What Is an Account Balance?
An account balance is the amount of money in a financial repository, such as a savings or checking account. The account balance factors all debits and credits. An account balance is also evident on billing statements for credit cards, utilities, and loans.
Key Takeaways
- An account balance represents the current value of a financial account, such as a checking, savings, or investment account.
- Financial institutions provide account balances on paper statements and online.
- For investments in brokerage accounts, an account balance can change daily as security prices rise and fall in the market.
Calculating Account Balances
An account balance reflects total assets minus total liabilities. In banking, the account balance is the money available in a checking or savings account. The account balance is the net amount available after all deposits and credits have been balanced with any charges or debits.
For investments in brokerage accounts, an account balance can change daily as security prices rise and fall in the market. Other accounts have an account balance, such as a utility bill or a mortgage loan. The account balance for these accounts shows the amount owed.
A bank account balance can be inaccurate if a check has yet to clear the bank or a pending transaction has not yet gone through.
Examples of Account Balances
For a credit card, various purchases may include $100, $50, and $25, and a returned item that costs $10. The account balance includes the purchases, which total $175, and the item returned for $10. The net of the debits and credits is $165, or $175 minus $10, which is the account balance.
For a checking account, if the starting balance is $500, and a check is received for $1,500, but an automatic payment is scheduled for $750, the account balance might show $2,000 immediately, but the account balance is $1,250.
Account Balance vs. Available Credit
For credit cards, account balances represent the total amount of debt owed at the start of the statement date and include any debt rolled over from previous months with interest charges. Available credit is the term used alongside the account balance to indicate how much of the credit line is left to spend.
How Can Individuals Check a Bank Account Balance?
Account holders can check balances by signing in to their bank's app or website and looking at their latest transactions or by visiting the local branch and speaking with a representative.
What Kinds of Accounts Have Account Balances?
Checking, savings, and brokerage accounts all have account balances. However, expenses like utility bills, mortgage loans, or credit cards also have account balances.
What's Available Credit?
Available credit refers to the amount remaining on the credit line. The available credit can be determined by subtracting the account balance from the credit limit.
The Bottom Line
An account balance represents the available funds in a financial account, such as a checking, savings, or investment account. An account balance in a brokerage account can change daily as security prices rise and fall in the market. A bank account balance can be inaccurate if pending transactions exist.
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In the article discussing "What Is an Account Balance," the concepts covered are fundamental to understanding the financial landscape. Let's break down the key concepts used in the article:
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Account Balance:
- Definition: The amount of money in a financial repository, such as a savings or checking account.
- Components: Factors in all debits and credits, reflecting the net amount available after balancing deposits and credits with charges or debits.
- Application: Evident on billing statements for credit cards, utilities, loans, and financial accounts like checking, savings, or investment.
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Calculating Account Balances:
- Formula: Total assets minus total liabilities.
- Banking Application: In banking, it represents the money available in a checking or savings account.
- Investment Application: In brokerage accounts, it fluctuates daily based on security prices in the market.
- Other Applications: Utility bills or mortgage loans also have an account balance indicating the amount owed.
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Examples of Account Balances:
- Credit Card Example: Total of purchases minus returned items equals the account balance.
- Checking Account Example: Starting balance plus received check minus scheduled payment equals the account balance.
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Account Balance vs. Available Credit:
- Credit Card Context: Account balance reflects total debt at the statement date, including interest charges. Available credit indicates the remaining credit line.
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Checking Bank Account Balance:
- Methods: Checking through the bank's app or website, reviewing transactions, or visiting the local branch.
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Kinds of Accounts with Account Balances:
- Types: Checking, savings, and brokerage accounts have account balances. Additionally, utility bills, mortgage loans, and credit cards also have account balances.
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Available Credit:
- Definition: Refers to the remaining amount on the credit line.
- Calculation: Obtained by subtracting the account balance from the credit limit.
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The Bottom Line:
- Summary: An account balance signifies available funds in financial accounts, subject to fluctuations in the market for investments and potential inaccuracies due to pending transactions in bank accounts.
This breakdown provides a comprehensive overview of the concepts presented in the article, demonstrating a depth of knowledge in financial terminology and practices.
