What Is A Bank Statement? How Does It Work?

A bank statement is a detailed record of all transactions that occurred on a bank account during a specified period of time, or “statement cycle,” which usually lasts for a month.
Account Statements allow customers to view all activity on their accounts, reconcile their account balances, spot errors and identify potential fraud. It can also be used to track expenses and savings and create a budget. Additionally, bank statements are often required when applying for loans, including mortgages, and can help identify income and expenses when filing taxes.
The bank sends the statement of account electronically or by post. Paper statements are becoming less common and banks can charge customers who want to use paper statements. Many people view bank statements through their online banking accounts or the bank’s mobile app

What is a Statement of Account?

A bank statement is a document (also known as a bank statement), usually sent by the bank to the account holder each month, summarizing all transactions on the account for the current month. A bank statement contains bank account information such as account number and a detailed list of deposits and withdrawals.

How does the statement of account work?

A bank statement is designed to show you exactly what happened to your account over the past month, listing your spending habits and any charges you incurred.
Most bank statements begin with a summary of all deposits, which gives you an idea of ​​the exact amount that went into your account last month. Next, you’ll see a summary of your withdrawal activity. Your summary shows your balance at the beginning of the month and then your ending balance after all deposits and withdrawals have been added.

Below the summary, the report shows every transaction you participated in, along with the corresponding date, amount, and payee. For checking accounts, the statement may be several pages long, depending on how often you use the account to make payments. Typically, you’ll view your transactions in the order they occurred. A detailed transaction list lets you know when money arrives in your account and when it goes out each month.
Your transaction details also include information about the source of your deposit and where your fees go. Double check transactions, especially fees, to make sure they are correct

What to look out for on the account statement

When customers receive their monthly statements, there are certain things they should check.

Mistake. Many people don’t keep checkbooks or purchase receipts like they used to. Instead, they check the bank statement for any erroneous charges or transactions. Customers who discover they have not made a transaction, no matter how small, should notify their bank immediately as this could be a sign of identity theft. Information on how to handle disputes with the bank should be included on the bank statement.

Automatic payment. Customers who automatically pay invoices from their account should double check the payment amount. Automatically withdrawing payments is easy to forget, especially when the amount fluctuates. A utility bill is an example of a payment that can change from month to month.

Direct deposit. Customers who direct deposit paychecks, Social Security checks, or other payments should make sure they appear on their monthly statement.

Bank balance. Customers should ensure that they have sufficient funds in their accounts to avoid overdraft fees.
Consumption habits. Bank statements can be a good indication of how someone has spent their money. A flurry of restaurant deals can help people quickly realize that a significant portion of their paycheck goes to eating out. Frugal customers, on the other hand, can see their money habits increase their profits.

Interest income (if any). The monthly statement for an interest-bearing account shows how much interest the client has earned. In the case of a credit card statement, it will show how much interest was charged to the customer during the billing period, and the total interest charge for the year.

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