What Is a Ledger Balance?

The ledger balance also referred to as the current balance shows the total amount of money in your bank account at the end of a business day. The ledger balance is calculated at the end of a business day and remains the same until updated at the end of the next business day.

Because the ledger balance is calculated at the end of a business day and remains the same the next morning, it is also known as the opening balance. It remains the same during the entire day and changes at the end of the day.

Ledger or Current Balance vs Available Balance

Ledger balance is not to be confused with available balance. Available balance in your account changes throughout the day when you make transactions. So, when you open your mobile banking app, the balance you see in the morning before making any transaction is your ledger balance or current balance. When you send, receive, or transact money, the changed balance is available to balance.

The ledger balance or current balance remains the same all day, but the available balance keeps on changing as real-time transactions occur. When the money is credited to or debited from your account, the available balance quickly resets to show the latest amount that is available.

How is Ledger Balance Calculated?

The bank calculates and updates the ledger balance for every bank account at the end of each business day. This can include deposits, wire transfers, check withdrawals, and all credit or debit transactions. Once all transactions are processed for the day, the bank’s system updates the amount which is the ledger balance.

Is Ledger Balance Important?

The ledger balance is an important term often used in banking and finance and appears on financial statements such as bank statements. Using available balance is difficult for banking purposes as it keeps on changing throughout the day.

Therefore, for banking purposes such as auto loan applications, bankers consider the ledger balance of the account holder on a certain date while processing their application. Ledger balance is also important to check the minimum balance that is being held in a bank account if an individual’s bank account has a minimum balance limit.

For instance, an opening ledger balance of $560 on June 5th shows that on June 5, the amount in the bank account was $560. But it might have changed throughout the day. The next day’s (June 6th) ledger balance shows the amount that was updated at the end of the day on June 5, after all, transactions on June 5 had taken place.