Banking Savings Accounts How to Use a Bank Statement (and Why You Should Be Reading Yours) By Justin Pritchard Justin Pritchard Facebook Twitter Website Justin Pritchard, CFP, is a fee-only advisor and an expert on personal finance. He covers banking, loans, investing, mortgages, and more for The Balance. He has an MBA from the University of Colorado, and has worked for credit unions and large financial firms, in addition to writing about personal finance for more than two decades. learn about our editorial policies Updated on January 27, 2022 Reviewed by Margaret James Reviewed by Margaret James Twitter Peggy James is an expert in accounting, corporate finance, and personal finance. She is a certified public accountant who owns her own accounting firm, where she serves small businesses, nonprofits, solopreneurs, freelancers, and individuals. learn about our financial review board Fact checked by Emily Ernsberger Fact checked by Emily Ernsberger Twitter Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. learn about our editorial policies Photo: Image Source / Getty Images A bank statement is a document showing details about account activity and account balances over the last month or quarter. Using that information, you can balance your accounts, review spending and any other transactions, and spot errors or fraud before they become serious problems. While bank statements may seem boring, they’re essential tools for managing your finances and avoiding problems. Review these reports regularly. What Bank Statements Show Statements show the vital details about your account over the last month or quarter. Starting and Ending Balances See how much you had in your account at the beginning and end of each period. If your goal is to grow your account, this is a quick test to check your progress. If you have more than you need for your monthly budget, you can also see how much is available to move into longer-term savings and investments. Transactions Note Your statement shows every transaction in your account, helping you make sense of where the money comes from and where it goes. Deposits: See all additions to your account, including direct deposit of your wages, any checks or cash you deposited, on-us items, and other credits to your account. This information can help you understand how much you bring in—and how much of your monthly income is available for spending after taxes and deductions. Withdrawals: You need to know about every transfer out of your account, so review withdrawals and spending carefully. Examples of withdrawals include money you spend with your debit card, automatic bill payments and ACH withdrawals, and cash withdrawals at ATMs. Fees: Fees can eat away at your savings and add up to significant annual costs. Find out if you’re paying monthly fees, overdraft fees, or any other charges. If you are, ask your bank how to qualify for fee waivers, or open a free checking account. Interest earnings: If you earn interest from savings accounts or certificates of deposit (CDs), you’ll see those earnings on your statement. Other transactions: Your statement details everything that happened in your account. Less-frequent transactions will also show up, informing you about important events you might otherwise forget about. For example, you might see maturing CDs, returned deposits, and outstanding checks that went stale and were credited to your account. How to Use Your Statements Your bank will create statements monthly or quarterly and send them to your mailing address unless you opt-in to receive paperless statements. Balance Your Account It’s wise to balance or reconcile your bank accounts every month. To do so, review every transaction on your bank statement and compare it to your own records of what happened in your account. This helps ensure that you and your bank agree on how much you have in your account, how much was added, and how much was removed. Occasionally, you’ll find discrepancies—which is fine if they’re just timing issues that clear themselves up. Sometimes you’ll discover serious problems. Identify Fraud and Errors Your statement shows you a record of all transactions in your account. If you see anything unexpected, research the transaction to see if it’s a result of theft or a bank error. In many cases, federal law protects you from losses. The sooner you notify your bank, the more protection you have—but you might be responsible for losses in your account if you wait more than 60 days to report the problem. Understand Spending and Income Bank statements display the facts (with no judgment). If you want to know where your money goes, your transaction history tells a detailed story that can help you track your spending. If you need to make changes to your budget, your statement can show you what the impact will be—and next month it will hold you accountable. Know How Much You Have Unless you check your account every day or sign up for account alerts, you might not know how much money you have in your checking and savings accounts. Monthly statements provide a regular opportunity for you to check in and see where you stand. Note You’re less likely to miss payments and face penalty fees due to insufficient funds when you keep tabs on your account. Document Your Finances Statements are useful when applying for loans, and in other situations where you need to document your assets and income. As official, periodic, documents, lenders often demand two or more bank statements when you apply for home loans and other large loans. You may need a recent statement for student loan verification. Electronic vs. Paper Statements Traditionally, bank statements came via mail, making them difficult to ignore. Now, banks and credit unions promote electronic statements, and you may be able to avoid monthly fees by agreeing to go paperless. Paperless statements are a good option for several reasons. Privacy: Your personal information does not go through the mail every month, giving thieves an opportunity to steal letters and use them for identity theft. Plus, there’s no need to destroy or secure those documents after you read them—just delete everything.Storage and retrieval: When you choose electronic statements, your bank typically stores several years’ worth of historical statements online for you. You can also download and save those documents yourself for easy access. Electronic statements are at your fingertips 24/7, and they don’t take up space in your home.Sustainability: Going paperless obviously saves paper, but it also reduces the amount of fuel and other resources needed to produce statements and deliver them to your home or office. Don’t rule out paper statements if electronic statements aren’t right for you. Sometimes it takes a physical document in your hands to make you perform mundane monthly tasks. Note If you’ll just delete email notifications about new statements and ignore your accounts, you might be better off sticking with traditional bank statements. You can always go paperless later. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. FDIC. "FDIC Law, Regulations, Related Acts."