Bank debits are any kind of transactions submitted to a bank account which result in a deduction of funds from that account. Many kinds of transaction fall into this category, but all of them result in the same basic operation, which is a transfer of funds from an account. The funds may be transferred to another account or business, used as payment for services, or withdrawn as cash.
Many people are familiar with debit cards that can be used at automatic teller machines (ATMs) and that are accepted at many businesses. They allow a direct withdrawal, or debit, from an account to pay for goods or services, or as a disbursement of cash. These cards therefore can serve the purpose of a typical checkbook or an old-fashioned savings passbook, or both. All transactions are recorded and credited to the account attached to the card electronically, and any transaction that results in funds being removed from the account are bank debits.
The same types of transactions that are allowed with the use of debit cards that are initiated with traditional checkbooks and savings passbooks are also bank debits. They differ from the transactions carried out through debit cards in certain ways, however. Personal checks written and used to transfer funds to another business, organization, or individual may or may not be executed against the account immediately. Often, it can take several days for the check to be processed, or "clear" and the funds debited. Generally, transactions involving a savings passbook must be conducted at a branch of the bank where the account was opened, and these transactions as well as any involving a traditional checkbook performed at a branch of the bank are executed immediately.
Other types of bank debits are scheduled automatic transfers for payment of goods or services. Most modern banks allow patrons to set up automatic payments for things like utility bills, credit cards, mortgages, or other financial obligations held by the account holder. This type of bank debit requires the account holder to give permission for another entity to access the account and usually requires them to give the entity the account number. At an agreed upon date, which may be scheduled as a one-time payment or a regular monthly payment, the account is debited a certain amount, which may either be set in advance or be enough to pay a a monthly bill, whatever the amount.
This can be confusing to some, as it seems to contradict some of the basic principles of accounting. Accountants learn that adding to the cash account in a traditional ledger is a debit, and a deduction from the same account is a credit. When looked at from the point of view of the bank rather than the account holder, this make more sense. When funds are added to an account, the bank's obligation to the holder has been increased, so from the bank's point of view, the account has been credited. Conversely, when funds have been removed from the account, the bank's obligation has been lessened, and so the account has been said to have been debited.
