If you spend more money than what you have in available funds, that could put your account into overdraft. When that happens, you may be charged one or more overdraft fees until you deposit enough money into your account to bring the balance back into the positive.
Types of Available Funds
Available funds are money that’s available to you for some purpose. How this works can vary, based on the situation. As mentioned, you can have available funds in a bank account. However, you may also have available funds in other scenarios. For example, say that you need to take out a personal loan to pay for an unexpected expense. You apply for a loan online and are approved for $15,000. That $15,000 represents your available funds or the amount you’ll pay back to the lender, along with any applicable interest and fees.
Lines of Credit
Available funds or available credit work differently with revolving credit lines. For example, say you have a credit card with a $5,000 limit. You currently have a $2,500 balance on the card. That means the available funds that you can make new purchases against is $2,500. You may have a separate amount that you can use to take cash advances.
Investment Accounts
You can also have available funds when investing for retirement. If you have a 401(k) at work, for example, your available funds can be determined by your plan’s vesting schedule. Vesting refers to a process by which you become the owner of the funds in your account, including your original contributions, employer matching contributions, and earnings. Available funds would be the money you could withdraw or borrow against if your plan allows 401(k) loans.
Bank Accounts
Your available funds or available balance in a bank account excludes any pending transactions or check holds. Checks you’ve written that haven’t been cashed, debit card purchases that haven’t cleared, or deposits that have yet to post to your account are not included in your available funds—but they can be included in your total account balance. Your available funds may be less than your actual account balance. This can happen if you have debit transactions that haven’t been posted or deposits that haven’t cleared. Banks and credit unions can establish funds availability policies in accordance with federal regulations that determine when deposits will clear. Under federal Regulation CC, these deposits must be made available on the first business day following the banking day of deposit:
CashElectronic payments, including ACH and wire transfersU.S. Treasury checks deposited at a branch or ATMU.S. Postal Service money orders deposited at a branchFederal Reserve Bank and Federal Home Loan checks deposited at a branchState or local government checks deposited in person if the payer and the payee are in the same stateCashier’s, certified, or teller’s checks deposited in person
Generally, you can access up to $200 from checks deposited in person at a teller the next day. Anything above $200 would be available the second business day. Deposits must be made by 2 p.m. to be included in that business day’s transactions. Deposits received after 2 p.m. are processed the next business day. It’s possible, however, that you could be waiting a little longer for funds to become available after depositing money to your account. Banks can impose longer deposit hold times if:
You’re depositing money into a new accountYour past account history includes multiple overdraftsA deposit is greater than $5,000Deposits are made at ATMs that are not owned by your bank or credit unionThe bank believes there’s a strong likelihood that deposited check may be uncollectibleYou’re redepositing a check that was previously returned unpaid
For example, say you sell your car to a private buyer. The buyer gives you a cashier’s check for $10,000 to complete the purchase. Following federal guidelines, the first $200 of the check would be available to you the next business day. However, the bank can hold the remaining $9,800 for up to seven business days to ensure the check will clear before releasing the funds to you. Some banks and mobile banking apps allow you to get paid up to two days faster when you sign up for direct deposit of your paychecks.
