Bank Debits

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DEFINITION of 'Bank Debits'

A bookkeeping term for realization of the reduction of deposits held by bank customers. Bank debits can be the result of check payments, honored drafts or a withdrawal of funds from an account. Economists also use bank debit statistics to forecast national economic trends, including the transactions demand for cash.

INVESTOPEDIA EXPLAINS 'Bank Debits'

On a bank's balance sheet, deposits are liabilities: they represent a source of capital and obligations to the customer. As a liability, deposits has a credit balance. In contrast, the cash deposits supply to the bank are assets, which have debit balances.

When a check is paid, the bank's obligation to the customer becomes smaller, since fewer funds are supplied to the bank. The liability that deposits represent is reduced through a debit for the amount of the check. At the same time, the bank's cash is smaller as well, and so the assets of the bank are reduced through a credit.

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