What is a Memo Debit?

A memo debit is a pending reduction in the cash balance of a bank account, which is a debit transaction. The bank has not yet completely processed the transaction; once it has done so (typically during end-of-day processing), the memo debit designation is replaced by a regular debit transaction, and the cash balance in the bank account is reduced by the amount of the memo debit.

Example of a Memo Debit

A common example of a memo debit occurs when you check into a hotel. At check-in, the hotel sets up a $100 memo debit on your credit card, to offset any additional charges that might arise during your stay. When you check out a few days later, the hotel clerk tallies up your charges over the course of your stay, which includes several meals that were charged to your room, totaling $80. At check out, the $100 memo debit is replaced by an actual $80 charge, resulting in a net decline of $20 on your credit card balance.