Banking 101: Understanding Your Bank Statement

Whether you get your bank statement online or in the mail, you might wonder how to get a good handle on everything it’s telling you. Maybe you just have a few questions about different parts of the statement. What’s that monthly account fee? Why is your balance different than you expected? Is that an error you need to address? If so, who do you even call about it?

Don’t panic! Learning how to understand your statements — and realizing why it’s important to look at them every month — is a big step toward empowering yourself and taking control over your financial health.

We’re here to make sure you understand your bank statement, from analyzing your accounts to knowing which fees you’re paying.

What is a bank statement?

A bank statement is an overview of the activity in a checking account or a savings account that you have at a financial institution. Essentially, you can think of your statements as snapshots of all of the money coming in and out of your accounts in a given period of time.

Your bank or credit union sends out a monthly or quarterly statement for each account that you own, summarizing all of the transactions completed within the last statement period (usually on a rolling month-to-month basis), as well as any fees or charges incurred in the period covered.

“A bank statement provides a summary of account deposits and withdrawals which have occurred during the statement period,” explained Ken Tumin, founder and editor of DepositAccounts.com. “The statement also includes information on interest rates, rate changes and fee changes.”

You receive statements on paper, through the mail or via an institution’s website. Almost all institutions let you opt-in to receive your statements online only and skip the paper version. Receiving a statement from your bank is a free service financial institutions are required to provide, so you should never be charged for accessing a physical or electronic copy of your statement.

Although most banks and credit unions send monthly statements for bank accounts, the Consumer Financial Protection Bureau (CFPB) notes that they are not required to do so unless you have completed at least one electronic funds transfer in that monthly statement period. Electronic funds transfer transactions include direct deposits, automatic payments or transfers, debit card purchases or withdrawals made with an ATM card. If you do not have an electronic funds transfers or activities every month, your bank or credit union may instead opt to send you a quarterly statement.

How to read a bank statement

To help you understand your statement, consider a real-life example. This sample statement is from Howard Bank and it features all of the components of a personal bank statement for a checking account that you could receive from your own bank or credit union.

A bank statement includes the following components:

• #1 Statement cycle: The first thing you should look for on your statement is the “statement ending ” or “for period of ” date, which notes the date range the statement covers. Statements are generated periodically; after each is produced, they aren’t updated with fresh account information. For instance, if the statement is generated on May 10th and covers the period of April 8th to May 8th, any transactions you made on May 9th will not be shown; you’ll have to wait for the next one.
• #2 Bank information: Your statement should include clear, easy-to-find identifying information about your bank or credit union, including the bank’s name, website, phone number and information about how and when you can contact them for questions.
• #3 Your information: Your name, current mailing address and account number (usually shown with only the last 4 digits of your account number for security purposes), will also be present so you can verify the statement is yours and it is for the correct account. You will receive separate statements for each account you have open with your bank or credit union.
• #4 Account summary: At the top of your transactional list, you will see an account summary that provides a quick “snapshot” view of your account. It will list your beginning balance, total amounts of withdrawals and additions, and your ending balance. Again, keep in mind that the ending balance is the balance that was accurate on the ending day of your statement cycle, so it may not necessarily be the same balance that you have the day you’re looking at the statement.
• #5 Account activity: Next, you will see a breakdown of each and every transaction that went through your account. Anything that came out of your account, such as purchases you made, withdrawals or payments you authorized, will be reflected as “debits” or “withdrawals.” On the opposite end, any deposits you made, credits you had, or payments that went into your account will be displayed as “deposits” or “credits.”
• #6 Transaction date: Some transactions may reflect a day or two delay, as some purchases like credit card transactions or large payments may not have posted on the same day you made them. Instead, the transaction date shows the date it was actually processed.
• #7 Debits & credits: Debits are funds taken out of the account, while credits are funds added to the account. Debits include payments made with a debit card, bill payments and also fees charged by the bank for account maintenance or account overdrafts. Credits include things like paychecks that are direct deposited into the account, or check deposits made online, at an ATM or at a bank branch.

Why it’s important to review your bank statement

Although it might seem like it’s enough to simply monitor your bank account every now and then by checking your mobile banking account, Tumin explains that it’s actually very important to physically review your statement, because in addition to listing the deposits and withdrawals, statements include notices of interest rate and fee changes. “That’s an important feature that may not always be shown when you log in to online banking,” he pointed out.

To help you get in the habit of reviewing your statements regularly, Tumin suggests setting up a monthly routine to review your statements. You might set a date every single month where you sit down, review all of your statements and tie them into other financial maintenance practices, such as paying your bills or balancing your budget. Although it might sound like a burden, reviewing your statements can take only a few minutes, especially once you’re in the practice of doing it on a regular basis and know what to look for.

Tumin adds that most people don’t pay enough attention to their statements and as a result, may be overlooking key financial information that could help them stay on track financially. “Without a regular routine, it’s easy to forget, and before long, you might go many months without reviewing your statements,” he said.

Frequently asked questions about your bank statement

When looking at a statement from your bank, it only natural to have questions. Here are a few FAQs you might have about your statement:

Should I receive my bank statement only online?

There is no right or wrong way to receive a statement from your bank, but many people find they are less likely to actually look at their statements on a regular basis if they are only receiving them online.

“I prefer to receive statements online,” noted Tumin. “However, I do find that I’m more likely to review a statement that I receive by mail.” Opting to receive your statement in the mail may prevent you from being tempted just to hit “delete” to clear your inbox when the online version arrives.

If you opt to receive your statements only online, be sure to open and download them with a secure network connection. Avoid using public Wi-Fi to access your private account information.

Do I need to save my bank statements?

Tumin advises keeping your most recent bank statements on hand, in order to compare against other bills and receipts. This way, you keep your bank information readily available, just in case. “It can provide account information for your family in case you become incapacitated or deceased,” he said.

Beyond that, you don’t need to store statements any longer than a year, says the Federal Trade Commission. And if you do need your statement printed out, such as for a loan application, you can request back copies from your bank or print them out from your online account. To dispose of past statements, shred them instead of recycling them or throwing them out.

Can thieves steal anything from you off your bank statement?

Even if someone nabs your bank statement from a mailbox, the criminal wouldn’t have an easy time stealing money from your account, notes Tumin. The account number listed on the statement is no different than the one printed on your paper checks.

That said, Tumin warns that if you’re leaving your personal bank statements around, you have an increased risk of financial theft and identity theft. If you keep statements on hand, be sure to store them filed in a private location and don’t leave any of your personal information out in public where someone could potentially take it.

What should I do if I spot an error on my bank statement?

Contact your bank or credit union directly to address concerns with errors on your statement as soon as possible. Your statement includes a phone number that you can call to speak with a representative directly.

If the error involves unauthorized withdrawals and customer service is unable to reverse the charges, Tumin recommends escalating your case to managers ASAP. According to the CFPB, you have a window of 60 days from the time your bank or credit union transmits your statement to report an unauthorized electronic fund transfer, so it’s in your best interest to address any potential errors you find immediately.

If you are unable to resolve an issue with your bank or credit union directly, you can also submit an official complaint to the CFPB through their online form. The CFPB will work with your financial institution to resolve complaints, usually in about 15 business days.

The bottom line on your bank statement

If you’re not already in the habit of reviewing your statement on a regular basis, you need to start today. Your statement is a free tool that empowers you to take full control over your checking and savings accounts. Establishing this practice now helps ensure that you know exactly what’s happening with your finances at all times. You need to be able to recognize any hidden fees, rate changes or unauthorized withdrawals, and take immediate action to rectify them if needed.