A provisional credit is a temporary deposit your bank puts back into your account while it investigates a transaction you’ve disputed as unauthorized or incorrect. The money is yours to use during the investigation, but it isn’t final: if the bank concludes the transaction was legitimate, it can take the funds back out. The rules come from Regulation E, the federal regulation implementing the Electronic Fund Transfer Act, and they set firm deadlines your bank has to follow.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
When Your Bank Has to Post One
After you report an error, the bank has 10 business days to investigate and reach a conclusion. If it finishes within that window, no provisional credit is required. The bank simply tells you what it found and corrects any error it confirms.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
Most investigations take longer. When the bank needs more time, it must provisionally credit your account for the full disputed amount, plus any interest that would have accrued, by the end of the 10th business day. Posting that credit buys the bank an extended investigation window of up to 45 calendar days from the date it received your error notice.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
The bank has to tell you within two business days of posting the credit, including the amount and the date it was applied.
One carve-out on the amount: if the bank has a reasonable basis to believe the transfer was unauthorized, it may withhold up to $50 from the provisional credit, matching the minimum consumer liability under the statute.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
Situations That Stretch the Timeline
Some disputes give the bank more room. The investigation window stretches from 45 to 90 calendar days when the transfer was not initiated within the United States, when it was a point-of-sale debit card purchase, or when it occurred within 30 days after the first deposit was made to a new account. New accounts also get a longer initial investigation period, 20 business days instead of 10, before provisional credit is required. The trigger for the new-account rule isn’t how long ago you opened the account; it’s whether the disputed transfer happened within 30 days of your first deposit.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
Using the Money While the Bank Investigates
Once the credit posts, you have full access to the funds. The bank cannot restrict how you use them, hold them separately, or make you sign anything committing to leave them untouched. For practical purposes, the money spends like any other balance in your account.
The catch is that the credit isn’t final. Spend it down and you should keep in mind that if the investigation goes against you, the bank will pull those dollars back out. Planning for that possibility protects you from an unpleasant surprise later.
The Written Follow-Up Rule
Here’s a step that catches people off guard. If you report the error to your bank by phone, the bank is allowed to require you to send a written confirmation within 10 business days. It has to tell you about this requirement and where to send the confirmation during the call. Skip the written follow-up and the bank has no obligation to provisionally credit your account at all.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
The bank still has to investigate. It just loses the mandatory provisional-credit obligation. Always follow a phone report with something in writing, even if the representative doesn’t bring it up.
How It Ends: Permanent or Reversed
The investigation closes one of two ways.
If the bank confirms the error, the provisional credit becomes permanent. You get a written explanation of the findings, and the money stays in your account.1eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors
If the bank concludes the transaction was authorized or your claim was invalid, it reverses the credit by debiting the funds back out. You get a written notice explaining the reasons, and the notice must tell you that you have the right to request copies of all documents the bank relied on. The bank has to provide those documents promptly if you ask.
A Five-Day Buffer Against Overdrafts
Regulation E includes a cushion to keep a reversal from cascading into bounced checks and overdraft fees. For five business days after sending the reversal notice, the bank must honor checks, preauthorized payments, and similar items without charging overdraft fees, as long as those items would have been paid had the provisional credit still been in the account.2eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors That’s not a blank check, but it gives you a few days to move money around.
Pushing Back on a Reversal
If you disagree with the bank’s conclusion, ask for the documents it used and submit anything that supports your side. If the bank still won’t move, you can file a complaint with the Consumer Financial Protection Bureau, which oversees Regulation E compliance.3Consumer Financial Protection Bureau. Consumer Complaint Program A CFPB complaint won’t automatically undo the reversal, but it puts the investigation under outside review and creates a formal record.
Why Reporting Speed Matters Even Before the Credit
How fast you report doesn’t change the mechanics of provisional credit, but it changes how much money is even in play. Regulation E ties your maximum liability for unauthorized transfers to how quickly you notify the bank.4eCFR. 12 CFR 1005.6 – Liability of Consumer for Unauthorized Transfers Report within two business days of learning about the loss and your liability caps at $50. Wait longer and it can climb to $500, then, past 60 days from the statement date, potentially every dollar taken after that window closed, for transfers the bank could have stopped had you reported sooner. Miss the 60-day deadline to report the error itself and you lose access to the error resolution process altogether, provisional credit included.
Where Provisional Credit Doesn’t Apply
Two big situations fall outside these rules, and it’s worth knowing them before you assume you’re covered.
Credit card disputes. If the disputed charge is on a credit card, you’re under Regulation Z and the Fair Credit Billing Act instead. Regulation Z doesn’t require the issuer to post a provisional credit. Instead, you have the right to withhold payment on the disputed amount while the issuer investigates, and the issuer can’t try to collect that portion of the bill. The issuer has two complete billing cycles, but no more than 90 days, to resolve the dispute after receiving your billing error notice.5eCFR. 12 CFR 1026.13 – Billing Error Resolution
Business accounts. Regulation E covers accounts established primarily for personal, family, or household purposes.6eCFR. 12 CFR Part 205 – Electronic Fund Transfers (Regulation E) If a business checking account is hit with an unauthorized transfer, there’s no federal right to provisional credit and no mandated investigation timeline. Business electronic transfers generally fall under Article 4A of the Uniform Commercial Code, which places much more responsibility on the account holder.7Legal Information Institute. UCC Article 4A – Funds Transfer
If the Bank Ignores the Rules
A bank that skips provisional credit when it’s required, or runs a sham investigation, is exposed under the Electronic Fund Transfer Act. You can sue for actual damages plus statutory damages between $100 and $1,000 in an individual action, along with attorney’s fees.8Office of the Law Revision Counsel. 15 USC 1693m – Civil Liability
The stakes climb when the bank’s conduct is particularly bad. A court can award treble damages, three times your actual losses, if the bank failed to provisionally credit your account within the 10-day window and either didn’t conduct a good-faith investigation or had no reasonable basis for concluding your account wasn’t in error. Treble damages also apply if the bank knowingly and willfully reached a conclusion the evidence couldn’t reasonably support.9Office of the Law Revision Counsel. 15 USC 1693f – Error Resolution
For smaller amounts, small claims court is available in every state. Whatever route you take, document every interaction: dates of calls, names of representatives, copies of every written notice. A CFPB complaint filed alongside or ahead of any legal action creates an independent paper trail that the bank was put on notice of its obligations.