What is the difference between current balance and available credits (current balance vs available credit)?
The current balance is the total amount of money in your account, which you can always monitor through your online account. However, this may not be the accurate status of your account.
You will also see your current balance and available credit once you log into your credit card account. Now if you don’t understand the meaning of the number on your account, you might get confused about what you have spent on your credit card and what is left.
It’s important to monitor what is left on your current balance and available credit. This will help you minimise your spending.
We will be discussing the differences between current balance vs available credit and more in this article.
What Is Current Balance?
The current balance is the total amount of money currently in your bank account. Your current balance may include pending transactions such as a check that is yet to be cleared or a credit card payment.
Just so you, if there have no activity on your account for a period of one week, your current balance and your available balance might be the same. But if your account has seen a recent activity, the amount of money can spend may be different from your current balance.
Let’s say your current balance is $700, then you decide to make your $450 car payment. But you forgot that you previously made a $300 credit card payment a day prior which is still processing.
Now unless you have another deposit that clears, your bank account could be overdrawn by $50.
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What Is Available Credit?
Your credit card’s available credit is the amount of credit that you have left, which can be used for balance transfers, cash advances or purchases.
The available credit in your account is displayed on your credit card stamen or online account. It’s part of your credit limit.
It’s easy to calculate your available credit. All you have to do is to take your credit limit and subtract your current balance.
For example, let’s say your credit card has a total of $22,200 limit. If your charges total $263, you will have $21,937 in your available credit. This means that you could charge close to $21,937 more before you exceed your credit limit.
If you also have $800 in pending charge that is yet to be cleared, what will be left in your available credit is $21,137.
Expanding Your Available Credit
Sometimes your available credit may not be enough for what you intend to spend.
For example, you want to spend up to $5,000 in a statement period on a credit card with a spending limit of $2,000. What you have to do in this situation is to ask for a higher credit limit of $5,000 or higher.
If that attempt is unsuccessful, you can make a $1,000 payment to help increase your available credit.
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Credit Card Current Balance
This is the total amount you have charged to your credit card but is yet to pay. This may include cash advances, fees, purchases, balance transfers, and accrued interest but does not include pending charges.
The current balance displayed on your online account is different from the amount on your statement balance. You will get the real amount when you are looking at it on your stamen closing date.
Can I Have a Negative Available Credit?
Negative available credit indicates an amount showing that you have exceeded your credit limit. This occurs when you have a credit card that lets you spend more than your credit limit.
Generally, the minimum payment on your statement balance will comprise all the amount you have exceeded in your credit limit.
It’s possible for you to spend on a negative credit card balance. It’s easy, just use your credit card or you can ask for a cash payment.
Should I Use My Available Credit?
It’s not recommended that you use all the available credit in your possession. However, you can do that if you have the funds to pay back the full statement balance by your due date.
It’s always important for you to stay on top of your available credit, and know how much credit is in your balance to ensure you don’t exceed your credit limit.
Additionally, you should try to avoid using much of your credit limit.
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Current Balance vs Available Credit vs Credit Limit
Current balance, available credit, and even credit limit are all components of a credit card bill.
While the current balance is the amount the borrower owes on the credit card, available credit is the remaining credit after some are spent, and the credit limit is the amount of credit allocated to the borrower.
| Current Balance | Available Credit | Credit Limit | |
| Definition | The total amount a borrower owes on the credit card | If the borrower continues spending, the limit will reduce or even become 0. | The total amount of credit allocated to a borrower |
| Limit Depends on | Here, it can be as high as the credit limit. For example, if the credit limit is $1,500, the current balance can also be $1,500 or less. | To find out the number of credits available on the card | It all depends on the credit score, as the credit limit will be high if the person has a good credit score. |
| Purpose | To find the amount of credit payable to the card company | To find out the amount of credits available on the card | To determine the maximum credit allocated to a borrower |
Frequently Asked Questions
Below are frequently asked questions about Current balance vs Available credit.
Do I pay my current balance or available credit on a credit card?
Make sure you pay your statement balance by the due date. Paying your current balance gives you an advantage, as it will include your statement balance, with any charge after the stamen closing date that is not due yet.
Can I spend my current balance on a credit card?
Unfortunately no. You are not allowed to spend your current balance on a credit card.
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Will my available credit increase if I pay my current balance?
Yes! Once you pay your current balance, your available credit will increase.
Why should I use less than 30% of my credit card limit?
It’s not advisable to use more than 30% of your credit card limit. Doing that will can negatively affect your credit score.
Conclusion
The current balance is the total amount of money in your account, which you can always monitor through your online account. However, this may not be the accurate status of your account.
It’s not recommended that you use all the available credit in your possession unless you have enough funds to repay the full statement balance by your due date.
We hope this article on current balance vs available credit was helpful.
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References
- WallStreetMojo: Current Balance vs Available Credit
- Upgradedpoints: Take Control of Credit Card Debt: Current Balance vs. Available Credit
- Abs.co.nz: What is the difference between current balance, available credit and credit card limit?
