The mass change information from the Gravity Recovery And Climate Experiment (GRACE) satellite mission is available in terms of noisy spherical harmonic coefficients truncated at a maximum degree (band-limited). Therefore, filtering is an inevitable step in post-processing of GRACE fields to extract meaningful information about mass redistribution in the Earth-system. It is well known from previous studies that a number can be allotted to the spatial resolution of a band-limited spherical harmonic spectrum and also to a filtered field. Furthermore, it is now a common practice to correct the filtered GRACE data for signal damage due to filtering (or convolution in the spatial domain). These correction methods resemble deconvolution, and, therefore, the spatial resolution of the corrected GRACE data have to be reconsidered. Therefore, the effective spatial resolution at which we can obtain mass changes from GRACE products is an area of debate. In this contribution, we assess the spatial resolution both theoretically and practically. We confirm that, theoretically, the smallest resolvable catchment is directly related to the band-limit of the spherical harmonic spectrum of the GRACE data. However, due to the approximate nature of the correction schemes and the noise present in GRACE data, practically, the complete band-limited signal cannot be retrieved. In this context, we perform a closed-loop simulation comparing four popular correction schemes over 255 catchments to demarcate the minimum size of the catchment whose signal can be efficiently recovered by the correction schemes. We show that the amount of closure error is inversely related to the size of the catchment area. We use this trade-off between the error and the catchment size for defining the potential spatial resolution of the GRACE product obtained from a correction method. The magnitude of the error and hence the spatial resolution are both dependent on the correction scheme. Currently, a catchment of the size ≈63,000 km2 can be resolved at an error level of 2 cm in terms of equivalent water height.