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.
Here are five tips for reading your bank statement with success:
1. 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, checks, 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.
2. What type of statement are you looking at? While the format may be the same, the information on a checking account bank statement will be much different than that of a savings account. For instance, your checking account probably has a lot more money coming in and out, especially in the form of checks. 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.
3. 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
What about overdraft, bank wire, and ATM fees? My bank charges $20 if they need to pull money from one account to cover another; $13 for bank wires and roughly $1.50 per “out of network” ATM transaction.
4. 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.
5. 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 Starbucks, 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.
Tip: Compare three consecutive bank statements to see if there is a pattern, or if one month was just a fluke. Also, a lot of these same rules apply for analyzing a credit card statement if you happen to have a credit card.
So, is there anyone out there that still looks at their bank statement and balances their checkbook? Let us know!
(photo credit: thewhiterabbit11)