# Bank Service Charges on a Bank Reconciliation

- Author: PreciseBankFlow (https://www.precisebankflow.com)
- Published: 2025-07-06
- Updated: 2025-07-06
- Category: Bank reconciliation
- Canonical: https://www.precisebankflow.com/blog/bank-service-charges-on-a-bank-reconciliation

> Where bank service charges go on a bank reconciliation, how interest earned is treated, and what to do when the fee schedule and the statement disagree.
Bank service charges on a bank reconciliation are subtracted from the balance per books, because the bank has already taken the money and your ledger has not recorded it. Interest earned goes on the same side but is added. Each needs a journal entry, and a charge that differs from the bank's fee schedule should be questioned, not just booked.

## Where do bank service charges go on a bank reconciliation?

Bank service charges go on the book side, as a deduction from the balance per books. The bank took the fee out of the account during the month, so the statement balance already reflects it. The ledger usually learns about the fee only from the statement, which makes it a book-side item.

The book side of a reconciliation lists everything the bank has recorded that the ledger has not. A fee fits that description exactly. The bank side, by contrast, holds items the ledger already has and the bank is still waiting on, such as outstanding checks.

Service charges come in several forms, and all of them follow the same rule:

- a monthly maintenance or account fee
- per-item charges for wires, stop-payment orders or cashier's checks
- charges for returned deposits or overdrafts
- an account analysis charge on a business account, which totals the month's activity fees in one line

Treat each line on the statement as its own reconciling item. Grouping them makes the reconciliation shorter, but it hides which fee changed when the total jumps.

## Interest earned beside service charges on the book side

Interest earned is a book-side addition, the mirror of a fee. The bank credits it to the account, often on the last day of the cycle, and the ledger has no record until someone reads the statement. Add it to the balance per books and record it as interest income.

This worked example uses invented figures for one month on a small business checking account.

| Book side, example month | Amount |
| --- | ---: |
| Balance per books before adjustments | 14,262.40 |
| Add: interest credited | 4.12 |
| Less: monthly maintenance fee | (25.00) |
| Less: outgoing wire fees, two at 30.00 | (60.00) |
| Less: stop-payment fee, check 3318 | (35.00) |
| Less: paper statement fee | (3.00) |
| Adjusted balance per books | 14,143.52 |

The arithmetic: 14,262.40 plus 4.12 is 14,266.52. The four fees total 123.00, and 14,266.52 less 123.00 is 14,143.52. That figure must equal the adjusted balance per bank, after deposits in transit and outstanding checks, for the reconciliation to agree. A whole month that includes fees, interest and a returned check, with both sides shown, is in [a bank reconciliation example worked line by line](/blog/bank-reconciliation-example-worked).

## Recording a bank service charge in the ledger

Record a bank service charge by debiting a bank fees expense account and crediting cash, dated at the end of the statement period. For interest, debit cash and credit interest income. Keep fees and interest in separate entries so neither figure is netted out of sight.

From the example above, the entries are one debit to cash of 4.12 with a credit to interest income, and one credit to cash of 123.00 split across the fee lines, with the debit to bank service charges. A memo such as "Wire fees, 2 x 30.00, March statement" lets a reviewer tie the entry back to the page without opening the PDF.

When a business holds several accounts at one bank, the bank may charge the fees for all of them to a single account. Book the fee to the account it was taken from, then decide by policy whether to reallocate the cost. That pattern, and the order of work across accounts, is part of [reconciling multiple bank accounts at month-end](/blog/reconcile-multiple-bank-accounts). Quiet accounts carry fees too, such as a low-balance charge on savings; [reconciling a savings account each month](/blog/reconcile-a-savings-account) covers what to watch on an account with few lines.

## When the fee schedule and the statement service charge disagree

A service charge that does not match the bank's fee schedule should be recorded as charged and then disputed. The reconciliation reflects what the bank did, not what it should have done. If the bank agrees and refunds the fee, the refund is a new book-side item on the statement where it appears.

Common reasons for a mismatch:

- **A waiver that did not apply.** Many accounts waive the maintenance fee above a minimum balance. If the balance stayed above it all month and the fee was still charged, ask for a refund.
- **A schedule change.** Banks revise their fee schedules. Check the most recent disclosure before assuming the charge is wrong.
- **A duplicate charge.** Two identical wire fees on the same day for one wire is worth a call.
- **A fee for a service you did not use.** A stop-payment fee with no stop-payment request on file is a question for the bank and possibly for whoever has online banking access.

Keep a copy of the current fee schedule with the reconciliation file for the year. Comparing each month's fees against it takes a minute and catches charges that would otherwise repeat for years. If months of fees were never booked because statements were not reviewed, the clean-up is closer to [reconstructing bank records](/blog/reconstruct-bank-records) than to a normal reconciliation.

## Can a bank service charge ever sit on the bank side?

Rarely, but yes. A fee belongs on the bank side when the ledger already has it and the statement does not. That happens when you record a charge from an online banking notice or a fee invoice before the bank posts it, and the posting falls into the next statement period.

In that case the fee works like an outstanding check. Your ledger is right, the bank is late, and the next statement will show the charge. List it as a deduction from the balance per bank, with no journal entry, and tick it off when it clears.

A bank error is the other case. If the bank charged a fee belonging to another customer, or charged you twice and has agreed to reverse one, the wrong charge goes on the bank side as an addition back to the statement balance until the reversal appears. Do not book an entry for a fee the bank has admitted is a mistake.

Both cases are easy to miss when fees are booked by habit at month-end. [PreciseBankFlow](/) lists the statement lines that have no match in the ledger, which puts unexpected or repeated fees in front of you before you sign the reconciliation.