Do you know how to read your bank statement? Some people never take the time to learn how. Instead, they throw out their statement or delete it from their inbox before taking a closer look. If you are in this habit, there is no better time than now to make a change. Learning how to read your bank statement is not as difficult as you may think. Once you know what you are looking for, you will feel much better about your finances, www.moneycrashers.com reported.
Here are five tips for reading your bank statement with success:
- Start with the summary. Somewhere near the top of your statement, there will probably be an area that provides an overview of the past month’s activity. This includes the opening balance, closing balance, deposits, withdrawals, cheques, and fees. A quick glance at this will give you a great idea of what you did during the past month, and whether or not there are any issues you may need to look into.
- What type of statement are you looking at? While the format may be the same, the information on a current account statement will be much different than that of a savings account. For instance, your current account probably has a lot more money coming in and out, especially in the form of cheques. On the other hand, your savings account is probably where you store money that you don’t want to spend. On a savings statement, make sure you hunt down the line that shows how much interest you earned. Even if only a little bit of money, you want to be sure of how much you are earning.
- Keep an eye out for common bank charges that you may be able to avoid in the future. For instance, some banks impose monthly service charges if a certain amount of money is not kept in the account. If you are not reviewing each and every statement, you may make a mistake that leads to one of these charges repeatedly.
- Look for errors. Although you may not find them very often, mistakes do happen from time to time. It is essential that you comb through each and every detail of your bank statement, looking for errors. You never know when you will get charged for something you didn’t purchase, or get hit with a fee that is not fair. If you don’t catch this on your bank statement, chances are that it will go unnoticed. If you find a fee that you think is unwarranted, be sure to call up the customer service line and ask that it be removed from your account.
- Detect spending patterns. Since your bank statement includes every transaction that was made, it is simple to see where your money is going and whether or not you are making good decisions. This allows you to pinpoint problems such as spending a lot at the beginning of the month, but running out towards the end. Patterns like this should help you better budget your money. It should also show you how often you took a trip to the supermarket, went to the movies, went out to eat, or bought clothing. Use your bank statement as a means to identify expenses in your life that you need to cut back on.
Things to observe
If you are looking at a bank statement for the first time, you are probably wondering what everything means. If you are a newbie, the information can be a bit confusing to decipher. Understanding how to read a bank statement correctly can help you learn better money management and avoid careless mistakes, like overdrawing your account, according towww.igrad.com.
Your statement details your account activity for a specific period of time, and depending on the type of account (usually current or saving), this length may vary. You should carefully review your statement each time you receive one as it is the most opportune way to reconcile your own spending records with the banks. If you see any errors or discrepancies, you have 60 days to report it to the bank; once those 60 days expire, the bank is no longer obligated to investigate.
Here are the essential parts of the bank statement so that you can better understand how to interpret where your money goes:
- Personal Info
This is your full name and permanent address, most typically the information you gave when you set up the account. Make sure that this is accurate and if you have plans to move, make sure to let your bank know so that they can send your statements accordingly.
- Account information
This should include the type of account you have, typically either current or saving, your account number, and also the statement period, which is the dates that the statement covers.
Checking statements usually arrive every month because the money is going in and out regularly with income and everyday spending. Savings statements usually are quarterly because not many payments are made out of these.
- Statement summary
This part of the statement is usually at the top of the page and condenses the status of your account. It should tell you:
The balance at beginning of statement period
Total withdrawals
Total deposits
Services fees
The balance at end of statement period
- Transaction summary
Here on the statement, you will find the details of all your expenses by date. The statement usually shows the oldest payments at the top and work back to the most recent.
Description: Where/who the transaction took place with
Date: Transaction date
Withdrawal: Indicates if money was taken out/spent
Deposit: Indicates if money was put in to account
- Fees
On your statement, you will be able to note any fees that you have incurred, either due to overdraft or miscellaneous bank fees. These will be deducted from your monthly balance. If you overdraw your account, you will have to pay this back to the bank, along with any other interest and charges, unless you have an interest-free overdraft.
By paying attention to this section of the statement, you will become aware of miscellaneous bank fees that you are being charged with and thus can take appropriate action to avoid incurring them in the future.
Source: https://punchng.com/how-to-read-your-bank-statement/