A bank statement is a document with a record of every transaction in your bank account within a specific time frame. In most cases, bank statements are published every month. Your statement would include deposits, charges, withdrawals, and the monthly balance for the period. You must always look out for errors, fees, and any interest earned after receiving your bank statement.
What is a bank statement?
A bank statement is a monthly document (sometimes quarterly) that gives a synopsis of banking activities, recording every transaction account. If you possess both the checking and savings at the same bank, you will get a single report comprising both statements. A statement period usually is a month is not the same as a calendar month.
Every statement would carry the following: account balance; deposits, like direct deposits, checks cashed, and funds received; withdrawals, like purchases, funds sent, ATM withdrawals; interests earned; fees charged by the bank; and finally, the new account balance. The transaction details part would have the specific deposits, withdrawals, and fees.
How do you receive a bank statement?
Many banks and credit unions would send the statement by mail every month. Sometimes, they would send a quarterly statement if you had not made any electronic transactions with the time period. If your bank has an online banking facility, they would send an electronic copy of the statements through the bank’s website or mobile app. Nevertheless, you can always choose if you want electronic statements or not.
Why do I need to read a bank statement?
Reconciliation is a method that compares records and examines if the values are in agreement. You should start assessing bank statements consistently to ensure accuracy. It is advisable to note down every transaction in a diary and compare it to the bank statement to spot mistakes or even cheating. Moreover, you can check if the statement matches the interest, deposits, withdrawals, and fees with your personal record at home. Suppose you don’t want to record every transaction by yourself, in that case, you could try using a third-party budgeting or accounting program.
You don’t have to get confused if you don’t see some of your transactions in the statement. You must check the end date of the statement. Transactions that are made after that day would be recorded on the following statement. Bank statements are also a timely reminder of the actual amount you have in your bank, which might be different from what you might have had in mind. Checking your bank statement can help you avoid overdraft fees.
There might be discrepancies
One of the other reasons to read the bank statements is to spot discrepancies. During reconciliation, you might come across activities that you don’t remember, or the transaction amount would be different. For instance, you would have bought something for $45, but you would see that it had been recorded as $55 inaccurately in the statement. After making sure that it is a discrepancy with necessary proof, you must report it to the bank or the credit union. Usually, you are allowed to dispute any errors within 60 days.
Keep them safe
Bank statements help you track your financial progress be aware of changes in banking or credit union practices.
You must keep every statement you receive forever, even if they are an electronic statement. You can download the electronic statement and back it up on the hard drive as some banks would deny access to the documents after seven years. Moreover, you would need to check your bank statements whenever you file tax returns. You would need it even if you want to refinance or buy a new house, banks and lenders will study numerous statements before sanctioning a loan.