A bank statement shows an individual/ company’s bank transactions and balances in the form of a checking account. In other words, it is a copy of the bank’s record sent to the customer for periodic review. It shows checks paid from the bank account, deposits received in the bank, service charges deducted by the bank, and the account balance after each day’s transactions.
Mechanism of a Bank Statement
A bank issues bank statements to all its account holders so that to help them in obtaining detailed information about account activities during a specific accounting period. It helps the account holders in getting information about all the transactions processed on their bank account. Banks usually send statements to their customers on a monthly basis on a predefined date. It is important to mention that all the transaction presented on a statement appears in a chronological sequence/ order.
Contents of a Bank Statement
A bank statement typically contains the following:
- Home address
- Account number
- Bank’s customer service number
- Statement period
- Beginning balance for the time period
- How to report errors or fraudulent activity
- Transaction and processing date
- Direct Deposits
- Electronic transfers both for deposit and withdrawal
- Reimbursements or credits
- Canceled checks or payments
- Purchases and payments
- ATM withdrawals
- Fees charged by the bank
- Auto Payments
- Dividend or interest earned
- Closing balance for the period
If you find any discrepancy or inaccuracy in your statement then you should immediately report it to your bank. Usually, you have a period of 60 days from the statement date to dispute any inaccuracy.
Means of Obtaining Bank Statements
There are different ways through which an account holder can receive a bank statement from its bank. One way to receive a bank statement is the traditional method in which the statement is printed on a piece of paper. Banks also provide their account holders with access to the electronic version of the bank statements by using their online portal. The electronic version of a bank statement is known as an e-statement or electronic statement and allows the account holder to access, download, and print it any time anywhere. Banks provide bank statements to their customers through e-mail as well. Some ATMs also provide the option to print a summarized version of the statement, called a transaction history.
Benefits of Bank Statements
There are multiple benefits of bank statements which are as follows:
- It helps in keeping you updated on your current bank balance reducing the need of utilizing an overdraft facility.
- It prevents errors and fraud. Errors related to addition, subtraction, wrongly debited or credited terms, double checks, lost checks, etc. can be detected with the help of a bank statement. Moreover, if you are suspicious that someone may be withdrawing money from your account without informing you through fraudulent ways, a bank statement can also help you in identifying such situations as well.
- Tracking of receivables is easy with the help of a bank statement. You can stay updated on the amounts that are credited to your account.
- It helps in keeping a tab on your expenses and payments.
- You can keep a check on your bank status on a daily, weekly, monthly, and yearly basis. It helps you in identifying whether your book balance matches the balance appearing on your bank statement or not.
- It helps in filing your tax return as you need to reference your bank account and bank statement when filing your taxes.
- Account-holders obtain a bank statement for visa purposes from their banks as the said document is necessary for filing an application for obtaining the visa to travel to a specific country.