A bank statement is a document issued by your financial institution that shows your account activity over a specific period of time. Most bank statements are produced monthly, although some banks offer statements on either a quarterly or annual basis.
Here, we’ll go over some of the most useful information about bank statements.
What is a bank statement?
A bank statement includes all of your account transactions over a specific period of time -- usually a month. Your statement will show your beginning balance, any additions or subtractions to your account, and your ending balance for the period in question.
The statement will also provide information about the issuing bank, like their address and contact information, along with other miscellaneous information. You’ll also be given information about who to contact if you suspect there’s an error on your statement.
Your bank statement can help reveal erroneous payments, keeping your hard-earned money where it belongs.
No matter who you bank with, you’ll most likely receive a statement once a month, but some institutions also provide quarterly and annual consolidated statements. This can depend on how much activity your account has; generally, the less frequently you use your account, the less need there is for frequent reporting.
Why are bank statements important?
Bank statements have a variety of uses, but here are some of the more common ones:
- Record-keeping purposes: Keeping track of your bank balance, as well as any deposits or withdrawals, is vital for personal financial management. Bank statements also act as official documentation to prove the existence of certain financial transactions.
- Budgeting: For those looking to gain a better understanding of where their money is going, your bank or credit card statement is likely going to be one of the first documents you inspect. Reviewing your bank statements can help you get control of your finances.
- Certain big transactions. If you’ve ever signed an apartment lease, bought a home, or needed funding for any large purchase, it’s very likely you’ve been asked to provide “proof of funds” documentation. Bank statements play a key role in these contexts.
- Employment purposes. Everyone needs to be paid for the work they do. You’ll probably be asked to provide routing number and account number information to receive direct deposits from your employer. Usually, at least your account number will be visible on your bank statement, so you can use the statement as a point of reference.
Critically, bank statements can also help with error identification. You might have been charged for something you didn’t order, or you might have directed a payment to the wrong vendor by mistake. Your bank statement will help to reveal these errors.
Bank statements might also help you identify recurring subscriptions that you don’t use or no longer need. Removing these unnecessary charges can help you free up additional funds to either pay down debt or build your investment portfolio.
Now what?
If you haven’t looked at your bank statement in some time, take a few minutes to do so. It’s at least worth being familiar with your bank’s reporting processes and knowing what to expect on one of your bank statements.
There’s a high probability that you’ll learn something from just looking at your most recent statement. While it may seem obvious, being able to clearly understand where your money is going is a skill that requires practice.
If you already review your bank statements on a periodic basis, you might not need to do anything right now. But it’s smart to know where to find your statements if you ever need them, and it’s also a good idea to know the information you can expect to find on them.
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Bank statements in the real world
If you’re applying to rent an apartment, you’ll probably have to provide a few months’ worth of bank statements to show that your income is sustainable -- and sufficient to cover rent expenses.
As part of an application package, you’ll have to gather 1-3 months’ worth of statements from your bank. Knowing in advance where to find your statements, as well as the information they contain, is responsible behavior when it comes to basic personal financial management.
If you’re ever having trouble finding your statements, don’t be afraid to ask for help on your bank’s online customer service page. If that fails, give your bank a call. Most recent statements are readily available after logging on to your account online, and some even still arrive in paper format.
