A popular crime thriller had a plot where the villain planned to hack into the servers of banks and wipe out all their data. The logic was that most people never knew how much balance they had in their account. If all records were deleted, then there would be chaos all over. What if something like this really happened? If such an unlikely scenario really occurred, then what would save you is your bank statement. A bank statement is a record of all your transactions at the bank and contains the balance in your account. It helps you know how much money you have in your bank account.
The bank statement is an official record issued by the bank where you have an account. Usually, bank statements are issued once a month. It can also be issued for a particular period, like three months, six months, or even for a date range. All types of banks, small and large, and credit unions issue bank statements. Some banks issue the statement periodically while others issue it on demand, i.e.: you are given a copy when you ask for it.
Why would you need a bank statement?
A bank statement can be useful in many ways:
- It helps you reconcile your account. You would probably have records of transactions you carry out in your bank account in the form of pay-in slips, e-mails, and SMS. When you get an official statement, you can compare the record you have maintained with the official record. This will help you reconcile your account so you are clear about all the transactions that have occurred. You can verify all the transactions carried out to check if they are right and to identify any possible mistakes.
- Errors are unlikely in the age of digital banking. Errors though can happen due to human mistakes or can be even be an instance of cyber fraud. In case there is an error, like an incorrect transaction or a reference to a check issued which you have not issued, you can get it rectified. The statement allows you to check for errors and get them corrected. For this reason, it is better to review your bank statement so that any errors can be reported on time to get it fixed.
- It helps you in financial planning. The bank statement helps you get a bird's eye view of how much money you are earning (credit to your account) and how much you are spending (debit from your account). It is the best way to track your spending. One look at your bank statement and you can understand how much you are spending. For those who do not track how much they spend, the bank statement can help in tracking expenses so you can reduce unnecessary expenses.
- It is an official document. The bank statement is an official record of your banking transactions. It may be required while applying for a loan, when you need to produce the bank statement as proof of your financial position. It may also be demanded by a landlord from whom you are renting an apartment.
- The bank statement will be very helpful while filing your income tax returns. You can refer it to get data to prepare your returns.
Online or printed statement
While printed bank statements are the norm, most people are switching over to paperless statements that are delivered online. To save paper usage and show their commitment to the environment, banks are convincing customers to opt for e-statements that are sent through email in the form of a pdf file. Usually, these statements would have a password that is revealed in the accompanying email. If you need a bank statement that has the signature and seal of the bank for any official purpose, you can then ask for a printed statement. Otherwise, e-statements are as good as a printed statement.
What does the bank statement contain?
The bank statement contains the following information:
- Your details
Your personal details like name, account number, address, email, and phone number are printed at the top of the bank statement.
- Statement period
This is the period for which the statement has been generated. It could be for a month, three months, six months, a year, or a date range, i.e.: from 01-01-2019 to 01-05-2019.
- Opening balance
The statement starts with the opening balance as on the first date. A monthly statement would have the balance in your account as on the first date of the month.
All transactions that took place during the period are listed out. The date of transaction, a brief description of the transaction, and the amount would be printed. The statement would show whether it is a credit transaction (incoming) or debit transaction (outgoing). All transactions, including deposit of checks, receipt of checks, receipt of salary, withdrawal of cash from ATM, money spent using debit card, online transactions using the bank account are mentioned in the statement. Apart from these, interest paid by the bank and charges levied on your account are displayed.
- Closing balance
At the end of the statement, the totals for credit and debit are shown. This will help you get a snapshot of whether you are spending more than your income. The closing balance would also be printed on the statement. This is the amount in your bank account as on the last date of the period for which the statement is generated.
The bank statement is a record of all your banking transactions. It is an important record that helps you know the history of your banking transaction that can be useful while financial planning. You can get this record by visiting the bank branch or even print it at the ATM. E-statements can be downloaded anytime by logging into your bank account online and generating the statement. Make sure you check your bank statement periodically, so you are able to track your spending and also find out any error in your account.