What Is a Bank Statement?

A bank statement is a record, typically sent to the account holder every month, summarizing all the transactions in an account throughout the time from the previous statement to the current one. The opening balance from the previous month added to the total of all transactions during the period results in the closing balance for the current statement. Consumers should carefully review their bank statements and keep them for their own financial records.

Key Takeaways

  • Not only will reviewing your bank statement every month help you keep a tab of your expenses and spending, but it can also help you identify any fraud or mistakes as early as possible.
  • If you find an error or discrepancy on your bank statement, alert your bank as soon as possible.

How a Bank Statement Works

During reconciliation of their account with the bank's records, account holders should check their bank statement for discrepancies. Account holders must report discrepancies in writing as soon as possible. A bank statement is also referred to as an account statement. It shows if the bank is accountable with an account holder’s money.

A bank issues a bank statement to an account holder that shows the detailed activity in the account. It allows the account holder to see all the transactions processed on their account. Banks usually send monthly statements to an account holder on a set date. In addition, transactions on a statement typically appear in chronological order.

The bank statement lists checks paid, total withdrawals, total deposits, interest earned, and service charges or penalties incurred on an account. In addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder’s account number, and the bank’s customer service number.

About 70% of consumers find it easier to track expenses and manage finances with paper statements, and about two-thirds prefer a combination of paper and electronic statements for bill and statement delivery.

For example, a bank statement may show a non-interest-bearing checking account with a beginning balance of $1,050, total deposits of $3,000, total withdrawals of $1,950, an ending balance of $2,100, and zero service charges for the period April 1 through April 30.

Special Considerations

Many banks offer account holders the option of receiving paper statements or using paperless, electronic ones. An electronic version of a bank statement is known as an electronic statement or e-statement and allows account holders to access their statement online where they can download or print it. In addition, some banks email statements to customers as an attachment. Some bank automatic teller machines (ATMs) offer the option to print a summarized version of a bank statement, called a transaction history. Some institutions may offer a discount to customers who opt for e-statements or charge customers for paper statements, as it saves the sender postal costs.

Even with the convenience, value, and accessibility of electronic statements, paper statements aren't likely to go away anytime soon. As of 2015, about 15% of suburban and urban residents and 22% of rural residents did not use the Internet. In addition, smartphones do not offer the formatting and ease of use of a computer. About 70% of consumers find it easier to track expenses and manage finances with paper statements, and about two-thirds prefer a combination of paper and electronic statements. Many recipients of e-statements still print out their statement at home, preferring to keep a permanent record.

Bank statements are a great tool to help an account holder keep track of their money. They can help account holders track their finances, identify errors, and recognize spending habits. An account holder should verify their bank account on a regular basis—either daily, weekly or monthly—to ensure their records match the bank’s records. This helps reduce overdraft fees, errors, and fraud.

If any discrepancies are found, they must be reported to the bank in a timely manner. Account holders usually have 60 days from their statement date to dispute any errors. They should keep monthly statements for at least one year.