, your current balance and your statement balance might be different.

This is because your current balance continuously updates according to your account activity to show you purchases, payments deposits and interest even after your current billing cycle has closed.

If you’ve made a purchase since your last billing cycle closed, go online to check your account and you’ll see your current balance is higher than your statement balance.

For example, if your card’s billing cycle is between the 1st and 28th of the month and during that time you spent $1,000 on purchases, your statement balance as of the 28th will be $1,000. If then you make an additional purchase of $500 on the card on the 29th of the month, your statement balance will still be $1,000, and your current balance will be $1,500 because the additional $500 was made after your billing cycle closed.

The same is true if you were to make a payment after your billing cycle ended and did not make any other purchases. In this case, it’s likely your current balance would be lower than your statement balance.

Locked Balance

An account’s locked balance is another abstraction over it’s free balance. In this case, it is a certain amount that is locked from withdrawing for a certain reason.

The different withdraw reasons are:

  • Transaction Payment: In order to pay for (system) transaction costs.
  • Transfer: In order to transfer ownership.
  • Reserve: In order to reserve some funds for a later return or repatriation.
  • Fee: In order to pay some other (higher-level) fees.

So if an account has a lock for 100 units with WithdrawReasons::Transfer, it cannot make a transfer which brings its free balance lower than 100 units. However, this account will be able to perform another operation like reserve taking its free balance below 100 units. A lock can have multiple reasons associated with it, in which case, those funds can only be spent for the other reasons.

Multiple different locks can be placed on an account, but these locks overlay one another rather than stack. This means that if an account has 3 locks for 100 units, the account can spend it’s funds for any reason down to 100 units, at which point the locks will start to come into play.

Locked balance also overlays with vesting balance as these two are checked independently, but both checks must pass for ensure_can_withdraw to be successful.

From the terminology section:

Reserved Balance: Reserved balance still belongs to the account holder, but is suspended. Reserved balance can still be slashed, but only after all the free balance has been slashed. If the reserved balance falls below the existential deposit then it and any related functionality will be deleted. When both it and the free balance are deleted, then the account is said to be dead.

Relatively speaking, reserved balance is more simple than free balance because there are no abstractions over it. Funds which are reserved from a user are not meant to be directly touched by any other logic outside of the balances module. Instead, funds should first be unreserved and then modified in the free_balance.

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Which balance should I rely on when making payments?

If you have a payment or transfer coming out of your account soon, or you plan to use your debit card or make a withdrawal, look at your available balance to determine how much money you actually have to use.

Using the available balance instead of the current balance can help reduce the chance of overdrawing your account, which could trigger overdraft fees and possibly NSF fees.

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