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What is an 'Account Balance'

An account balance is the amount of money in a financial repository, such as a savings or checking account, at any given moment. It can also refer to the total amount of money owed to a third party, such as a credit card company, utility company, mortgage banker or other type of lender or creditor. The account balance is always the net amount after factoring in all debits and credits. Debts can sometimes be considered negative account balances; for example, when there is an overdraft on a checking account.

BREAKING DOWN 'Account Balance'

The following is an example of an account balance with a credit card: A person may have made various purchases of $100, $50 and $25, and returned another item costing $10. The account balance includes the purchases he made, which total $175, but also the item he returned for $10. The net of the debits and credits is $165, or $175 minus $10, and that amount is the account balance.

Finding Your Account Balance in Banking

In banking, the account balance is the amount of money an individual has available in his checking or savings account. The account balance is the net amount available to the person after all deposits and credits have been balanced with any charges or debits. Sometimes an account balance does not reflect the most accurate representation of an individual's available money, due to pending transactions or checks that have not been processed.

For example, if a starting checking account balance is $500, and the account holder received a check for $1,500, and also wrote a check or scheduled an automatic payment for $750, then his account balance might show $2,000 immediately, depending on the banking establishment. However, the true account balance is $1,250. It is important to keep track of account balances by recording every credit or debit to ensure the most accurate picture of the account.

Balance in Accounting

In accounting, the account balance shows the net worth of assets and liabilities within the accounting period. Sometimes this can be referred to as an individual's or firm's net worth or total wealth because it subtracts any debts or obligations from positive sums.

The Difference Between Account Balance and Available Credit

For credit cards, account balances are the total amount of debt owed at the start of the statement date. The account balance on a credit card also includes any debt rolled over from previous months, which can be liable for interest charges. Available credit is the term used alongside the account balance to indicate how much credit line the account holder has left to spend. For some bank accounts, deposits may not clear in whole or in part immediately, and may take up to a few business days to show up in your account. In such situations, the bank will usually indicate to you the available balance and that unavailable amount that is waiting to clear.

Finding Your Account Balance for Other Accounts

Many other financial accounts also have an account balance. Everything from a utility bill to a mortgage account needs to have an account balance to show an individual consumer the balance of his account. For financial accounts that have reccurring bills, such as a water bill, the account balance usually shows the amount owed.

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