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.

Examples of Memo Debits

Here are several scenarios in which a memo debit might be used:

Pending check withdrawals. When a company issues a check, the bank may place a memo debit on the account to reflect the pending deduction before the check officially clears. This ensures that the available balance accurately reflects the upcoming withdrawal. Once the check is processed, the memo debit is replaced with a permanent transaction.
Bank fees and service charges. Banks sometimes apply memo debits for service fees, such as monthly maintenance fees, wire transfer charges, or overdraft fees. These charges temporarily appear as pending debits before being fully posted to the account. This allows account holders to see upcoming deductions before they are finalized.
Automatic loan payments. If a business or individual has set up automatic loan payments with their bank, a memo debit may appear on the account before the payment is officially processed. This temporary hold ensures that sufficient funds are available to cover the payment. Once the transaction is completed, the memo debit becomes a confirmed withdrawal.
Hotel check-in charge. 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.