A bank statement according to Wikipedia, is an official summary of financial transactions occurring within a given period for each bank account held by a person or business with a financial institution – Wikipedia
An understanding of how to read your bank statement make you feel good about your finances and this article gives you the basic understanding of what you need to look for in your statement of bank account when you get one from your bank
This article give you 7 basic items to look out for when you are presented with your bank statement of account and how to match the details in the statement with the reality of your income and expenses.
Here are the 7 things to look for when analysing your bank statement of account
- Account Details – The very first thing to look out for when presented with your bank statement of account is the account details. It is important to ensure the name and the account number are correct so you are not mistakingly presented with another customer’s statement of bank account.
- Statement Date – After the name and the account number had been confirmed correct, the next item to check is the statement date, it is very important to know the period the bank statement you are presented with covers. Most bank statements are sent monthly, there is also quarterly, 6 months and annual statement. Confirmation of the date gives you an idea what period of your financial history the statement covers as this is critical to your account balance and credit and debit turnover. The date column also shows you the date each of the transaction recorded in your bank statement takes place.
- Account Balance – Most bank statement will present you with a snapshot of your account by providing you with opening and closing balance. There is also the cleared and uncleared balance. Also there is a balance column which shows how much is left in your account after every debit (withdrawal) and credit (payment) transactions. The opening balance is how much you have in the account before the period of transaction and closing balance is how much is left in the account at the end of the period. The cleared and uncleared balance refers to cheques deposited into your account. If the cheque has successfully gone through the cheque clearing system them it is cleared and forms part of your balance otherwise it is uncleared and it is not part of your balance.
- Debit and Credit Turnover – This represents the total amount withdrawn from your account and total amount deposited into your account for the period the statement covers. It reflects the volume of transaction you are doing with the bank. The differences between the debit and credit turnover is your balance during the period.
- Deposit Details – All the fund paid into the account during the statement period including cash, transfers and cheques are seen in the deposit column. The column also includes interest paid by your bank if your account is interest bearing, wrong debit reversed into your account and others.All lodgement into your account can be verified in the deposit column. The narration part will let you know the reason and purpose of the deposits.
- Withdrawal Details – All fund withdrew from your account during the period the bank statement covers is seen here. Payments made by you to a third party, including cash, transfers and your cheques that has been cleared into the third party account are seen here. This column also has all the bank charges you have paid to your bank during this period here : Account Maintenance Charge (AMC), Card Charges, Loan Repayment and other statutory charges including Stamp Duty charges, VATs on AMC, Withholding Tax charges and others are seen here.
- Bank Charges – The bank charges part is one of the most important reason for checking you bank statement of account, the financial finicky person would say. All bank charges are found in the Withdrawal Details column. Bank Charges includes: AMC, Card Charges, Loan Repayment, Stamp Duty charges, Withholding Tax charges and others.