When you get an email that your bank statement is ready or it shows up in your mailbox, what do you do? If you are like most people, those bank statements go right to the recycle bin and those emails never get read. But there are some big benefits from reading your bank statements. Follow along to learn some important benefits of reading your bank statement and what to watch out for along the way.
Discover and Combat Fraud
Your bank statement contains a complete list of all of your transactions for the statement period. For checking accounts, you generally get a statement every month. For savings accounts, they may come quarterly.
When you get your statement, you should start by reviewing the transactions line by line to make sure you recognize each one. If you spot anything suspicious, check your receipts and other records to make sure it was really your transaction. While banks are generally very good at detecting fraud, the final responsibility lies on your shoulders to make sure there is no unauthorized activity on your account.
The only downside of using your statement to detect fraud is that it’s backwards looking. And transactions can be up to five weeks old by the time you get your statement in the mail. Logging into online banking more often, or even better, using a money tracking app such as Personal Capital, can help you detect issues much sooner.
Stay in Tune With Your Spending Habits
At the end of the month, do you typically have less or more money than you started with? Where is your money going every month? If you can’t answer that question, you need to get a better grasp of what’s going on with your money.
Checking in at least monthly is vital to maintaining strong financial health. Your statements include information on where your debit card was used, which checks were paid, and other transactions. If you don’t know where your money is going, you can’t tell if you are in good shape or bad shape financially.
You certainly won’t be able to improve your financial footing without giving your accounts and spending habits regular attention.
Avoid Overdrafts and Embarrassing Mistakes
In my entire history with bank accounts, only once was an ACH rejected. Although I had plenty of cash in my savings account to have covered the automatic withdrawal for my condo’s HOA, my checking account was a few dollars short the day the fee came through.
That timing mistake cost me $25 with my HOA, but my bank didn’t charge me for the rejected electronic payment. However, just as bad as the $25 fee was my building manager telling me about it. The small mistake made him think I’m not very good with my money or don’t have much of it. Both are perceptions I want to avoid!
To save face and save money on fees, make sure you know how much is in the bank at the end of the month and how much you have added, withdrawn and spent since.
Keep Ahead of Bank Fees
The best bank accounts don’t charge any monthly fees. But the biggest banks in the country do charge hefty fees if you don’t meet certain account activity requirements. Those usually include a combination of debit card use, minimum balance, and/or direct deposits.
Your best option may be to move to a better bank that doesn’t charge any monthly fees. But if your bank does charge monthly fees you can find information on your statements to help you avoid them.
Also keep track of those notices and inserts in your statements. Those may include updates to your account terms and conditions, which in many cases include… new fees. You can’t avoid them if you don’t know about them.
Track Your Money Regularly
You already know your money is too important to ignore, or you would not be here at Investor Junkie today. Now you know why your bank and other financial statements belong on your monthly reading list.
Use your bank statements to avoid fees, stay in tune with your spending and keep your money working for you. With the right combination of personal finance tools — including your bank statements — you can get yourself on track to better financial success.