Cleared funds definition
Cleared funds refers to the balance in a trading account and means that these funds are ready to be traded with. Once funds have cleared, they are free from any obligation and can be used to either make a trade or be withdrawn. If funds aren’t cleared, they might be pending, which will limit what a trader can do with them.
On occasion, a deposit of funds can take some time to arrive in a trading account. As a result, a $100 deposit could show up in the account but just not be cleared. At that point, restrictions on how the funds can be used are also likely to apply until the funds are fully cleared.
What is the difference between cleared funds and available funds?
The difference between cleared funds and available funds is that cleared funds carry no further obligations and can be traded or withdrawn freely, whereas available funds often come with certain restrictions.
Let’s say a deposit might be pending. Funds from that deposit might be available to be used to place a trade, but until it has been finalized and the funds have been cleared there might be withdrawal restrictions.
In the context of banking, banks are legally obligated to make a certain amount of a deposit available to be used as regular funds.