A bank statement summarizes your financial activity in a period of time. For many, it’s an essential tool to keep on track with expenses and do personal finance. But these papers have other uses aside from accounting.
This article is about how to get bank statements and what to do with them.
- Why Do We Use Bank Statements?
- How Do I Get a Bank Statement?
- What’s This Charge in My Bank Statement?
- Difference Between Current Balance and Statement Balance?
Why Do We Use Bank Statements?
A statement will show data such as deposits, withdrawals, bank information, beginning balance, or interest earned. These numbers can serve for the following:
Correct banking errors
In the rare case that your bank makes a mistake with your money, you can verify and correct it. Likewise, you can use bank statements as proof for the IRS if they are overcharging you by mistake.
If these “errors” occur repeatedly, those statements are your tool to detect potential accounting fraud.
Keep your records safe
Who knows if you’ll need these documents in the future? And if you will, the last thing you want is losing them.
Most banks keep bank statements for five years, which you can conveniently access from their platform.
Monitor your balance
If your balance is too low, you may miss payments and thus pay for late fees. You can monitor how much balance you have at the end and beginning of the month, and whether it’s enough to cover monthly expenses.
When you organize data on a bank statement, it’s easy to contrast what’s wrong. The sooner you catch those mistakes, the higher is your chance of retrieving the money.
For example, an identity thief may have accessed your account today. If you log in regularly and review your statements, you’ll notice it immediately. If you act fast, you can file a credit fraud alert and revert unauthorized transactions.
Verifying accessible income
Other banks and credit companies require their clients to verify their income by law. This way, they make sure you can afford their service.
This way, you protect yourself from falling into debt in case you can’t pay, or the company did some bait-and-switch. Instead of adding debt, they cancel your service.
See the interest you’re earning
Don’t just trust the rate they’ve promised you. You should be able to see what you earned in the bank statements, do some basic math, and get to that number. If you find that your interest earned is below what you expected, you should contact your bank for information.
Even a 1% error margin can become an atrocious mistake when compounding interest long-term.
Since they use variable rates, you may earn 3% per year and 0.5% the next one. It doesn’t last much, but it’s the closest you can get to the ideal interest rate. Anything more than that is likely too good to be true.
There are firms promising over 3% returns per month, presumably consistently for years. They are the same folks who encourage you not to withdraw your funds since you would be “missing out on further gains.” But before we judge whether something is legit or not, it’s necessary to understand the difference between a legit bank and a get-rich-quick scheme.
If you want to make money on the Internet, the law requires these platforms to verify that the earners are real people (to prevent fraud). What they’ll often request you is an ID document/card and some proof of address.
Your utility bill will work for the latter in most cases, although there are others who only accept bank statements as proof. If you can’t provide one, you can’t use their business platform.
Among other conditions, your statement must show:
- Transactions performed in the last three months
- The legal contact data about you and your bank/statement issuer
- Your bank account address
Note: If a company rejects your bank statement, mind that your info has too much every letter, or the verification program won’t recognize it. Change your bank account profile info to match your name and address as in your ID document.
How Do I Get a Bank Statement?
If you go to your local branch, you just need to tell the employee your account ID information. They will either print you the statement or send a digital file to your email.
As many will say, you can do this yourself from the comfort of your home. Just login to your banking platform and click on your balance. Somewhere in the menu, you should be able to load your last movements and create a bank statement.
The page will ask you to enter a time period (e.g., from June 3rd, 2020 to January 1st, 2021) and what transactions you want to see (only deposits? only withdrawals? both?). You click on generate, and it will display on the screen. There’s a download/printing option as well.
Most banks have a 24h support service and fast turnaround. You can call them, start a live chat, or email. They reply the same business day.
How long should I keep my bank statements?
Companies ask for these files because of all the data they share. In that sense, it’s a risk that the wrong person finds your information.
It’s better to keep your statements online. But if you want to print some and want to keep them accessible, you can store them for no longer than a year.
- For verification purposes, your statement shouldn’t be older than three months
- When you keep statements for 12 months, it’s easier to track your annual income, expenses, and taxes.
If you get quarterly statements, keep them until the end of the year. Once you get your annual statement and all numbers match, you can get rid of them.
You may still want to keep the annual report in case the IRS requests verification. They reserve the right to audit your tax reports for 3-7 years.
In any case, your bank keeps your account records for at least five years, so you can generate a statement when needed.
If you want to dispose of your bank statements, the safest way is to make them unreadable. If you just throw them away, someone might still find and read them. It’s better to use a shredder or throw them into a fireplace.
For more advice on what documents to keep and for how long, we’ve written this other guide.
What’s This Charge in My Bank Statement?
Have you found a charge you can’t explain? Even though identity theft is a real threat, it is more uncommon than you think. You can contact your bank to investigate what that charge is, but it will likely be one of the following:
- An automatic payment you set a long time ago and forgot
- A service that charges you fees once a year
- A fee from your bank, either due to overdrafts, empty balances, or credit interest (APR)
If you’re sure none of those are the case, your bank might have made a mistake (e.g., double-charging). But if the bank didn’t charge you, then you have to request refunds from the 3rd party instead.
It’s not always possible to revert a payment. But if it’s recurrent, you can tell your bank to reject any requests from that entity.
The easiest way to recover your funds is to:
- Act as fast as possible (the same day they charged you)
- Let them know it was an unauthorized transaction
But what if the company has proof that you approved the purchase? In that case, take it as an identity theft red flag. Just to be safe, follow the steps from this guide for identity theft prevention.
Credit fraud alerts will help you stop further charges while you’re trying to investigate what’s going on.
Difference Between Current Balance and Statement Balance?
If you use a credit card often, you will find that your current balance is different from your bank statement balance. So what does each one mean, and why do you need both?
The statement balance refers to the credit you owe for the last billing cycle. The current balance shows all the payments, interest, credit, and total charges in your account. It’s a global view of what you owe, excluding those transactions that are still pending.
Ideally, you want to end the month with a statement balance of $0. This means you paid it in full and they won’t apply any charges to your account.
If you don’t want to worry about it, set up an auto-pay feature so that your credit provider gets paid a few days before the balance is due (the “grace period” is 21 days after receiving the bill). Just make sure you have enough funds in the account, or your bank might charge a returned payment fee for the failed transaction.
Which one should you pay off first? The statement-balance minimum payment.
If you can’t afford the whole balance but pay the minimum, they will charge you interest on the next payment, but it doesn’t hurt your credit. If you can’t pay the minimum, the credit provider reports to the bureaus as a missed payment. Late fees will also apply.
It’s okay not paying off the current balance the same month. When your statement balance is lower than your current balance, the difference is kept for the next monthly payments.