December 19, 2023

Bank Statements 101: What They Are and How to Read Them

A bank statement or billing statement is an invaluable tool for anyone managing an active account — whether it’s a credit card, debit card, or savings account.

To keep track of your financial health, you should set aside time each month to review your accounts. It’ll give an overview of how much income your household brings in, and you can compare that to outgoing expenses to set a practical budget and make sure you’re living within your means.

So, what is a bank statement? Where do you get one, and how do you read it? Let’s dig a little deeper.

What is a bank statement?

A bank statement, billing statement, or account statement — all the same thing — is a report that summarizes account activities during the current billing cycle. It shows your deposits, check or debit card payments, direct deposits, and automated bill pay actions.

Bank statements are records of your checking and savings accounts with a financial institution, like a bank or credit union. Account numbers, deposits, charges, cash withdrawals, current balance, beginning balance, and ending balance are all included in these statements.

These days, banking statements are often handled electronically or online. They’re typically sent to your email or accessible through your bank’s website and mobile app. Paper-based bank statements are rare today, but you can still receive them via mail.

Credit card statements

A credit card statement shows all activities related to your credit card account, including purchases and payments.

The difference between the statement balance and the current balance on a credit card statement is relatively simple. The statement balance refers to the total at the close of the billing cycle. The current balance is the real-time balance of the account, which may include purchases, transactions, or deposits that aren't on the statement.

Why are bank statements important?

What is the purpose of a bank statement? Many people throw out their paper bank statements and neglect to check them online. You should avoid this because it’s best to have a paper trail.

Here's what bank statements can help you with:

- Dealing with errors, fraud, and unauthorized transactions. Banking statements help you discover inaccuracies in your checking account statement so you can file a transaction dispute. Statements and receipts serve as evidence when the numbers don’t add up.

- Balancing your budget. You can use bank statements to keep your budget current and match transaction amounts while viewing balances. You’ll also know faster if you have a negative credit card balance.

- Tracking uncashed checks. You can compare your bank statement to your check register to see whether a check has been cashed. It also helps you keep track of how much money you need in your account to cover pending checks.

- Loan applications. When you apply for loans, most lenders ask for bank statements to assess your income, cash flow, and expenses.

- Tax returns. When filing your personal and business taxes, bank statements can be used as supporting documents.

How to get a bank statement

Many banks and financial institutions automatically send you a paper statement monthly. You can also opt to go paperless and receive statements electronically instead — just another benefit of online and mobile banking. You can usually find them under a “statements” or “e-statements” section within your banking portal.

Your bank or credit union may also automatically send you emails and notifications when a new electronic statement is posted. Both formats offer the same detailed breakdown of your financial activities.

How to read a bank statement

Bank statements are designed to be easily readable, but they can contain a ton of information. It’s still possible to find yourself confused after looking over one.

Unfortunately, we can’t provide a single bank statement example since they vary across financial institutions and accounts. Instead, we’ll explain what you’ll likely find in a statement from any institution.

Here are some of the most essential elements of a bank statement:

- Bank information. You’ll find contact information for your financial institution, including the HQ address, a local branch address, and phone numbers.

- Your information. Personal information of the account holder's details, including your name, mailing address, and contact information.

- Important dates. You’ll find current billing cycle dates, including the day the cycle started and its closing date, which may not necessarily fall on the first and last of the month and payment due date.

- Balances. You’ll typically see a starting or ending balance for the current cycle.

- Transactions. All current and pending transactions will be included — deposits, checks, purchases, withdrawals, and even ACH transfers.

- Fees. Any fees that your financial institution charged you will be listed. Avoiding extra fees, like overdraft charges, is always wise.

- Interest. You’ll also see how much interest you accrued on interest-bearing accounts during the current billing cycle.

You’ll often find legalese, disclosures, and disclaimers included on statements in the footnotes or the document's footer.

How often should you check your bank statements?

It makes sense to review your bank statements, billing statements, and credit statements regularly. But how often?

It’s best to review traditional banking statements when they become available — around once a month. The exact times and dates depend on when your bank posts the documents.

You should also check online accounts weekly to review transactions and look for unauthorized purchases or charges. This allows you to course correct if you learn you have a negative bank balance.

How to reconcile bank statements

Reconciling is a way to compare and balance your bank statement with your personal records to ensure everything aligns. This is critical for tracking your expenses and maintaining healthy money management practices.

You should compare transactions, balances, and withdrawal amounts to your records and receipts, making sure it’s all correct. It’s also a good idea to double-check fees and taxes for errors or mathematical inconsistencies.

You can contact your bank or financial provider if you discover a discrepancy. That’s why it’s essential to review your bank statements regularly; if something’s wrong, you’ll have plenty of time to correct it and keep your budget on track.

EarnIn: The easy way to access your finances

Reviewing your bank statements and accounts helps you maintain control of your finances. With the proper tools, you can take your financial security to the next level.

The EarnIn app offers powerful tools to give you new opportunities and options with your money, like our free Credit Monitoring service. And our Cash Out tool lets you access your pay as you work — up to $100 a day and up to $750 every pay period — so you have what you need to keep moving forward.

Download the EarnIn app today and get your money moving at the speed of you.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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