‘Debit Memo’ Explained: What Does This Charge Mean On Your Bank Statement?

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Wondering why your bank balance has shrunk and there’s a “debit memo” on your statement? Learn what these bank notices mean, why NSF or overdraft fees might be responsible, and what steps to take next.

A debit memorandum – also known as a debit memo or debit note – is a notice from your bank letting you know of an adjustment to your checking account that decreases your balance.

A debit memo might show up on your bank statement to cover things like:

  • Returned check fees
  • Insufficient funds fees
  • Interest fees
  • Fees for printing checks
  • Adjustments to incorrect deposits

The fee will be deducted (or debited) from your account and recorded as a debit memorandum to indicate that it is an adjustment rather than a transaction.

Normal checking account debits, like swiping your debit card or cashing a check, don’t count as debit memos – even though they decrease your account balance – so if you’ve spotted an unexpected charge on your bank statement, it pays to know what it is and where it came from. 

What is a debit memo?

Banks don’t always have the best reputation for putting customers first but they can’t hit you with random fees. Federal law requires banks to disclose any fees being charged.

A debit memo, also known as a debit note or debit memorandum, is a formal notice that there is an upcoming adjustment to your checking account balance.

If you’ve incurred a fee, like an overdraft or NSF fee, your bank will include it on your monthly bank statement. If you’re using a digital banking app, you’ll usually see this debit note in real time (no need to wait for a monthly paper statement). 

🤓 Overdraft Apps: Credit memos are the opposite of debit memos. If you receive a credit memo, the bank is increasing your account balance, not taking money from you.

Real life example of a debit memorandum

Let’s say you wrote a check to cover next month’s rent but your math was off and you don’t have enough funds in your checking account to cover what you owe.

You get on with your life but when your landlord goes to cash your check, it bounces.

Your bank charges you a non-sufficient funds (NSF) fee of $34 and directly debits that amount from your bank account. Even if your account balance is $0, you can go into a negative balance.

This debit will show up on your bank statement as a debit memo (your landlord will probably be chasing you up too).

Recommended: How long can your bank account be negative?

Why does your bank use debit memos?

Banks and fees go together like peanut butter and jelly. 

While banks have cut back on overdraft fees, the country’s nuggets banks still pulled in a staggering $8 billion in overdraft fees in 2023.

Your bank doesn’t have time to call you up and politely remind you that your account is about to be overdrawn or that your latest check bounced. Debit memos are the quick and easy way to tell you that action has already been taken.

For example, if you have $1,000 in your checking account and the bank charges a service fee of $35, the account will be reduced by $35 to $965. The reduction will be noted on your bank statement as a debit memo. 

There are plenty of people asking about debit memo charges on their Wells Fargo checking accounts, but they’re not the only banks who’ll happily take money from your account.

Whether you’re with Wells Fargo, Bank of America, Chase or any other traditional bank, you can be stung with a debit memo.

What to do if you receive a debit memo?

Technically, you don’t need to do anything because your bank has already done it.

You don’t get a chance to dispute a debit memo. It’s included on your bank statement to let you know your bank has already taken money from your checking account.

If your bank balance is positive, you can get on with your life although you may want to look into the reason you got a debit memo to make sure you’re not bouncing checks or trying to spend money with insufficient fees.

If your debit memo has sent your account into negative, you’ll want to bring the balance back ASAP to avoid further potential fees and charges.

Getting a notice from your bank that your account balance has dropped is frustrating and might even have you side-eying other banking options.

If you’re looking for a bank that matches your needs or a way to top up your checking account, check out the following resources:

Key Takeaways:

  • A debit memo is used to indicate an adjustment to your checking account that reduces your balance.
  • A debit memo indicates an account balance decreased for reasons other than a cash withdrawal, debit card swipe, or cashed check.
  • A debit memo is usually related to banking fees, such as service charges, overdrafts or bounced-check fees.

Learn more about your bank’s jargon: What is TOT ODP SWP DR MEMO 🤔

Alexander Porter

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