What Is the Ledger Balance in a Checking Account?

Financial transactions increase or decrease your checking account and are a routine part of life. If you maintain an accurate check register, it details your true available balances.

The available balance in your check register might not match your bank's version of your available balance. Midwestern State University advises that it’s important to reconcile your bank account with the bank statement. This will give you the ledger balance. But what exactly is the ledger balance in a checking account, how do ledger balances work and how do you find this information?

You probably use a check, debit card or ATM to make payments, deposits or withdrawals from your checking account. These can be done via online banking, with a mobile device or in person.

Even though your bank may receive notification of these payments, withdrawals and deposits throughout the day, your ledger balance remains unchanged. This is because banks calculate ledger balances at the end of the business day, and this amount becomes the opening balance for the next day.

The ledger balance of your checking account is the amount of funds after the bank processes all your transactions including interest rate income, payments, cleared checks debit transactions and deposits. As far as the bank is concerned, at the end of the day, your ledger balance is the accurate amount of funds you have in your account. It is the day’s ending balance.

Reconciling a bank statement is comparing your ledger balance with the financial institution’s ledger balance and noting the differences, explains Stanford University. It gives you an opportunity to adjust your ledger balance to the bank’s. The statement date of the bank or credit union is important, so you’ll have an accurate picture. Reconciling a bank statement gives you your true current balance.

Because in a checking account or savings account the ledger balance is updated by the financial institution at the end of each business day, the bank's ledger might not match the account holder’s ledger.

As the account holder it’s imperative that your checking account ledger balance match the current balance of the bank or credit union. Unless you reconcile your checking account bank statement or other accounts with the bank, it might not match the bank’s ledger.

There could be consequences to your account balance. For example, you could incur overdraft fees if you aren’t aware of the total amount of money in your bank account.

Unlike the ledger balance, your available balance changes frequently throughout the day. As transactions hit your account, your amount of funds changes. It, therefore, represents your inflow and outflow of money, and your bank updates it as they receive information about your transactions.

For example, your available book balance will not include the check you just wrote, but it will likely include a recent automated teller machine withdrawal. To your bank, the available balance is the amount of money you have reported in real time.

If a check comes in at that given time and it's greater than the available balance, your account will be overdrawn, or the bank might return your check. Either way, your bank might assess overdraft fees.

Sometimes the difference between the ledger and available balances creates confusion. When you look at your bank statement, you typically see the ledger balance for a specified time. Your bank obtains this amount by considering the difference between the total amount of money you deposited and your total liabilities like withdrawals and payments.

This is different from the available balance, and the two balances might not match. Differences are usually due to amounts that have not cleared such as outstanding checks or deposits made after business hours.

Confusion about your checking account balances can lead to a false picture of your financial position. Simply put, a misunderstanding of the differences between a bank and an account holder’s ledger balance can lead to overdrafts.

Proper management of these accounts can help track payments and receipts and give you a clear picture of your cash flow. This includes deposits or payments that have not yet hit your bank ledger balances.