What is a Deposit in Transit?

A deposit in transit or DIT is money that you have deposited in your bank account, but that doesn’t show up yet as received or credited by the bank. There are a number of reasons why a deposit in transit may not show up yet on a bank statement. It’s important to bear these different reasons in mind when you claim money the bank may not yet have recorded.

Sometimes deposit in transit refers to personal checks that the bank will hold until it receives money from another bank. Some banks have policies regarding holding personal checks, and not crediting you with their amount until funds are verified. Under these circumstances, it’s important to record the money, but not to count it as what you currently possess. This will help you avoid bank overdrafts.

Other times banks immediately accept all deposits, especially for businesses. However on weekends when deposits are made, your deposit may not be recorded until the next business-banking day. If this is the case, your access to the money will be limited or nonexistent until the DIT is recorded.

When you’re reconciling personal checking or small business checking accounts, and you have a low balance, you will really want to verify that the bank has recorded any deposit in transit. Even if you have deposited money into the bank, if the bank has rules about recording the money or when they will credit it, you could very easily bounce checks or overdraw your account. If you’ve made a deposit via ATM for instance, it may not be credited until the next business day, so you’ll want to be sure you have adequate funds in your account not including the deposit before you make any purchases.

Another way in which deposit in transit is used in business terms, is when people claim sales or payments at the end of a fiscal year. Even if not all your checks have cleared for a fiscal year, the money is usually still considered income for that year. If you make some deposits right before the end of a fiscal period or year, and they haven’t shown up in your bank account yet, they are still part of the income or profits you would claim on your taxes.

Similarly, people filing their taxes in the US would claim all money made during the year (1 January - 31 December). A bank may not have recorded a paycheck or it could still be in deposit in transit status. Yet because the check or payment was for work done during the tax year, it would still count as part of your income, even if the bank hasn’t recorded it yet. All forms of payment should show up on your bank statement within a few days. You should check with your bank if this is not the case.