If you’re looking at a bank statement for the first time, you’re probably wondering what everything means. If you’re a newbie, the information can be a bit confusing to decipher. Understanding how to read a bank statement correctly can help you learn better money management and avoid careless mistakes, like overdrawing your account.
Your statement details your account activity for a specific period of time, and depending on the type of account (usually checking or saving), this length may vary. You should carefully review your statement each time you receive one as it is the most opportune way to reconcile your own spending records with the banks. If you see any errors or discrepancies, you have 60 days to report it to the bank; once those 60 days expire, the bank is no longer obligated to investigate.
Here are the essential parts of the bank statement so that you can better understand how to interpret where your money goes:
1.) Personal Info
This is your full name and permanent address, most typically the information you gave when you set up the account. Make sure that this is accurate and if you have plans to move, make sure to let your bank know so that they can send your statements accordingly.
2.) Account Information
This should include the type of account you have, typically either checking or saving, your account number, and also the statement period, which is the dates that the statement covers.
Checking statements usually arrive every month because the money is going in and out regularly with income and everyday spending. Savings statements usually are quarterly because not many payments are made out of these.
3.) Statement Summary
This part of the statement is usually at the top of the page and condenses the status of your account. It should tell you:
- The balance at beginning of statement period
- Total withdrawals
- Total deposits
- Services fees
- The balance at end of statement period
4.) Transaction Summary
Here on the statement you will find the details of all your expenses by date. The statement usually show the oldest payments at the top and work back to the most recent.
- Description: Where/who the transaction took place with
- Date: Transaction date
- Withdrawal: Indicates if money was taken out/spent
- Deposit: Indicates if money was put in to account
On your statement, you will be able to note any fees that you’ve incurred, either due to overdraft or miscellaneous bank fees. These will be deducted from your monthly balance. If you overdraw your account, you will have to pay this back to the bank, along with any other interest and charges, unless you have an interest-free overdraft.
By paying attention to this section of the statement, you will become aware of miscellaneous bank fees that you’re being charged with and thus can take appropriate action to avoid incurring them in the future.