When an account's status is "memo-posted," it means that the financial institution has temporarily recorded a credit or charge to the account so as to update the balance in a "batch posting" environment. Three examples might help illustrate memo-posting.|
In the first example, a customer receives an electronic credit, such as a Social Security deposit, that carries the current date. The actual transaction will not be posted to the account until the end of the day (when all the transactions are "batched" and posted to accounts). However, the customer is entitled by rules to access his electronic credit when the bank opens today, so the bank creates a temporary "memo" credit that increases the balance available for withdrawal during the day. The temporary item is removed after the actual transaction is posted later that evening.
In the second example, the customer makes a cash withdrawal from her account during the business day (at the teller line or at an ATM, perhaps). In order to prevent her from overdrawing her account later in the day, the amount of the cash withdrawal is memo-posted as a charge to her account until the transaction actually posts in the batch update that evening.
In the third example, a customer's account is attached by legal process. When the bank receives the attachment order and determines which account(s) it applies to, the bank will place a memo charge against funds in the account to prevent access to funds that will be remitted to creditor or court, until the actual debit can post in the evening's batch update.
Published on BankingQuestions.com 6/12/07