Banks and credit unions keep itemized records of your activities. When you pull up your monthly statement, you’ll see a list of the various deposits, transactions, and withdrawals made during that period.
If you have online banking services, you can customize a search of your records to encompass a longer time.
Most terms are relatively straightforward. If you see “mobile check deposit,” you know that the money came from actions you took to put a check into your savings or checking account. Direct deposits, ACH transactions, and other common terms are often seen.
One that has become more uncommon is “Counter Credit.” Here’s what it means when you see it on your account register.
What Does Counter Credit Mean on a Bank Statement?
Counter credit refers to a cash deposit made at a bank or credit union. It means funds were deposited into the account by the teller serving at the counter. This option might include checks and money orders brought to the financial institution for processing, but only if they were cashed first. It is always an in-person transaction.
Counter credit only appears when you make an in-person deposit with a bank or credit union employee at your financial institution. It isn’t listed on the transaction register when depositing money through a mobile app or ATM – even if the machine is on company property.
A counter credit occurs when a teller processes a cash-only transaction to add money to your account. If you deposit a check or money order, you’ll see a different term used to reflect the change in status.
A check or money order deposit turns into a counter credit only if you have the teller cash those items first. Although it is unlikely that this step is necessary, it can be done at some institutions for some internationally secured funds.
How to Make a Counter Deposit at a Bank or Credit Union
Every financial institution has specific rules or policies in place when bringing cash in to make a deposit. Although there are some minor differences in the following steps, you’ll find that this sequence will help you make a successful counter deposit.
- Travel to the closest branch of your bank or credit union. It should be the location where you manage your account when in-person needs are required.
- Use a deposit slip to fill out the information about the transaction you want the teller to run. Everything must be present, including the date, name, amount of cash you’ve brought, and account number.
- Give the cash to the teller with your deposit slip. If it is a significant amount, the teller will run it through a bill counter to verify the totals are correct. When you only bring a few bills, the amount will likely be hand-counted.
- You’ll be issued a receipt for the transaction, along with an updated account balance. If you don’t receive this documentation, request it so that you have a record of what you put into the bank or credit union and when.
- Save the receipt. Verify that the amount listed as a counter credit matches the paperwork you have in your possession.
If you see a difference in the amount you’ve received compared to what was deposited, you’ll want to contact your financial institution immediately to initiate a dispute. Most clerical errors are easily resolved, but you might have a limited amount of time to start this request.
Why Do People Still Use Counter Credits?
Although we have ATMs and mobile options almost everywhere, some deposits require more security than convenience. It’s worth the time it takes to stand in line, waiting to be helped, when you have a significant chunk of cash to deposit into your account.
Here are a few reasons why the counter credit option makes sense.
- Some people get paid in cash. Service staff receive cash tips throughout their shift. Anyone in the hospitality industry could come home with $300 or more. After a week of collections, it’s easier to go to the bank or credit union to process the deposit.
- Online banking isn’t always an option. Although most financial institutions have created apps and online features for consumers to use, smaller banks and credit unions don’t provide this luxury. At best, you might get to run a deposit through a teller drive-thru window.
- ATMs can be a security risk. These machines sit outside banks and other businesses. Although you can place money in them to get a deposit, it’s not the same as giving the bills to another person. You can steal that equipment, and there’s always the risk of a malfunction.
You might receive a counter credit on your bank statement if you send cash through a bank’s drive-thru process. It might also be classified as a drive-thru credit or another term because of how you conduct the transaction.
Why Does a Counter Credit Appear on a Bank Statement?
Basic accounting principles use charges as “debits” and deposits as “credits.” You receive a counter credit because you’re putting cash directly into your account.
If you take money out of your checking or savings with the help of a teller, it might get logged as a “counter debit.”
When you see a counter credit on your statement, it means that the money is yours to use instead of the financial institution’s. You’re growing your savings or increasing what is available for debit card or check transactions.
Most financial institutions allow funds from a counter credit to be available on the same day as the deposit. If you were to submit a check, it could take 14 days or more for it to clear. Each bank and credit union has its own policies they follow, so ask if you’re unsure.
What Are the Reporting Rules for Cash Deposits?
If you deposit more than $10,000 in cash at once, your bank or credit union is required to report the transaction to the government. This guideline is set by the Bank Secrecy Act.
The goal of this law is to prevent money laundering activities by criminals. Before these rules were enacted, it was relatively easy to disguise how they received their funds.
Financial institutions must also report “related” cash deposits. The bank or credit union must report these activities if you make two or more related payments within 24 hours or transactions within 12 months.
Your activities are even reported when using $10,000 or more of your cash when having a cashier’s check drawn off the account. It’ll still get reported if you put together a down payment for a home and provide these funds to the mortgage lender.
The cash reporting rules apply for all currencies – not just American dollars. Any counter credit or similar transactions worth more than $10,000 require the government to be notified.
No businesses are exempt from the cash reporting rules from the Bank Secrecy Act. Business owners who receive cash payments of $10,000 or more in the United States must file Form 8300.
Several transactions qualify for Form 8300. The following list represents a partial example of when you’d want to notify the IRS and FinCEN of these activities.
- Sales of real or intangible property.
- Escrow arrangement contributions or pre-existing debt payments.
- Exchanging one type of cash for another currency.
- Renting real or personal property.
- Contributions made to a custodial trust.
The cash can come from installment payments or as a lump sum. If the amount is more than $10,000 in a single year, Form 8300 needs to be filed.
Cash can include bank drafts, money orders, traveler’s checks, or cashier’s checks. If the amount is greater than this, the issuing financial institution reports the transaction – not the recipient.
When customers pay with those options for an amount less than $10,000, some businesses might still need to file the form. It’s most often related to travel, entertainment, or collectibles. Everyone has 15 days to file Form 8300 after receiving the cash, which can be done electronically or by mail.
What About Structured Cash Deposits?
When you have less than $10,000 cash to deposit as a counter credit, the bank or credit union might not need to report that activity.
If you make smaller cash payments in a single 12-month period (not based on the calendar year), the 15-day countdown to report the amount begins.
The IRS is known to look at structured deposits that try to evade the reporting requirements. If you bring a $9,700 counter credit for three weeks in a row, the financial institution can file a voluntary report that outlines the suspicious activity.
If you think there will be a time when you receive enough cash that the $10,000 requirement could be exceeded, it helps to talk to your bank or credit union first. They’ll provide the relevant advice needed to help you comply with the current laws and regulations.
Can Someone Deposit Money in My Account with Counter Credit?
Banks and credit unions have their own policies. Some might allow others to place money in your account with your information, but others won’t let this practice happen.
If you want to give someone money, it is safer to provide an ACH transfer or a different payment option than cash. When there isn’t another option, taking those funds to the bank personally can reduce the risks of theft or loss.
When someone other than the account holder requests a counter deposit, the institution typically notifies the individual. Some might require the person to be present to authorize the transaction.
Should I Be Worried About Receiving a Counter Credit?
Counter credits indicate cash deposits were made for a specific account. This transaction occurs when people bring physical money to a bank or credit union to be deposited. Once the funds are approved, they can be used for debit or check-based transactions. This line-item notation is nothing to worry about in virtually all circumstances.
Most bank statements are routine. You see a list of all your transactions, mostly debits, with the deposits from paychecks, gifts from grandma, and the occasional cash windfall from a side hustle.
When I checked my bank statement in the spring of 2003, there was an $8,200 counter credit on it.
Since I certainly didn’t remember having that much cash, I contacted the bank immediately. The customer service representative seemed confused. “We wouldn’t deposit the money into an account other than what was noted on the slip,” she said. “I’ll double-check things and get back to you.”
The following day, I was asked to come down to the bank. They showed me a deposit slip with my account number on it, but it wasn’t in my handwriting. I told them that.
Concerned looks appeared on the faces of the people in the room. It seemed that someone had made an error somewhere.
Since the deposit record was directed toward my account, they left the money there – but frozen as they investigated the matter. They ran the security cameras back, put pictures of the person on the news, and asked for leads. No one showed up to claim the money.
About two months later, I was asked to come back to the bank for another meeting about the money. “We talked with the IRS,” the manager said. “There was someone in town who had a refund of the exact amount, but there was a paperwork filing error, and they’re unsure of who actually received the funds.”
“What does that mean for me?” I asked.
“It means you get to keep the money.” And that’s the story of how we got a free vacation one year, all because of promptly reporting an unknown counter credit.
This moment is also proof of why you need a receipt for each transaction. It’ll prevent you from losing funds that get put in unexpected places.
