You may notice when looking at your bank or other financial institution account activity that memo post debits show up as transaction items. These memo post debits affect your available balance for the day, and may also affect your actual balance once the bank performs its batch post that night.
A memo post, whether it is for a debit or credit on your account, provides only a temporary effect on your account. The memo post changes the temporary account balance, but may not necessarily have any effect on your account's actual balance. When all of the transactions on your account for the day are batch posted by the bank, which typically happens each night, the memo post debit will result in a permanent debit on your account. The amount of the debit may increase or decrease from the amount of the memo post debit, depending on the final authorized amount presented by a retailer.
Debit vs. Credit
A debit on your account results in funds being transferred out of the account, with the funds going to another's account who has a legal claim to those funds. Credits increase the amount of funds in your account, such as when you make a deposit. This means memo post credits will increase the amount of funds available in your account temporarily, while memo post debits will decrease the amount of funds available for your use.
Legal Attachment Orders
A memo post debit that shows up in your bank account's status for the day may be from a legal attachment order the bank has received, such as a writ of garnishment or lien against a portion of the assets in the account. The bank must place the memo post debit on the account to stop the account owner from accessing those funds. Once the memo posts in the batch update, the funds are transferred to the court or creditor as specified by the legal attachment order served on the bank.
Retailers Use Memo Post
Some retailers, such as gas stations, hotels and restaurants, use memo post when you present a card for payment. These retailers use memo post since they do not know exactly how much your final bill will total. When paying for your meal at a restaurant, you decide how much to add to the final bill for a tip. With hotels, you may use services that inflate your total bill to more than the room rate. These retailers utilize memo post debits to ensure your form of payment can cover the cost of the goods or services you may consume, avoiding problems with payment in the future.