Bank Statements: What They Are And How To Read One

You know money doesn’t grow on trees or come from some magic cash fairy. But if you’re not tracking your monthly income and expenditures, it might feel that way.

Reviewing the bank statements from your financial institution each month will tell you exactly where your money is coming from and where it’s being spent. Bank statements help you meet your financial goals and qualify for things like a mortgage or car loan, so it’s important to know how to get them and how to read them.

What Is A Bank Statement?

A bank statement is a document detailing financial transactions to and from your bank account over a certain period of time. In addition to helping you track your spending and saving habits, bank statements can come in handy when you’re filing your tax returns, renting an apartment or applying for a loan.

This is because they can show that you have a stable income and are in a good position to take on more financial obligations. You can get bank statements for all your bank accounts, including your checking accounts, savings accounts and credit card accounts – if you have any credit cards with your bank.

What Does A Bank Statement Look Like?

A bank statement will be multiple pages. The more transactions completed in the statement period, the longer the bank statement will be. While different banks will have different statements, most will include the following information:

• The statement period – beginning and ending dates
• The name and contact information of you and your financial institution
• Your bank account information
• An account summary
• A list of every deposit and withdrawal during the statement period

What Information Is In A Bank Statement?

Bank statements can provide both a high-level and a very detailed account of your spending and earning. For a broader understanding or a basic summary of your financial transactions, you’ll want to review your account details. For a closer look, you’ll want to review the deposits and withdrawals section.

Account Details

The account details section provides basic information about your bank and you. It will also provide a summary of your account balance and how much money was deposited into your account and how much was taken out during the statement period.

You’ll find the following information in this section:

• Your financial institution’s name and information, including the number for customer service
• Your name and home address
• The name of a second account owner if it’s a joint account
• Your account number and routing number
• The starting account balance, or amount of money you had at the beginning of the statement period
• The ending account balance, or amount of money you have at the end of the statement period
• The total amount of money you added to the account over the statement period
• The total amount of money you took out of the account over the statement period
• Any service fees you were charged during the statement period
• Interest earned – if you have an interest-bearing account, like a savings account

Deposits

This section will list out every deposit and other addition you made to the account, whether it was by an electronic direct deposit, a cash or check deposit through an ATM or made in person or through mobile banking.

The information you’ll find here includes:

• Date the deposit was made
• Description of the deposit source
• Amount of money deposited

This information is helpful when it comes to setting a budget and predicting future income. It can give you a good idea of how much money you make each month and know where that money is coming from.  

Withdrawals

This section will list out every withdrawal you made from the bank account during the statement period. Depending on the bank, it may further separate the withdrawals into each type: ATM, debit and electronic.

Whatever the type of withdrawal, the following information will be included in this section:

• Date the withdrawal was made
• Description of where the withdrawal was made or the purpose of withdrawal (for example, a charge at a store or a bill payment)
• Amount of money withdrawn

This information can be important because it reveals your spending habits. It can show you where you may be overspending and help you create a budget for groceries, utilities and entertainment based on what you spend on average each month.

Other Information

Your bank may also include other information in your statement, including any changes to terms and conditions, explanations for monthly service fees and company updates.

If you have a checking and savings account with the same bank, your statement may also give you a summary of the other account. For example, your checking account statement may provide an account summary of your savings account at the end of the statement.

Keep in mind that the statements for your checking and savings account look a little different as you’ll likely have more transactions in your checking account than savings and there may be different updates from your bank based on the type of account.

What Happens If There’s An Error In My Bank Statement?

If you find an error or any suspicious activity on your bank statement, you’ll first want to confirm that it is an error. Review all the information that is provided, including the date and source, to make sure you aren’t forgetting a coffee run or shopping trip you may have had.

For example, if your bank statement shows a $100 charge from a steakhouse in Oklahoma on January 10 and you’re a vegetarian who was in Michigan on January 10, that is clearly suspicious activity.

Once you verify there’s indeed an error or suspicious activity on your bank statement, take the following steps:

Review the rest of the statement. Check for other errors or suspicious activity, as someone may have your card information.

Gather proof. It may be helpful to also gather any proof that supports that you did not make this charge. In this example, you may have receipts from a store you shopped at, in Michigan, on that day, proving you weren’t in Oklahoma.

Contact your financial institution immediately. You’ll want to contact your financial institution immediately to inform them of the error or suspicious activity. Your bank statement should have contact information and even instructions on what to do if there is an error.

Take additional precautions. If there is suspicious activity, you may need to freeze your debit or credit card or cancel it and get a new one.

Whether it’s an error or suspicious activity, make sure you record the names of the people you’re working with, take notes during your conversation and keep track of any reference numbers. Save all correspondence as well. This will be helpful if there are any problems later.

Update your records. Once the error is corrected or the suspicious activity is removed from your statement, make sure you review it again and update your records.

How To Get A Bank Statement

There are a few ways to get a bank statement. Typically, your financial institution will mail paper statements to your address every month at the end of the statement period. You can also request statements in person.

If you prefer online banking and wish to go paperless, you can also get a digital statement. You’d simply log in to your account and download any previous monthly statement. Receiving a digital copy can be a more sustainable option and can be a safer option in terms of privacy.

How Long To Keep Bank Statements

Typically, your online banking account will have several years’ worth of digital bank statements available.

As for paper statements, the FDIC recommends keeping bank statements with no tax significance for no longer than a year. If the bank statement has tax significance, you should keep it for 7 years.

Remember, when you’re applying for a mortgage, you’ll be asked to provide 60 days’ worth of bank statements for every bank account that lists assets your using to qualify for a mortgage.

The Bottom Line

Bank statements help you track your finances, see how much money you make each month, show your monthly expenses and help reveal your spending habits. Reviewing statements will help you spot errors and suspicious activity but can also help you budget your money and find ways to save.

Bank statements are also needed to qualify for a mortgage and other loans. If you’re concerned about information on your bank statement affecting your chance of buying a home, read our article on whether your bank statement is keeping you from getting a mortgage.