What is a debit memo?

In certain circumstances, a debit memo is typical in the banking business. When a bank charges fees, for instance, a bank can send a debit memo to a specific bank account. To show that the fee is an adjustment rather than a transaction, it will be debited (or subtracted) from the customer’s account and recorded as a debit memorandum.

What is a credit memo?

Credit memos are essentially the opposite of debit memos. In banking, credit memos alert customers of an increase in their account balance. In business, a seller might issue a credit balance to alert the buyer that the original invoice was too high, thus reducing the amount the buyer owes.

When should a bank issue a debit memo?

For example, a bank may issue a debit memo when it assesses fees. The fee will be debited (or deducted) from the customer’s account and recorded as a debit memorandum to indicate that it is an adjustment rather than a transaction. A debit memo may also be used when adjusting an incorrect account balance.