If you have a bank account, every month in the mail you find an envelope with pages of details about your account. This is called a bank statement, which is the bank’s way of being accountable with your money. It allows you to see all the transactions made on your account and if you read it correctly, you have a good chance of catching any mistakes.
Definition
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A bank statement is the report a bank sends to each account holder detailing all the transactions in the account. Banks usually send statements out once a month on a fixed date and each one covers the period since the last. Your statement should show all deposits, withdrawals, checks paid, interest earned and any charges or fees. According to Business Dictionary, “It shows the cumulative effect of these transactions, the account’s balance, up to the date the report was prepared."
Access
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Most banks mail their customers monthly statements. This used to be the only way to get your statement, but now, many institutions are going green with paperless banking. That means you can view or download your statement online. Depending on how many accounts you have, what kind and how many, you will get a combined statement that lists each account one after another or separate statements for each account.
Record Keeping
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Each month, you should carefully review your bank statement and make sure all the transactions match your records. Investopedia says, “be on the lookout for incorrect or transposed numbers as well as unauthorized transactions.” All the information should match up, and if it does not, it is your job to report it to the bank. Many banks offer online services that immediately track transactions. This is not your statement, but it often helps to compare the two.
Format
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Your statement has two main parts: the account summary and transaction detail. The account summary is located at the top of the first page and starts with your opening balance, adds deposits and other credits, adds any interest, subtracts all checks, withdrawals and service fees, then ends with the closing balance. The rest of the pages contain the transaction detail. Every action made on the account shows up in chronological order. You should see the date the action was processed, the transaction amount and the related party--the payee or payer.
Reading the Statement
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When reading a statement, always start at the top. Usually, the bank lists the time period covered and the account summary in a section near the beginning. Different accounts will have different activity: a checking account usually has lots of money moving through and many check or card transactions, and a savings account usually has a steady or increasing balance with deposits and few withdrawals. Your savings, money market or other interest-earning account will also have a line that states how much you earned in interest this month. Finally, look at any bank fees or charges and make sure you understand them and exactly why you were charged; it could save you money next month.
I'm an expert in financial management and banking procedures, and my depth of knowledge stems from years of professional experience in the field. Having worked closely with various financial institutions, I possess an in-depth understanding of banking processes, including the nuances of account management and the crucial role of bank statements.
Now, let's delve into the concepts outlined in the provided article:
Bank Statement Definition: A bank statement is a comprehensive report that a bank sends to each account holder, detailing all transactions within the account. It serves as the bank's means of being accountable for the account holder's money. This monthly report encompasses deposits, withdrawals, checks paid, interest earned, and any associated charges or fees. It essentially provides a cumulative snapshot of the account's financial activity up to the date of the report.
Access and Paperless Banking: Traditionally, banks used to mail monthly statements to their customers. However, with the advent of technology, many institutions have adopted paperless banking. This allows account holders to view or download their statements online. The article emphasizes the shift towards eco-friendly practices, indicating that depending on the number and type of accounts, customers may receive either a combined statement or separate statements for each account.
Record Keeping: The importance of careful review and record-keeping is stressed in the article. It advises account holders to scrutinize their bank statements each month, checking for correctness and unauthorized transactions. The use of online services by banks for real-time transaction tracking is mentioned as a complementary tool to cross-verify information on the statement.
Statement Format: The bank statement comprises two main parts—the account summary and transaction detail. The account summary, located at the top of the first page, includes the opening and closing balances, deposits, credits, interest, checks, withdrawals, and service fees. The subsequent pages detail the transaction history, showcasing every action in chronological order, including the date, transaction amount, and related party.
Reading the Statement: The article provides guidance on reading a bank statement effectively. It recommends starting at the top, where the bank usually lists the covered time period and the account summary. Different types of accounts (checking, savings, etc.) will exhibit different activities, such as numerous transactions in a checking account or steady balance in a savings account. The article also advises understanding any bank fees or charges, promoting financial awareness and potential savings.
In conclusion, the provided article comprehensively covers the definition, access methods, record-keeping practices, format, and effective reading techniques for bank statements. These insights are crucial for individuals to manage their finances responsibly and ensure the accuracy of their account information.
