How Bank Deposits Are Posted

I’ve gotten a ton of questions regarding how bank deposits get processed.  I’m no banking expert, but I know a bit about it.   I will tell you everything I know, and if readers have more info, they can add it in the comments.  Hopefully, we’ll all learn something.

First, banks do not process each individual transaction (deposit or withdrawal) as it happens.  As transactions come to the bank during the day, they are collected and held until the evening.  At some time during the night, usually over the course of several hours, all the transactions are processed in batches.  Batches are groups of transactions that are big enough to be efficient, but small enough not to overwhelm the computer system.  I will use my cookie making example again:  If you need 500 cookies, you wouldn’t try to make enough dough for 500 cookies in an enormous bowl and then put all 500 cookies in the oven at the same time.  You probably also wouldn’t make enough dough for just one cookie, and cook one cookie at a time.  Instead, you would do the cookies in batches, maybe 50 cookies at a time, over the course of a day.  This is the same concept as banks processing transactions.

Banks do their processing overnight because it is when their computer resources are not being actively used by their employees. The hours that each bank processes are a little different, but basically it is in the middle of the night. This is why you might find that your transactions process at midnight one time, then not to 6 am on a different day.

Then we come to the issue of ordering the transactions. I have read a number of well-documented articles that claim that many banks will process your transactions in a particular order, particularly if you are going to overdraft your account and incur overdraft fees. I’ve never had this experience, but it has been years since we messed up our account, and we also have overdraft protection. It seems entirely likely to me as banks are in the business of making money. In my experience, however, Navy Federal Credit Union does process payments before it processes withdrawals. Apparently, that is unusual and it is yet another reason why I like Navy Federal.

Every payday, I read lots of comments from people comparing notes, wondering why their deposit was posted at a different time than their friend’s deposit. I hope this helps you to understand how this could happen.

Please, my banking readers, share your information.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.

8 Comments on "How Bank Deposits Are Posted"

  1. Kate,
    One question. So if my pay date on my mid month LES if you will says 11 march 11. Why doesn't the bank post it and be availible on 11 march? It shows a pending deposit through my bank, but says wont post till the day after.. Not really understanding that part. But i just opened a new account at Navy Federal ,so i am not real sure on how they work there deposits.

  2. but well dfas release the funds to the bank on a weekend also

  3. What happeened if you get your salary double but you don't know why

  4. over night on week days banks do work but wonder if there are any banks that do still do overnight work on weekends so transactions can be accurate and up to date during the weekends rather for them to wait to post everything on the following monday.

  5. Does Navy Fed post deposit on a friday night? because it was posted but the funds arent going to be available till tomorrow. In the two years I have had Navy Fed I have never seen them deposited on a friday night.

  6. unnamedlord | January 11, 2014 at 9:24 pm |

    This is a pretty stupid reason. Most of the big banks are multinational and keep high computer usage throughout all of the day (When america goes to sleep, europe awakens). The servers do not have to be local and check processing is actually not that computationally expensive. Also, if this were actually true then why aren't checks processed on the weekend? Isn't that when the computer usage should be the lowest?

  7. I hate Banks | March 14, 2014 at 2:52 pm |

    this is all bull! Banks hold money to buy foreign currency at night in USA and they make a killing doing so. Each bank has branches oversees and they use the money they hold to trade on foreign markets.

  8. In an age of computer technology that sends and receives information at speeds unimaginable by people who process them by hand. You are telling me that you cannot process a transaction at the speed in which it is typed into this article? By the same token, every time someone conducts a transaction and it is stored on a computer you are utilizing those resources to exchange the information. Simply waiting for it to be exchanged at night is absurdity.

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