How often do you balance your checkbook? Depending on your age, you might not even have a checkbook.
In that case, do you regularly review your monthly checking and savings account statements?
Chances are, you may not, but it’s something you should make into a habit. That’s because reviewing your monthly bank statement or transaction history will notify you of possible fraud faster, like a hacker making unauthorized purchases with your debit card information.
Perhaps you signed up for push notifications and emails from your financial institution for those times when you purchase over a specific sum, like $50. However, checking your monthly transactions can help you understand how much of your money is going where, such as your home payment, utility payment, car loan, or student loan.
If you usually use your debit card for everyday transactions, checking each purchase is smart to ensure the merchant has charged the correct amount. This should be at the top of your list if you used your debit card to cover the cost of your plane ticket, hotel stay, food, souvenirs, and more during a recent trip.
What Are Bank Statements?
Bank statements are reports of transactions connected to an account within a specific timeframe, explains Bruce McClary, a spokesman for the National Foundation for Credit Counseling, a nonprofit group based in Washington, DC.
“The activity commonly featured on a bank statement includes account deposits, withdrawals, earned interest and fees,” he told US News My Money. “Accounts linked to a debit card will also feature point-of-sale transactions and ATM withdrawals on bank statements.”
Besides that, bank statements also contain any fees levied during the month plus the interest collected on savings accounts, money market funds, and certificates of deposit (CDs).
Bank statements are beneficial for other things as well, like verifying payments and contributions when you submit your state and federal income taxes, notes Jeff Rose, a certified financial planner and founder of the Good Financial Cents blog.
How Can You Receive A Bank Statement?
Although most banks and credit unions continue to offer paper statements via the mail, you can also decide to sign up for electronic statements. These are more convenient and can lower the risk fo fraud.
However, suppose your financial institution still sends paper statements. In that case, you should scan them and save the digital version, suggests Jackie Boies, a senior director of housing and bankruptcy services at Money Management International, a Texas nonprofit group offering debt counseling services.
Not only that, but if you sign up for online statements, your bank could give you a choice to export them to a spreadsheet, which you can download and save on your computer. Some institutions let their customers download their account records as PDFs, McClary adds.
In addition, your bank or credit union most likely allows you to check the last few years of your account history. For example, Chase and Citibank each let customers view their history over seven years. This can make it easier to save an electronic version of your own.
Rose tells US News My Money, “Personally, I keep electronic statements by simply downloading them and storing them in both an encrypted online vault and an external hard drive.”
Keep in mind that if you request previous statements, your bank might charge a fee.
How Long Should You Save Old Bank Statements?
Saving your bank statements could be required to follow transactions for tax reasons, offer evidence of income when applying for a line of credit, or make sure you’re not a fraud victim.
Because IRS audits usually extend back three to six years, you should keep your old statements for the same amount of time. Also, if you conduct monthly electronic transfers for child support or alimony payments, it would be best to save these records longer in the event of a dispute.
Bank statements are beneficial if you discover fraudulent activity.
Katie Miller, Navy Federal Credit Union’s senior vice president of savings products, told US News My Money, “It is not uncommon for a consumer to suddenly notice an unauthorized charge by a merchant and discover it has been going on for months through their bank statements.”
Checking your monthly bank statements is also helpful for making a budget and getting more precise insights into your spending and savings habits, particularly if you want to cut expenses, she notes.
- Chang, Ellen. “Your Bank Statement Deserves Your Attention.” U.S. News & World Report, U.S. News & World Report, 22 Aug. 2019, money.usnews.com/banking/articles/your-bank-statement-deserves-your-attention.