Most people keep track of their bank account balance on their phone or computer, but every month you get a bank statement in the mail or an email reminder that your online bank statement is available. Maybe you have a stack of unopened envelopes, haven't been checking your virtual statement — or maybe you're even wondering, "What is a bank statement?"
A bank statement shows all amounts paid into and withdrawn out of your account, plus any fees, for the statement period. If you aren't reviewing your statements, you could be making a big mistake.
Here are seven reasons why your bank statements are important:
1. You Could Overdraw Your Account
When you look at your account online, the balance reflects the funds in your account at the moment and does not always include pending transactions. By reviewing your bank statement, you can see which transactions have cleared and then calculate your true available bank account balance by factoring in any deposits, withdrawals and checks that have not yet appeared. Your bank statement usually gives you a worksheet to calculate this. The extra steps can prevent you from overdrawing your account.
Learn More: Bank Statements 101
2. You Might Not Realize a Payment Was Not Received
If you mail a check as payment or make an online bill payment that is not received, you might not realize it until you get a second bill, which could include interest charges and/or late payment fees. By reading your bank statement, you can see which checks have cleared. If one is missing, you can follow up with the payee in time to avoid late charges and damage to your credit score.
3. You Could Miss an Error
A transaction could have been recorded for the wrong amount, recorded twice or not recorded at all. Perhaps you cancelled your monthly gym membership or ended a free trial subscription, but the recurring charges continue to appear on your statement. You have 60 days to report errors like these, so be sure to review your bank statement regularly.
4. You Won’t Notice Bank Fees
Bank fees can be hard to keep up with. When you open a new bank account, sometimes the bank waives its fees for a period of time. Or, you might be able to avoid bank fees by keeping a minimum balance or making a certain number of transactions per month. Review your bank statement regularly to see if your bank is charging fees.
5. You Won’t Know Your Interest Rate Changed
Banks like to entice new customers with good interest rates, particularly on savings accounts, but these are sometimes introductory rates that decline after six months or a year. Unless you know when that great rate will end, you might think you're getting a higher interest rate than your bank statement indicates.
6. You Could Miss Early Indications of Identity Theft
Identity thieves and fraudsters will sometimes make a small debit to your account to test if it is a legitimate account. You might not notice a charge of a few dollars while checking your account balance on your app, but your statement gives you enough information to call the bank and question the charge. Finding fraudulent activity early is critical to keep you from losing a lot of money later.
7. You Won’t Have Important Tax Information
Your bank statement contains important information you could need to substantiate taxes paid or deductions taken. Your statement will include records of your electronic bill pay and transfers as well as copies of cancelled checks, which can be used as proof of taxes paid, charitable contributions, business expenses, medical expenses or other deductions in case of an IRS audit.
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