What to Do if There Is a Bank Error in Your Favor
You check your bank balance and see that the bank has accidentally deposited $1,000 into your account. What should you do? If you discover a bank error in your favor, you should report it to your bank immediately and not spend any of the money.
A bank error in your favor is when money not belonging to you is mistakenly deposited into your account. While rare, bank errors can happen due to system or human errors, such as a teller inputting your account number incorrectly. Here's what to do if there is a bank error in your favor.
1. Don't Touch the Money
No matter how tempting it is to tap the funds, leave the money alone. Aside from the moral implications of taking money that isn't yours, the bank will eventually uncover the error. They may find the mistake through their own quality control processes or when another customer complains that money is missing from their account.
If you've spent the money or transferred it to another account, you'll have to repay the money. In some cases, you might even face criminal charges. In 2023, a New Jersey man discovered that $100,000 had mistakenly been transferred into his checking account. He moved the money into another account and spent part of it—only to be arrested and charged with third-degree theft.
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2. Contact Your Bank
As soon as you discover a bank error in your favor, contact your bank and ask them to investigate where the money came from. Perhaps someone else, such as a parent or other relative who knows your account number, put money in your account without telling you. If so, the bank will give you the go-ahead to use the money.
Bank errors sometimes get automatically reversed, but don't count on that happening. Telling the bank about the error demonstrates honesty. Keep a record of your communications with the bank about the issue, including who you interacted with, the date and what they told you.
3. Wait for the Bank to Investigate
Once the bank is alerted of the error, it typically has up to 10 business days to investigate a consumer account, but this can sometimes take up to 45 days. (Your bank's deposit account agreement will specify how long it should take to correct a deposit error.)
If the funds were deposited by mistake, the bank can do any of three things:
- Put a hold on the deposit amount until the error is resolved
- Reverse the deposit without your permission
- Freeze your account until the error is corrected
If you've already moved or spent the funds, the bank may use the right of offset. This allows them to charge your account for the money you owe them.
While the bank investigates, stay on top of the issue and keep checking your bank account until you have proof that the issue is resolved.
Learn more: How to Check Your Bank Account Balance
4. Monitor Your Account
Monitoring your account after a bank error helps you avoid potentially costly consequences, such as missing payments or incurring bank fees. For example, if the bank reverses the deposit or places a hold on funds, you might not have enough money in your account to pay your bills. If the bank freezes your account, your scheduled bill payments won't go through, no matter what your balance is.
In those cases, your creditors may charge late fees for missed payments, and your bank might charge nonsufficient funds (NSF) fees or overdraft fees if your account balance can't cover your spending.
A bank error in your favor doesn't appear on your credit report, but the repercussions can cause problems that could damage your credit. When a payment is late by 30 days or more, creditors generally report it to credit bureaus. Your payment history is the most important factor in credit score calculations; a single late payment can cause damage that takes time to recover from.
Bank account balances and transactions aren't reported to credit bureaus and don't affect your credit score. Neither do overdrafts and NSF fees. However, if unpaid bank fees or negative account balances are sent to collections, the collection account can negatively affect your credit score.
Learn more: How Much Money Should You Keep in Checking and Savings?
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About the author
Karen Axelton
Karen Axelton specializes in writing about business and entrepreneurship. She has created content for companies including American Express, Bank of America, MetLife, Amazon, Cox Media, Intel, Intuit, Microsoft and Xerox.
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