Updated: June 4, 2024
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Reading a bank statement allows you to track your spending, catch errors and make sure your records match what the bank has on file. Bank statements detail your transactions, balances and fees over a set period.
Understanding how to read a bank statement is part of financial awareness and security. Review your bank statements regularly — make it a habit so you make more informed financial decisions, boost your savings and take ownership of your overall financial health.
A bank statement is a detailed record of all transactions in a bank account over a specific interval, typically monthly.
A bank statement includes information including statement or cycle period, personal information, interest earned and all incoming and outgoing account activity.
Understanding how to read a bank statement helps you track expenses, monitor spending and identify potential fraudulent charges or errors.
A bank statement, also known as an account statement, is an official document provided by your bank that summarizes your account activity over a specific period. It serves as a record of all transactions, including deposits, withdrawals and fees.
Bank statements are usually issued by your bank on a regular basis, such as monthly or quarterly, depending on the type of account and the bank's policies. Most types of bank accounts — including checking, savings and credit card accounts — generate bank statements.
Paper statements are physical documents mailed to your address, whereas electronic bank statements are digital versions. Both options are safe ways to store details of your account history. But if you’re applying for a mortgage or loan, for example, having digital versions available can expedite the application process.
Some financial institutions offer electronic statements for free but may charge a fee for paper copies to discourage using extra resources.
Electronic bank statements have a number of advantages, including instant access and reduced clutter. They’re also more environmentally friendly.
If you're tech-savvy and don’t like clutter, electronic statements can be a better format for you. But if you require hard copy records or have limited internet access, paper statements may be more suitable.
With many of the best banks, getting your bank statement digitally is a straightforward process:
You can also request that paper statements be mailed to your address. More and more banks are charging fees for this service.
Bank statements typically include details like transaction history, account balances, fees and any interest earned. Here’s a breakdown of what you might see and how to interpret what they mean:
Information | What It Is | Why It’s Important |
|---|---|---|
Statement or Cycle Period | The period of time that the statement covers. | Helps you understand the timeframe for the transactions listed. |
Bank Information | The name and contact details of your bank. | Helps you to contact the bank for any queries or issues. |
Personal Information | Your name, address and account number. | Helps you to verify this information is correct to prevent any issues with your account. |
Account Summary | A summary of all transactions, including deposits, withdrawals, fees and interest. | Helps you get a quick overview of your account activity and balance. |
Interest Earned | The amount of interest you’ve earned on your account during the statement period. | Helps you understand how much your money is growing. |
Account Activity | Detailed list of all transactions made during the statement period. | Helps you track spending, identify unauthorized transactions and manage your budget. |
Overdraft Protection | Indicates whether your account has overdraft protection. | Helps you if your account balance falls below zero. |
Fees | Any fees charged by the bank, such as monthly maintenance fees or non-sufficient funds (NSF) fees. | Helps you understand ongoing fees needed to manage your account and avoid unnecessary charges. |
Some situations might arise where you'll need more detailed information than what is typically provided in a standard bank statement:
Disputing transactions
If you notice an unauthorized transaction on your account, you may need more details about the transaction, such as the exact time it was made or the location of the transaction, to dispute it with your bank or credit card company.
Applying for loans or mortgages
When applying for a loan or mortgage, lenders often require more detailed financial information, such as your monthly income and expenses, to assess your ability to repay the loan.
Investment tracking
If you have investments linked to your bank account, you might need more detailed information about your investment transactions and performance.
Reconciling your bank statement involves verifying the accuracy of your own account records by comparing them with your bank's records. Here's how:
If you write checks often, reconciling your bank statement is especially important because check recipients process and cash checks at different rates — keep your books balanced so you don’t spend more than you actually have on hand.
Review your statement at least monthly. Letting too much time pass between checks increases the risk of undetected errors, fraudulent activity or unauthorized transactions.
Spotting errors on your bank statement helps to prevent financial losses and protect your credit. Here are the main types of errors you should be on the lookout for:
Unauthorized transactions
Watch for any unfamiliar charges that could be fraudulent activity on your account.
Recurring charges
Check for unexpected recurring payments that may need to be reviewed or canceled.
Duplicate charges
Look for any instances where the same transaction appears multiple times, leading to overcharging.
Incorrect fees
Review fees to ensure they are accurate and in line with your account terms to avoid unnecessary charges.
If you notice any errors, contact your bank immediately to report the issue. Also keep a record of your communication and follow up to make sure the issue is resolved.
Banks make errors. If you don’t review your bank statements regularly, you can be left vulnerable to your account being drained by these errors, leading to financial losses and a dip in your credit score. Common mistakes you can make include:
Get answers to some common questions about reading bank statements.
A bank statement serves as a detailed record of all financial transactions in your account over a specific period, allowing you to track your income, expenses and account balances. It's also a way for monitoring your finances and detecting any errors or unauthorized activity.
Most banks provide electronic bank statements that you can access through your online banking portal or have emailed to you. You could request paper statements to be mailed to your address, but some banks may charge a fee.
To request a statement from your bank, you typically only need to provide your account number and name.
Yes, bank statements can serve as proof of receipt for various transactions, including deposits, withdrawals and payments. They are widely accepted as official documentation for financial records and can be used for tax purposes or to verify income and expenses.
It's recommended to keep bank statements for at least seven years — the standard period for tax audits and financial record-keeping.
You can get the most out your bank’s online platform in the following ways:
About Alvin Yam, CFP
Alvin Yam is a certified financial planner with over 15 years of experience working with individuals and corporations. He is an expert in wealth management and personal banking. Alvin is also the Founder and Managing Partner at Paraiba Wealth Management, an independent registered investment advisor.
Prior to founding Paraiba, Alvin spent five years as a Director at HSBC overseeing retail and wealth products, and was also a Financial Consultant at Charles Schwab, advising clients on investments, retirement planning and banking products.
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