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A bank statement is a summary of the financial activity that takes place on your bank account over a specific period of time. Your statements show your account's starting bank balance and ending bank balance for the statement's time period as well as a detailed accounting of how your balance changed during that period.
Here's how to read and understand your bank statement.
What Is a Bank Statement?
If you have accounts such as a checking account or savings account, your bank or credit union is obligated to send you a bank statement. Bank statements show a record of everything that happens with your account during the statement time period, including deposits, withdrawals and fees.
They may send your bank statement through the mail. Or, if your financial institution offers paperless options, you may be able to review and download your bank statement on their website or mobile app.
When you receive your bank statement, it's important to review it carefully to double-check that everything's correct and there are no signs of fraudulent activity. If you use other types of budgeting apps or keep a personal ledger, you can also use your bank statement to reconcile your account. This process is also sometimes called "balancing your checkbook."
Bank statements can also be useful to review your budget. You can use them to keep tabs on your expenses and look for trends in spending. Bank statements may also be requested when you apply for credit, such as a personal loan or mortgage, to confirm your income.
How to Read Your Bank Statement
Although the format of your bank statement may vary depending on your financial institution, they generally include similar types of information. Here's a closer look at what you'll likely find on your bank statement and what it means.
Personal Information
Your bank statement includes personal information such as your name, address and phone number. When you check your statement each period, be sure to review this information to make sure everything looks correct. If you've recently moved or changed your phone number or name, you'll need to contact your bank and update your information. If the information is incorrect, it's possible your bank accidentally sent you the wrong statement or there could be fraudulent activity on your account.
Account Information
Bank statements include key information associated with your account, such as the name of the financial institution and your account number. When you get your statement, it's a good idea to look over this information to make sure that everything is correct. Also, if you get a bank statement addressed to you for an account you don't own, this could also be a sign of fraud and you should contact the bank immediately.
Statement Period
Since your bank statement covers all of your banking activity over a certain amount of time, your bank statement will include a date range for the statement period. For example, if your statement period starts on the first of the month and runs for 30 days, your statement may be marked April 1 through April 30. Bank statements will clearly feature the exact statement period dates, which can help you keep statements organized. Statement periods can vary by bank and type of account, so it's okay if date ranges differ between accounts.
Starting and Ending Balance
Your bank statement will include your account's beginning and ending balance for the statement. This can help you see how much money you have coming in and out during your statement period. You can look for spending trends over time and use the information to help create or refine your budget. Some financial institutions will also show you your average daily balance that you keep in that account.
Account Activity
During your statement period, you'll likely have many transactions on your account. This account activity is listed on your bank statement in chronological order for the statement period. Items listed may include deposits, cash withdrawals, debits, fees and also any interest earned if you have an interest-bearing account.
Be sure to review all transactions closely to make sure they align with the funds that should have been coming into and out of your account over the statement period. Checking your account activity is also a handy way to look for charges that you may have forgotten about, like autopay subscriptions and memberships. And if you see any suspicious activity, be sure to report it to your bank.
How Long to Keep Bank Statements
Generally, you'll want to keep any bank statements until you've filed taxes for that year. But if you end up using your bank statement to help calculate your taxes, you'll want to keep it handy for at least seven years, just in case the IRS has any questions down the road.
Digital statements are often easily accessible from your bank's website or mobile app, but they don't always remain online forever. So it's a good idea to download a copy and keep it stored securely. And if you get paper statements in the mail, you can either scan them in for safekeeping or keep a paper file.
The Bottom Line
Bank statements can be a good way to keep close tabs on your bank account, spending and personal financial information—all helping you manage your expenses and budget. They can also be used for tax returns, and if you're applying for credit, lenders sometimes request them to check your cash flow and verify income.
Try to keep copies of your bank statements handy for at least a year (and longer if you're using them for tax purposes). And most important, if anything looks suspicious on your bank statements, be sure to let your bank know as soon as possible to nip potential errors and fraudulent activity in the bud.