What are Bank Errors?

Bank errors are transactions that have been incorrectly recorded by a bank in a customer’s account. These errors are usually found during the monthly bank reconciliation process conducted by customers, who notify the bank to correct the indicated items. There are usually few bank errors, which are concentrated in the areas of incorrect check and deposit amounts.

It is also possible that a bank will debit an account for services that were not actually provided to the customer. For example, a bank might incorrectly apply a wire transfer fee to the wrong customer account, so that an account holder that did not initiate the wire transfer is charged for it.

Examples of Bank Errors

Here are several examples of bank errors:

Depositing funds into the wrong account. A bank may accidentally deposit a customer's funds into another person’s account due to a misentered account number. This can delay access to funds and cause confusion for both account holders.
Incorrectly processing a check amount. A check written for $150 might be mistakenly processed by the bank as $1,500. This error can overdraw the account and trigger overdraft fees or declined transactions.
Duplicate withdrawals or charges. The bank may post the same withdrawal or debit transaction more than once. This can reduce the available balance and may lead to unintentional overdrafts.
Omitting a deposit. A bank might fail to record a deposit entirely, especially when processing large batches of checks or cash. The customer’s balance will be lower than expected, potentially causing bounced payments.
Incorrect interest calculation. The bank may calculate interest incorrectly on a savings or loan account, resulting in too much or too little interest credited or charged. This can distort financial planning and reporting.
Applying fees in error. Banks sometimes charge fees (e.g., maintenance or overdraft fees) that shouldn't apply, such as on accounts that meet waiver requirements. These fees can accumulate unnoticed over time.
Unauthorized account closure. A bank may accidentally close an account due to clerical errors or confusion with a different customer. This disrupts access to funds and recurring payments tied to the account.
Incorrect foreign currency conversion. During international transactions, the bank may apply the wrong exchange rate or fees, leading to overcharges. Customers may not realize the error unless they closely review the conversion details.
Posting transactions to the wrong date. A deposit or withdrawal may be posted to the wrong date, impacting the account balance and reconciliation process. This can affect interest accrual or trigger automated limits or thresholds.
Processing stop payment requests incorrectly. A bank may fail to properly execute a stop payment order on a check or scheduled payment. As a result, the payment goes through, potentially causing financial or legal complications.