A bank statement is a detailed summary of all the financial activities for an account over a specific time period, highlighting the comings and goings of your finances. It provides a record of your money and regular reviews of your bank statements can be helpful for tracking expenses, spotting potential accounting errors and identifying fraudulent activity. Let’s learn more about how to make the most of your bank statement.
What is the purpose of a bank statement?
A bank statement helps you review your account’s activities during a certain period. Doing so can help detect fraud, accounting errors and refresh your memory of the period’s activities. A bank statement is also commonly used for account reconciliation, a process where you compare your statement with a second record of financial activities — like a personal accounts ledger or a budgeting app — to highlight any discrepancies.
Many rely on their bank statements for tracking expenses. By laying out your account’s overall activities, a bank statement can help you monitor your spending and spot trends that may have gone unnoticed during day-to-day spending. This can be helpful for budgeting purposes and finding ways to save money.
How to read a bank statement
Your bank statement may be simple, but it contains a lot of information. The style, formatting and exact contents of a bank statement vary by financial institution, but common elements you can expect to find are:
- Statement period: This is the time frame covered within your statement. For example, from the first to the last of the month or other time frames that are approximately a month long.
- Starting and ending account balances: Your statement includes starting and ending balances that let you quickly gauge where your money is trending. Some banks and credit unions may include average daily balances as well.
- All completed transactions for the time period: These are commonly shown in chronological order. Each line item typically shows transaction date, its exact amount and the name of the payee. Your bank statement may not include pending transactions.
- Fees and any interest earned: Statements for interest-bearing accounts will show interest earned over the statement period.
- Bank information: The statement will clearly indicate the issuing bank, account number, and possibly personal information like phone number and mailing address.
How to get a bank statement
If your account has made at least one electronic fund transfer (ETF), for example an ATM transaction, debit card usage or direct deposit, within a given month, your bank is required to provide you with a bank statement. This could be either a paper statement in the mail or an e-statement sent through email. Alternatively, many banks also make statements accessible through their apps or online portals.
Choosing between these options is a matter of preference. Many financial institutions allow you to opt out of paper statements or set up e-statements through online portals.
How long do banks keep bank statements?
For any accounts surpassing $100 in transactions, banks — including those you’ve closed accounts with — keep records for a minimum of five years. Some institutions may choose to keep records longer, though they aren’t required to. Calling your bank or any previous institutions you’ve held accounts with about their record-keeping policies can help you stay prepared for future inquiries into your financial activities.
General guidelines for keeping bank statements?
A common rule of thumb is to consider any financial document that verifies information on your tax return as relevant and worth holding on to. If you keep electronic copies of your bank statements, maintaining at least one set of these backups may help prevent file loss. When disposing of unwanted bank statements and other financial documents, shredding paper copies and ensuring that electronic copies are fully deleted can help prevent your personal information from falling into the wrong hands.
How often should you check your bank statements?
Aiming to review your bank statement at least once per statement period may help you spot accounting errors or fraudulent transactions early. The sooner you act to correct mistakes, the better your chances may be at recovering lost or stolen funds.
Regularly checking your bank statement may also help to keep tabs on any potential fees. Overdraft fees, minimum balance fees and maintenance fees can catch customers by surprise.
Can anyone check my bank statements?
Typically, the only parties that can check your bank statements or your account information are the account owner(s), authorized account managers and bank professionals. Banks take great care to maintain the privacy and security of their customers’ personal information. Unless you give out your account information to someone else, the only third parties that may be able to access your statements and other banking information are law enforcement professionals and legal representatives, and only with the appropriate request for documentation.
A bank statement serves as a snapshot of all the financial activities for an account within a given time period. This includes transaction history, account balances, fees and interest earned and personal information like, your account number. A bank statement can be a useful tool for catching accounting errors or fraud and tracking your spending habits. Customers can typically opt for paper statements, electronic statements or in some cases both. Checking with your bank on its statement policies can be a great first step toward making use of this valuable budgeting and financial management tool.