posted on 06-06-2019

Bank Debits

Updated October 1, 2019

What are Bank Debits?

Bank debits are reductions in customer accounts.

How Do Bank Debits Work?

Let's say you write a check at Target for $50. Your bank, Bank XYZ, will debit your account by $50. This is a bank debit. Your bank may also debit your account for overdraft fees, annual fees or other fees.

Why Do Bank Debits Matter?

A bank debit is a reduction in the deposits held at a bank. They can come from check payments, ATM withdrawals or other uses of funds.

It is important to note that deposits are liabilities to banks (they're assets to you, though). That's because they're obligations to customers. Accordingly, when you write a check, the bank's liabilities are reduced. In accounting, we would debt the bank's liabilities and credit the bank's cash balance (which also was reduced because it gave $50 to Target).