When you conduct a transaction at your bank, the teller “posts” the transaction to your account so that your current balance reflects the deposit or withdrawal. At my bank, this transaction is called a memo-post because it is pending approval. At the end of the business day, the paperwork for each transaction is put through processing. This is where a team of people and technology review the transactions for accuracy. If no corrections are needed, the transaction is then hard-posted to the account and is no longer considered a pending transaction.
The process of hard-posting begins at the end of the business day. Business days are determined as Monday through Friday, with the exception of federal banking holidays (i.e. Memorial Day and Christmas). The end of the business day is determined by a financial institution’s cut-off time.
Cut-off times designate when that day’s processing begins, and mark the “rollover” to the next business day. Cut-off times vary depending on your bank and city. Banks will often remain open past its cut-off time, which is why it is important to be aware of the change in business day, especially if trying to avoid an overdraft fee or negative account penalty.
At my bank, a fee is charged when a purchase is made using overdraft or bounce protection, but some banks will apply a fee for every day an account is negative. Because of the possibility for these fees, make sure you understand how cut-off times affect your deposits. If you make a deposit before your bank’s cut-off time, your transaction will be processed that same business day. However, if you make a deposit after the cut-off time or during the weekend, it will not be processed until the next business day, meaning you may be subject to a fee since you are ending the business day with a negative balance.
To help you understand, here is a basic scenario. At Bank XYZ, the weekday cut-off time is 5:00 p.m., but it remains open past the 5 o’clock cut-off. The breakdown:
- If you visit Bank XYZ before 5:00 p.m. Monday through Friday, your transaction will go through that same day’s processing (which begins at 5:00 p.m.).
- If you visit Bank XYZ after 5:00 p.m. Monday through Friday, your transaction will go through processing on the next business day.
- If you visit Bank XYZ after 5:00 p.m. Friday or anytime Saturday or Sunday, your transaction will go through Monday night’s processing (as Monday is the next business day).
The same timeline applies to card transactions. When you make a card purchase, the transaction will memo-post to your account and will be reflected in your current balance. When the merchant closes its business day, the transactions will hard-post. Traditionally, the card purchase will hard-post in alignment with the bank’s end-of-the-day processing, but this can vary depending on the merchant’s timing as well as the bank’s.
The moral of the story: be knowledgeable of your bank’s timeline. Business days are classified as Monday through Friday with a few federal holidays throughout the year. When a holiday occurs, it is treated the same as a weekend day where all items are memo-posted to the account throughout the day, but nothing will hard-post until the following business day. As far as cut-off times, they will rarely affect you unless trying to deal with a negative balance. However, it is wise to be aware of the cut-off time, and your bank should make this easy by having signs posted at the teller line.
Tags: banking holidays, business day, cut-off times, federal holidays
Great stuff .. it”s always good to know of these important times that people seem to forget. Then they get there and blame the banks! lol ! sounds like me !
I really like your writing style, great info, thank you for putting up
\”… the paperwork for each transaction is put through processing\”.
The article seems to imply this is done by people (i.e. staff at the bank) with the midnight oil burning into the wee hours of the morning. Perhaps so. But this is the 21st century; why is this not done by computers?
In other words, banks could be processing transactions 24×7, including Saturdays and Sundays… and holidays. They choose not to do so.
Why is this? Why must a transaction that is made on a Saturday wait until after 8am Tuesday morning to be hard-posted?
Hi, David. Our business days are lined-up with the Federal Reserve’s, as is the case with most institutions. Our core system processes at the end of each business day between around 7pm and 11pm, give or take a little bit. During this time, the day’s transaction are sorted and posted in the applicable order. This is not done during business hours because it can take some of our systems offline temporarily, and could potentially interrupt normal business. A check that is deposited on a Saturday would hard-post to the account with Monday night’s processing (Tuesday if Monday is a holiday), though if you were to deposit that check in person, we could memo-post the funds so they are available to you.
Just wanted to thank you for the specific info…very useful.
The memo post only applies if your bank uses an online teller platform. Not all banks do.
That is correct, David. For this reason, checks deposited at ATMs, through Mobile Deposit, or night depository may not be memo-posted prior to the funds posting. CNB does use an online platform, so if you bring a deposit into a branch, it will be memo-posted for you.
Thanks to everyone\’s posted information here,certainly starting with @amandac\’s story.
It\’s funny how the article was posted in 2011,and comments are so recent.
Well+written and welcome info from all. Thank You!
PS: Like your site\’s name!
But all this is about what is now, where is the needed push for the future when we no longer use \”business days\” as an excuse? Wasn\’t the ATM supposed to create 24/7 banking? Just because it\’s not a human doing it doesn\’t mean it\’s not banking! Hello banking it\’s 2017!