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You're doing a routine check of your bank balance one day when you discover to your amazement that thousands of dollars have been deposited into your account. While you may be tempted to go on a spending spree, the Monopoly game board is the only place where a bank error in your favor means free money. If you discover a bank error in your favor, you should report it to the bank right away and leave it alone.
Bank errors are rare but can happen. Ironically, mistakes may be more likely when you visit the teller window than when you use an ATM or banking app. ATMs and apps automatically pull up your correct account number, but bank tellers are prone to human error. For instance, a bank teller may input numbers incorrectly when a customer deposits a paper check or transfers funds from one account to another. Teller error was behind a Georgia couple having $120,000 mistakenly deposited to their account in 2019.
Follow these steps if you discover a bank error in your favor.
1. Don't Touch the Money
When encountering what seems to be a huge windfall, even the saintliest among us may be tempted to pay off debt, make a major purchase or put a down payment on a house. After all, the bank is insured against such losses, right? Or maybe you plan to report the error and pay back the money. In the meantime, however, you might figure there's no harm in putting the cash in an interest-bearing account or using it to buy some stocks and earn a profit. Aside from the moral implications of using money that's not yours, the error will eventually come to light and consequences could result.
Even if the bank doesn't notice its mistake, the money's real owner will. When the bank investigates their customer's complaint and finds the money in your account, they'll naturally question why you didn't report it. If you've spent the money or transferred it to another account, you'll have to pay the bank back and may face criminal charges. That Georgia couple, having spent almost all of the $120,000 before the bank uncovered the mistake, were convicted of theft and ordered to repay more than $100,000 to the bank.
2. Contact Your Bank
If you discover a bank error in your favor, alert your bank right away and ask them to investigate the source of the funds. It's possible 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 uncover it and let you know you're free to use the money as you wish.
Even though bank errors sometimes get automatically reversed, don't rely on that happening. Telling the bank about the mistake immediately shows them you're being honest about the situation. Maintain records of your interactions with the bank about the error, including who you talked to, the date and what was said.
3. Monitor Your Account
Unless you're ultra wealthy, you'd probably notice if $30,000 accidentally appeared in your checking account. However, if you only glance at your bank balance from time to time, you might not notice a deposit error of a few hundred dollars. These small errors in your favor still have the potential to negatively affect your credit score. How? Here's an example.
Suppose an extra $500 is mistakenly deposited into your checking account and you don't notice it. If the bank discovers the error, they can withdraw the funds without your permission, freeze your account or place a hold on the funds. Any checks you've written could bounce; automatic bill payments you've set up may not get funded. If your bills don't get paid on time, you might face late fees from creditors. Your bank may also charge fees for having non-sufficient funds (NSF) or overdraft fees if your balance goes below $0.
This financial turmoil could easily result in late payments that can hurt your credit score. Your payment history is an important factor in credit score calculations—and even one payment that's 30 days late or more can take time to recover from. Overdrafts and NSF fees don't appear on credit reports, so they won't directly affect your credit score. However, if you don't pay your NSF fees or overdraft fees or repay your negative balance after an overdraft, your bank might send your debt to collections. This creates a collection account that appears on your credit report for up to seven years and has a derogatory effect on your credit score.
Clearly, it's important to keep tabs on your bank account and make sure you always have enough money to cover upcoming expenses. Making it a habit to review the details of your account details once a week or so will help you spot anything out of the ordinary before it seriously affects your finances.
If you do find a bank error in your favor, alert your bank immediately and then check your account every few days until you see that the deposit has been reversed. Your bank's deposit account agreement will specify how long it should take to correct a deposit error. Generally, banks have 10 business days to investigate a report of an error on a consumer bank account, but it may take as long as 45 days to complete an investigation. Keep checking back until you have proof that the issue is resolved.
Keep Track of Your Financial Health
Setting up alerts on your bank account is an easy way to keep tabs on your finances so you can spot errors or fraud right away and act quickly. You can typically set up bank account alerts through your bank's website or app. Different banks offer different alerts, but you can usually get alerted when your balance is low, when a deposit or withdrawal is made, when your debit card is used at an ATM and more.
In addition to monitoring your bank accounts, keeping an eye on your credit report and credit score is key to protecting your financial health. Experian also offers free access to your credit report and credit score , as well as free credit monitoring to alert you of changes in your credit.