What a Bank Statement Is and How to Read One

Updated: June 4, 2024

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Reading a bank statement allows you to track your spending, catch errors and make sure your records match what the bank has on file. Bank statements detail your transactions, balances and fees over a set period.

Understanding how to read a bank statement is part of financial awareness and security. Review your bank statements regularly — make it a habit so you make more informed financial decisions, boost your savings and take ownership of your overall financial health.

Key Takeaways

A bank statement is a detailed record of all transactions in a bank account over a specific interval, typically monthly.

A bank statement includes information including statement or cycle period, personal information, interest earned and all incoming and outgoing account activity.

Understanding how to read a bank statement helps you track expenses, monitor spending and identify potential fraudulent charges or errors.

Bank Statements: A Definition

A bank statement, also known as an account statement, is an official document provided by your bank that summarizes your account activity over a specific period. It serves as a record of all transactions, including deposits, withdrawals and fees.

Bank statements are usually issued by your bank on a regular basis, such as monthly or quarterly, depending on the type of account and the bank's policies. Most types of bank accounts — including checking, savings and credit card accounts — generate bank statements.

Paper vs. Electronic Bank Statements

Paper statements are physical documents mailed to your address, whereas electronic bank statements are digital versions. Both options are safe ways to store details of your account history. But if you’re applying for a mortgage or loan, for example, having digital versions available can expedite the application process.

Some financial institutions offer electronic statements for free but may charge a fee for paper copies to discourage using extra resources.

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SHOULD YOU GO PAPERLESS?

Electronic bank statements have a number of advantages, including instant access and reduced clutter. They’re also more environmentally friendly.

If you're tech-savvy and don’t like clutter, electronic statements can be a better format for you. But if you require hard copy records or have limited internet access, paper statements may be more suitable.

How to Get Your Bank Statement

With many of the best banks, getting your bank statement digitally is a straightforward process:

1
Log in to your online banking portal.
2
Navigate to the statements section.
3
Select the desired statement period.
4
Download or view your bank statement.
5
Save or print the statement for your records.

You can also request that paper statements be mailed to your address. More and more banks are charging fees for this service.

How to Read Your Bank Statement

Bank statements typically include details like transaction history, account balances, fees and any interest earned. Here’s a breakdown of what you might see and how to interpret what they mean:

Information
What It Is
Why It’s Important

Statement or Cycle Period

The period of time that the statement covers.

Helps you understand the timeframe for the transactions listed.

Bank Information

The name and contact details of your bank.

Helps you to contact the bank for any queries or issues.

Personal Information

Your name, address and account number.

Helps you to verify this information is correct to prevent any issues with your account.

Account Summary

A summary of all transactions, including deposits, withdrawals, fees and interest.

Helps you get a quick overview of your account activity and balance.

Interest Earned

The amount of interest you’ve earned on your account during the statement period.

Helps you understand how much your money is growing.

Detailed Information Beyond Bank Statements

Some situations might arise where you'll need more detailed information than what is typically provided in a standard bank statement:

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    Disputing transactions

    If you notice an unauthorized transaction on your account, you may need more details about the transaction, such as the exact time it was made or the location of the transaction, to dispute it with your bank or credit card company.

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    Applying for loans or mortgages

    When applying for a loan or mortgage, lenders often require more detailed financial information, such as your monthly income and expenses, to assess your ability to repay the loan.

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    Investment tracking

    If you have investments linked to your bank account, you might need more detailed information about your investment transactions and performance.

How to Reconcile Your Bank Statement

Reconciling your bank statement involves verifying the accuracy of your own account records by comparing them with your bank's records. Here's how:

1
Gather your bank statement and personal financial records.
2
Compare the statement's opening balance with your records.
3
List all transactions from your records not on the statement.
4
Add deposits and subtract withdrawals not on the statement.
5
Verify the statement's closing balance with your updated records.

If you write checks often, reconciling your bank statement is especially important because check recipients process and cash checks at different rates — keep your books balanced so you don’t spend more than you actually have on hand.

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HOW OFTEN SHOULD YOU CHECK YOUR BANK STATEMENT?

Review your statement at least monthly. Letting too much time pass between checks increases the risk of undetected errors, fraudulent activity or unauthorized transactions.

Flagging Bank Statement Errors

Spotting errors on your bank statement helps to prevent financial losses and protect your credit. Here are the main types of errors you should be on the lookout for:

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    Unauthorized transactions

    Watch for any unfamiliar charges that could be fraudulent activity on your account.

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    Recurring charges

    Check for unexpected recurring payments that may need to be reviewed or canceled.

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    Duplicate charges

    Look for any instances where the same transaction appears multiple times, leading to overcharging.

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    Incorrect fees

    Review fees to ensure they are accurate and in line with your account terms to avoid unnecessary charges.

If you notice any errors, contact your bank immediately to report the issue. Also keep a record of your communication and follow up to make sure the issue is resolved.

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COMMON MISTAKES FROM IMPROPER BANK STATEMENT REVIEW

Banks make errors. If you don’t review your bank statements regularly, you can be left vulnerable to your account being drained by these errors, leading to financial losses and a dip in your credit score. Common mistakes you can make include:

  • Ignoring small charges: Small, recurring charges can add up over time.
  • Not tracking spending: Bank statements provide a picture of your spending habits. If you’re not reviewing it regularly, you might not realize where your money is going.
  • Not watching your account balance: You could overdraw your account and incur hefty fees.
  • Not noticing changes in terms: Banks often notify changes in account terms or fees through bank statements.

FAQ About Bank Statements

Get answers to some common questions about reading bank statements.

What is the purpose of a bank statement?
How do you get a bank statement?
What documents are required for a bank statement?
Can I use a bank statement as proof of receipt?
How long should I keep my bank statements?
How can I maximize my bank's online platform to monitor and manage my bank statements?

About Alvin Yam, CFP


Alvin Yam, CFP headshot

Alvin Yam is a certified financial planner (CFP) with over 15 years of experience working with individuals and corporations. Before founding Paraiba Wealth Management, he was a director at HSBC and a financial consultant at Charles Schwab. Yam is MoneyGeek's expert consultant on wealth management and personal banking.

Yam earned his bachelor's degree in political science from the University of California, San Diego and his Master of Business Administration from Loyola Marymount University.


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The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

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