How to Check a Bank Statement

Understanding how to read your bank statement will ensure that there are no bank errors, missing deposits, hidden fees, or other discrepancies. Banks perform an important and essential function in our society. We need these financial institutions to safeguard our money, clear our checks, and allow us to pay our bills. Bank statements provide a great deal of information. When you know how to check your bank statement you will be able take control of your finances and properly communicate with your bank when a discrepancy arises.

Difficulty: Easy

Instructions

1. Open you bank statement as soon as possible after it arrives in the mail. The bank often has a set time limit for reporting any errors. Typically for any discrepancies involving a debit card, on line transaction, or any other electronic bank transaction the time limit is 60 days. Hand written checks don't typically have these time limits, but reporting any issues quickly will be beneficial.

2. Check the date on the statement. The bank statement will outline the period of time it covers. You can then compare your checkbook to the bank statement using the appropriate dates.

3. The first area of the bank statement to read is the summary area. This is typically located at the top of page one on your statement. This will give you a quick overview of the month's activity. You will be able to see the opening balance, total deposits, withdraws, fees, and checks. If you have a regular income and keep track of your monthly payments, then you should have a good feel for the accuracy of these numbers. A quick analysis of the summary area will be your first indicator of any potential problems.

4. Often the next area found on your bank statement is the area outlining any interest you may have accrued from your account balances. It is important to pay attention to this area. You should recall what type of account you initially opened with the bank. If you opened an interest bearing account, then you should see interest payments on your statement.
   
   This is an area where banks often make mistakes. Banks offer both interest bearing and non-interest accounts. If the initial account set up was done in error, the bank is not going to catch the mistake. They will assume the account was not meant to be interest bearing. Catching the bank error will be left up to the account holder.
   
   If you signed up for an interest bearing account and there is no interest shown on the statement, call or visit your bank to sort out the problem.

5. The largest part of the bank statement will be the summary of your daily transactions. These transactions will be listed chronologically. Note that the dates of each transaction are based on when they cleared the bank system. So if you wrote a check near the last day of the month, it likely will not show until the following month.

6. Read each transaction listed on your bank statement. Most of the transactions will be familiar to you. Most people have regular monthly payments for utilities, mortgage payments, subscriptions, and so on. If you have automatic payments set up with a business or lender, make sure the amount on your bank statement matches with the preset payment amount.

7. If when reading your transaction list you see a payment to an unknown retailer, you can use the bank statement to help clarify the charge. Typically any debit card transactions will include the retailer's name and phone number. If not, then you can contact the bank to narrow down the origination of the charge. If appropriate, you can then dispute the charge.

8. Check the bank statement transactions to make sure no debit card transactions were input incorrectly. There are times when a retailer will improperly input the amount of a transaction or mistakenly run the charge twice. This is the time to double check these purchases. For example if your local garage repaired your car for $89.12 but mistakenly input $899.12 this is the time to catch this error. The bank has no idea if the actual repairs cost $89 or $899. It is your responsibility to catch the error and report it. Your bank can work with you and the retailer to remedy the situation.

9. A new practice among on line retailers is to offer free trials and ask for a debit card or checking account number. If you have signed up for a free trial, it is important to read the bank statement to ensure there were no errors. If you are certain that you canceled the transaction prior to the end of the trial period, then no charges should have been made to your bank account.
   
   These on line retailers will often attempt to slip in a $1 charge or quickly post the full fee prior to the end of the trial. By finding these improper charges on your bank statement, you will be able to contact the bank and dispute the charge.

10. As you read the bank statement, pay close attention to any fees that the bank may have charged. Most account holders open bank accounts that have no fees. However, if the bank makes an error during the initial set up, you may begin to see fees on your monthly statement. Contact or visit the bank to address any inappropriate fees. If the fee was an error, the bank can refund the fee and make sure your account type is changed. If the bank will not refund or change your account type, then it may be time for you to shop for a new bank.

11. If you find non sufficient fund charges (NSF) when reading your bank statement, this indicates you have either bounced a check or made a debit card charge when there was not enough money in your account to cover the transaction.
    
    It is important to track your spending daily by using your checkbook register or your bank's on line account access. That being said, many people will encounter a time when they accidentally overdraw their bank account. This is a good time to discuss overdraft protection with your bank. You can link one of your other savings accounts or a credit card to your checking account. Then if an NSF situation does occur, this alternate account will cover the payment and avoid the fee.

12. Follow up in writing. If after reading your bank statement you need to contact your bank or dispute a charge, it is a good practice to follow any verbal conversations with a letter summarizing the discussion. This is a common business practice and should be used in your personal transactions as well.

[Mitestarossa]

on 4/18/2009 Very detailed advice on how to read a bank statement.